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Electrosteel Castings Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 and FY '24 Earnings Conference Call of Electrosteel Castings Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikash Verma from EY LLP. Thank you, and over to you, sir.
Thank you, Darwin. Good afternoon, everyone. On behalf of Electrosteel Castings Limited, I welcome you all to the company's quarter 4 and FY '24 earnings conference call. To discuss the performance of the company and to answer the questions, we have with us from the company, Mr. Umang Kejriwal, Managing Director; Mr. Uddhav Kejriwal, Whole-Time Director; Mr. Ashutosh Agarwal, Whole-time Director and Chief Financial Officer; and Mr. Gaurav Somani, General Manager, Finance.
Before we proceed with this call, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties and other factors, which will be beyond management's control. It is highly requested that you bear in mind, there may be uncertainties when interpreting such statements. Please note that this conference is being recorded.
We will now start the session with opening remarks from the management team. Afterwards, we will open the floor for an interactive Q&A session. I'll now hand over the conference over to Mr. Umang Kejriwal for his opening remarks. Thank you, and over to you, sir.
Hello, everybody. So another year goes by and I don't really remember when we have been so optimistic as we are now about the future. We always thought that water is the business of the future. And we are in the right place at the right time. For so many years, we were definitely at the right place, but whether we were at the right place at the right time, we didn't really know. But today, we can confidently say, yes, we are at the right time, at the right place. And yes, things look all right for the future.
As far as figures, et cetera, are concerned, I think we are already in the public domain, and to elaborate a little more about them, I will now I hand you over to our Ashutosh. Thank you.
Thank you, sir. Good afternoon, everybody, and a very, very warm welcome in this session. I would like to first explain you about quarter 4 results. The results will be in 2 parts, consolidated results and standalone results.
Consolidated results: Electrosteel Castings total income grew by 6.8% year-on-year to INR 2,039 crores. EBITDA surged by 51% approximately year-on-year to INR 346 crores. Quarter 4 includes major renovation and repair works in our Khardah Plant in West Bengal approximately INR 60 crores. And the plant was also shut down for 53 days approximately during this financial year. But what is the benefit of this shutdown and maintenance? The efficiency of the plant subsequently will improve and yield better results out of this plant. EBITDA margin expanded by 495 bps year-on-year to 17%. PAT grew by 154% to INR 227 crores. PAT margin expanded by 645 bps year-on-year to 11.1% during this quarter.
Now I'm talking about standalone results. Company sold 1,96,000 tonnes of DI pipes during this quarter. Company's total income was INR 1,812 crores. EBITDA grew by 36.7% year-on-year to INR 319 crores. As informed earlier, Q4 results includes major renovation and repair work, and the company has incurred around INR 60 crores, which has been incurred in this quarter. And the plant was also shut down for 53 days during the financial year. But the benefit of this will come in subsequent years due to increase in the productivity and efficiency of the plant. EBITDA margin expanded by 553 bps (sic) [ 453 bps ] year-on-year to 17.6%. PAT grew by 116% year-on-year to INR 219 crores. PAT margin expanded by 640 bps year-on-year to 12.1% during this quarter.
Now I'm talking about yearly results. First of all, consolidated performance of the company. Company's total income stood to INR 7,580 crores in the financial year '23-'24. EBITDA surged by 56% to INR 1,281 crores, with EBITDA margin of 17%. PAT grew by 134% to INR 740 crores and PAT margin of 9.8%. EPS for 2024 was INR 12.30.
Now I'm talking about the standalone performance for the year. Company sold 7.47 million (sic) [ lakh ] metric tonnes of DI pipes during this year. Company's total income was INR 7,044 crores during this year. EBITDA surged to 120% to INR 1,246 crores, with EBITDA margin of 17.7%. PAT grew to 120% to INR 736 crores with PAT margin of 10.4%.
Now I'm talking about CapEx of the existing plant. Company has spent INR 390 crores out of INR 650 crores CapEx plan as of March '24. The ongoing CapEx plan is as per the schedule and the new capacity will be up and running by September/October 2025. Taking this in account, the total capacity of the company would be somewhere around 9 lakh tonnes per annum. Thus, we will be maintaining the leadership position in the country in DI pipes and fittings.
As of 31 March 2024, at standalone level, the gross debt of the company is down to INR 2,010 crores and the net debt [ stands ] to INR 1,523 crores. Company's net debt-to-equity ratio stands to [ 0.31:1 ] as of 31st March 2024. The consolidated level gross debt of the company is down to INR [ 2,266 ] crores against INR 1,722 crores. The company's net debt-to-equity ratio is [ 0.34:1 ] as on 31st March 2024.
Now I'm requesting for the question-and-answer session by the investors.
Can we just add one thing. Let me introduce -- add 2 things. Today, the Board has approved the increase of Kalahasti unit's capacity by 1 lakh tonnes of DI pipes, and the CapEx would be somewhere around INR 64 crores, and this capacity will be up and running within 15 months' time. That will give a very, very boost to the company and the total capacity of the company would be somewhere around 10 lakh tonnes -- 1 million tonnes.
Second announcement we made today with the approval of the Board that the company is going to acquire shortly around 500 acres of land in the state of Odisha, and the government of Odisha is supporting us like anything, and we are planning to set up a DI pipes and fittings plant there. So our objective is, first, to acquire the land. Our team is working for that, and we will come back to you later on with the full details of the project. Please carry on.
[Operator Instructions] The first question is from the line of Vikash Singh from PhillipCapital.
Sir, I just want to understand, if I just compare the 4Q standalone versus the consolidated numbers, it seems to be that the subsidiary's performance on a sequential basis has declined considerably, along with the higher other expenses. So if you could just give us some explanation what has happened there? And is that a one-off event and the next quarter they will bounce back?
Vikash, this is Gaurav. In case of consolidated numbers, we did an EBITDA of around INR 346 crores compared to standalone EBITDA number of around INR 319 crores. So there has been an uptick in the consolidated EBITDA number.
On a sequential basis, basically, I was talking...
On a sequential basis, yes, because what happens, when we sell to subsidiaries, there is also adjustment of undivided profit on the stocks, which is lying there. So those get adjusted as per the accounting norms.
Because whatever unsold stock is lying in the subsidiary companies and the profit margin we have to adjust here in the accounts [indiscernible] there.
Understood, sir. Sir, secondly, in terms of our CapEx basically to 9 lakh tonne capacity. By what time frame this capacity would come and what kind of volumes we should build-in in our FY '25 estimates? Or everything will come in FY '26?
So this is '24-'25 going on, and we expect to conclude '24-'25 with 8,50,000 tonnes. I think '25-'26 is when we will see 9 lakh tonnes, definitely, and '26-'27, we will be at 1 million tonnes.
Understood. Our blended EBITDA for this year was closer to [ 17% ]. So is this the run rate you would be comfortable with? Or our sustainable run rate is lower than that? If you could give us some insight into that?
[indiscernible] also, but we are slightly confident about 17%, but we will change for the better percentage.
Sustaining 16% to 17%, but definitely, we are not going to [indiscernible] our efforts to do better than that.
Understood. In view of your 500 crores (sic) [ acres ] land purchase and probably subsequent CapEx, how do we see this moving from here onwards? And also a little bit of insight on how are we doing this 1 lakh expansion on a very nominal CapEx of INR 64 crores?
The second question I'm answering first. The 1 lakh capacity we are increasing by adding some balancing equipment with no much capacity required, right?
Second question was about the INR 500 crores -- 500 acres of land acquisition. We have internal accrual fund available, so we will not be borrowing for that.
So debt reduction story would take a pause for some time, because you can't feed both debt reduction and internal land purchase, right?
No, no, no. There is some gap between me and you. Whatever commitment we have made with the banker, we will meet the commitment for us. Then we have corpus fund for acquisition of the land.
[Operator Instructions] The next question comes from the line of Gunit Singh from Counter Cyclical PMS.
Sir, we are also adding capacities in DI pipes, and some of our competitors like [ Jayaswal ] or Tata Steel, also they have also added capacities or planning to add capacity in future. So I would like to understand the market dynamics currently. What kind of overall demand we have in India currently as a whole for DI pipes and what kind of supply is there from all the players as of now?
[Foreign Language] And going forward, the budget for the current year will be announced immediately after the elections. And this situation is expected to continue. And so we don't really see much issues here.
So as of now, what should be the installed capacity in India according to you for DI pipes?
[Foreign Language]
The total capacity in the year 2024, '25 would be somewhere around 46 lakh tonnes to 48 lakh tonnes.
46 to 48 lakh tonnes. And sir, what kind of capacity additions are we looking at overall for the market over the coming 2, 3 years?
2, 3 years will be difficult to comment upon, but we are giving the figure of around 57 lakh tonnes in '25-'26.
All right. And sir, what is the annual demand according to you? I mean, if this has been sold capacity. Current demand?
Current demand is always better than the capacity. That's why the other players are also going for increasing the capacity, including us. All are confident about better demand in domestic market as well as in the international market.
All right, Sir. But are you not concerned about overcrowding going ahead as all the players are coming up with new capacity? So do you think that, I mean, there would be overcrowding going forward? Or I mean, how do you expect -- do you expect the demand to still be, I mean, ahead of the capacity that is being added? I just want to understand the market dynamics going forward, because all companies in our domain have announced a CapEx.
Sir, your company's Board as well as management has taken the decision of increasing the capacity after proper due diligence of the market and the forecast of the market domestically as well as international demand.
All right. Sir, so I just want to also understand one thing. Right now, the company is going through missions like Jal Jeevan Mission and infrastructure projects in the water domain, which probably might continue for the next, say, 3 to 4 years. So I mean, post the completion of such projects, I mean, what would drive demand for our products? I mean, what is the outlook on this?
[Foreign Language]. So going forward, for quite some time to come, this issue seems to be quite all right. And there are so many other types of pipes. Once people are able to get enough ductile pipes in the market, then these other types of pipes will start converting back to ductile. That will also help.
Got it. And sir, my last question is, what kind of growth are we looking at in FY '25 in terms of volumes? And are we confident of maintaining the EBITDA margins that we arrived at in Q4?
So as mentioned just a while back, I think we expect to close '24-'25 with an output of 8,50,000 tonnes of pipe. So production and sale being around those numbers. And yes, we are confident of maintaining EBITDA in the range of 17% to 18% the way things are right now and the way things are looking going forward for the year.
All right. And what was the volume in FY '24?
So we closed '23-'24 with 7,50,000 tonnes.
The next question is from the line of Aryan Sharma from B&K Securities.
I had questions regarding the export situation, actually. We see that exports as a percent of total volume has fallen from 17% to 15% in FY '24. Sir, could you elucidate the reasons for same as to why it has fallen and what is the mix that we can expect in the future? And which region can we see demand from in the future?
Well, at present you have the international demand and you have the domestic demand, and you really have to plan as you go along which demand to meet first. So looking at 17% or 15% or 19% probably is not the way to look at it quarter to quarter or half year to half year. People plan and decide where to sell and supply as we go along.
Sir, thank you for clarifying. Sir, my second question is regarding the CapEx plan. So actually, I just wondered, could you just elaborate as to what are the CapEx plans for FY '25 and '26? What will be the total amount we will be incurring for CapEx, including the Odisha land? And how much capacity addition are we expecting in Odisha through this deal?
As I told you, the Odisha CapEx plan will be in phases. We will be increasing the capacity gradually. And we are still on the drawing board stage on Odisha project. So [ debt equity ] will be able to be cleared maybe by a month or two. But other than that, we are comfortable that the debt will be reduced as per the plan, as per the commitment with the banks. And FY '25 CapEx is around INR 200 crores to INR 225 crores maximum.
The next question is from the line of Rakesh Roy from Boring AMC.
Just one -- sir, maybe I forgot. Sir, in which place we are going to add 1 lakh capacity, sir, addition?
Kalahasti unit, the south unit. The unit situated in south near Tirupati.
So already there in Srikalahasti we have already nearby 5,50,000?
Correct.
Yes. So again, we will add 1 lakh. So after this 1 lakh, it will become 6.5 lakhs?
Correct.
Yes, sir. My next question is the last time when we met, you said currently demand is high and supply is -- there's a difference between demand and supply. The supply is lower and demand is higher. After 2 years, demand and supply will be equal. In that case, how we maintain our growth after 2 or 3 years?
[Foreign Language]
[Foreign Language] So after 2, 3 years, how we will grow our strategy to maintain our market share or anything, sir. [Foreign Language].
[Foreign Language].
Okay. Agreed, sir. Sir, one last question, sir. Any plan to add new products in our portfolio apart from DI pipes in near future, after 2 or 3 years, or after 1 year? Any plan from your side?
[Foreign Language] we had something firmed up, so we came to you with the information. Now we are firmed up with the Srikalahasti further expansion and Odisha project, so we have come and shared that with you. So we need things to get a little advanced before we share with you.
The next question is from the line of Kuber Chauhan from Anand Rathi.
Congratulations on good set of numbers. I have 2 questions. First of all, when can we see 1 million tonnes of capacity in our plant, total capacity which we are witnessing? And secondly, what is the current order book in our hands?
So we will see 1 million tonnes capacity by '26-'27 financial year, definitely, number one. And on your second question, I think, like most of the times, even currently, we see an order book of 6 to 7 months.
In units, maybe you can specify?
6 lakh tonnes, let's say. So about more than 6 to 7 months, actually, 9 to 10 months.
I mean, in terms of value?
Sorry, I didn't catch the last part. Can you please repeat?
Yes. I was asking, you said about units, 6 lakh tonnes. And in terms of value, how much it would be?
Around INR 4,500 crores, approximately.
The next question is from the line of Dhyey from Niveshaay Investment Advisory.
I had this question regarding the competition with the OPVC pipes that we are seeing currently. So I believe the OPVC pipes are into diameters from 100 mm to 200 mm. I just wanted to understand the industry size or the opportunity which they might take away from the DI pipe category.
[Foreign Language] we have lot of types of pipes in the market. We have ductile, we have steel, we have different types of plastics, and then one of the more different types, and we feel as and when we are ready to meet the demand of ductile pipes in the market and go further, then we can begin to or again continue to take some market share of different types of pipes. Until then, we have to first take care of the ductile market demand itself.
So sir, you believe that this OPVC pipe, which I'm talking about, would not take a significant share from the DI pipe, like it will not be a competition to DI pipes, right?
What I'm trying to convey is that because we are hard pressed to meet the DI demand at present, so we are not able to take away share from other types of pipes.
Correct, sir, correct. And sir, would it be possible to give any volume or any capacity guidance for the Odisha plant which is coming up? Like we are taking 500 acres of land, so approximate amount of volume which you can set up over there in such area or something like that?
We have not worked that out in full detail. So as Ashutosh mentioned, we are not ready with that information. There's no point in sharing a figure with you today and changing it tomorrow.
Correct, sir. And sir, just last question. In FY '25, we would be at a capacity of around 9 lakh tonnes, right?
Yes. FY '25, yes, 9 lakh tonnes. Correct.
And you guided for volumes of around 8.5 lakh tonnes. However, in the PPT, it is mentioned the volumes of around 8.95 lakh tonnes. So which should we consider?
8.95 lakh tonnes is the total capacity. [indiscernible] capacity of around 9 lakh tonnes by the end of the calendar year. So the [indiscernible] part of the year.
So it is translated into 9 lakh tonnes only on an annual basis for '25-'26, basically.
The next question comes from the line of Kirtan Mehta from BOB Capital Markets.
In regards to Odisha plant, I do understand that we have not done the work, but is it possible to share what's the sort of the typical size of the greenfield plant that one is considering? [indiscernible] you can give a range in terms of what is the range of this plant that will make itself sort of economically feasible and what is the typical CapEx involved in putting up this kind of plant? [indiscernible] or something like that?
[Foreign Language].
The next question is from the line of Saloni Hemnani from Molecule Ventures PMS.
I have 2 questions. So the first question is regarding the existing capacity. You have mentioned in the PPT, it's around 7.4 lakh tonnes. But if I add the existing capacity mentioned by you in your results, the Srikalahasti plant is 5.5 lakh tonnes, plus if I do 3 lakh tonnes, so that comes around 8.5 lakh tonnes. So what's the correct figure in the existing capacity?
Saloni, 5.5 lakh tonnes at Kalahasti will become after the expansion gets completed, that is by around Q3 of this financial year. Right now...
Okay. So it's not there yet, right?
Yes, the CapEx is going on.
CapEx is going on in an advanced stage of completion also. Just in 3 quarters, it will be 5.5 lakh tonnes.
So we are sticking with our original time line of quarter 2 of FY '25, when we will have this capacity?
We are ahead of the schedule.
That's great, sir. The follow-up question is regarding Parbatpur Coal Block. Sir, any update on that?
Very difficult to answer this question. [Foreign Language]. The hearing keeps on going on. The next hearing is September 25. But I think one person in the world can answer is Mr. Modi.
Okay. Okay. But any rough figure that we might be internally estimating that we might be able to receive like the land component or the overall expenditure that we have done?
Whatever projections we have made about this in the past have proved wrong. So all we can say is that the matter is moving forward, it's not at a standstill, and we will definitely see recovery.
The next question is from the line of Jojo Shaju from Alpha Invesco Research Services.
I have 3 questions. So first coming to our export market. I just want to understand how much volumes are going into the U.S.A., America, and what sort of volume growth we are witnessing year-over-year?
[Foreign Language].
On the U.S. market, they want to know what is the growth stat for U.S. market...
Out of our total exports, U.S. contributes to around 10%.
Okay. 10% of the total export is going to the U.S.A.?
Yes, yes.
Can you give how much is the absolute volume growth there in the U.S. market? What is the demand outlook there? Are you witnessing any growth specifically to the U.S. market?
Seeing the present situation in U.S., we are not hoping a great increase in the U.S. market.
Okay, not much growth being witnessed from the U.S. market?
Yes.
And sir, what is the realization from the U.S. market? Is there any improvement there?
Very difficult to quantify these details. You know the competitors are also in this call.
I think we will not be able to give a specific quantification of the U.S. market realization in this manner. I mean...
Sure, sir. No issues. What would be the domestic realization, if I can [indiscernible]. Okay. And what would be the domestic realization for the [indiscernible]?
I think we are happy to talk about an average realization on an overall basis. But I think it would be not appropriate to get into micro details of domestic separately and exports separately. So on an average basis, if you look at this year gone by, about approximately [ 74,000 to 75,000 ] is our average realization for this year's business that has been concluded. Beyond that, I don't think it will be appropriate for us to detail out on the call.
Sure, sir. And sir, my second question is regarding the 500 acres of land you are purchasing in Odisha. I know you don't have enough details on the plant-wise details, but why did you choose Odisha as the location? Are we getting any specific advantage over there?
Can you come again, please.
Why Odisha?
Is your question, why Odisha?
Yes. Yes.
Port is 167 kilometers away. The major raw materials are within a few hundred kilometers. And it gives us a lot of confidence to go and work in Odisha with the way we see its development in the last many years. So there are many reasons -- these are some of the reasons which were at the forefront.
And sir, for this capacity which is coming there in Odisha, are you targeting for the export market? Or is it for the domestic market specifically? Any plan for...
The location is such that the domestic as well as export markets will be accessible from this location.
Okay. So you will be targeting both the geographic segments? Fine. And my last question is regarding the [indiscernible] purchase. I just want to know the strategy behind it, like what percentage are we hedging? What sort of inventory levels we are keeping for the [indiscernible]? Can you give some understanding over this?
So if I understood correctly, first of all, you have asked about inventory levels? And second is about buying/booking strategy, right? Is that the two parts of the question?
Yes, sir.
As far as inventory levels are concerned, we ideally have to be in the zone of 3 to 4 months inventory, because this is entirely import based, and most of our coals are imported from Australia. So that is where the inventory levels are supposed to be, number one.
On the second part of the question, so basically, keeping in mind that the plant needs certain coals at certain time periods, based on inventory levels, we try not to cut it too close, keeping in mind the shipping schedules, and we definitely look for the right windows to conclude our businesses for the coal buying. Keeping in mind that the coal market has been seeing a good amount of fluctuation in terms of prices in the last couple of months, we would like to believe that our calls have kind of gone right for us in the last few times. And as a result, we are in a decent space as far as our costs are concerned, because coal is the kind of the largest contributor in the raw material cost.
Okay, sir. But by and large, you will be having 3 to 4 months of inventories, right?
Yes.
The next question is from the line of Miraj Shah from Arihant Capital.
Congratulations on a good set of results. I have [Technical Difficulty]. First is that the 500 acres that you've decided to purchase in Odisha. [Foreign Language]. [Technical Difficulty].
Sir, there is so much echo. We are not being able to grasp the question. Can you come again minus the echo?
Is it better now, sir?
So many people are talking together. Multiple voices are coming.
[Technical Difficulty] I'll just get back in queue.
The next question is from the line of Pramod Jain from Inter Globe Finance.
Yes. I wanted to understand the EBITDA per tonne for this quarter, and what is the estimate that we can take for EBITDA margins for the next year?
So EBITDA per tonne is in the range of between INR 15,000 to INR 16,000 per tonne. And I think as we have already indicated, we expect to maintain the similar range going forward. That is where the entire focus lies as of now.
And any specific reason why on quarter-on-quarter basis the EBITDA is down, apart from the OpEx cost of INR 50 crores?
I'm sure you're referring to Q3 of this year versus Q4 of this year?
Yes, yes.
Quarter-on-quarter.
So I think 2 broad reasons if we have to put across. First of all, there is the majority part of the Khardah shutdown related expenditure that has got debited in Q4 to the tune of approximately INR 60 crores to INR 62 crores. And the second reason would be that if we look at the coal and iron ore, which are the 2 major raw materials for us, in Q4, we have seen about 8% to 10% increase in the cost of the raw materials booked to production. So these are the 2 factors which sum up the answer to your question.
[Foreign Language].
Just to add what Mr. Uddhav Kejriwal explained to you, as mentioned in the result also and the outcome also, the company has incurred around INR 60 crores for repairs and maintenance of its Kolkata based Khardah unit plant. And the plant was shut down for 53 days during this financial year. And in this quarter, the plant was shut down for 15 days. This is the main reason of reduction of EBITDA during this quarter.
The next question is from the line of Miraj Shah from Arihant Capital.
Hope this is better now, sir?
Yes.
Sir, just 3 clarifications. Firstly, regarding the 500 acres land that you are going to procure in Odisha, you mentioned that it will be through internal accruals only. So how much roughly are we going to spend for acquiring this land?
The final negotiation is still going on with the vendor. I think within 10 or 15 days, we will be able to click the deal.
Okay. So final amount we'll come to know in 15 days? But sir, a rough estimate, would you be able to provide?
Not advisable, as there was a restriction from the vendor.
Okay. Understood. Sir, second is that on the consolidated numbers, I think you clarified about this in one of the questions, but I wasn't able to understand this. Just one tax item pertaining to earlier years. Can you just explain what is that regarding the INR 36.5 crores?
That's INR 34-something crores.
There was a reversal of tax provision of earlier years. There was a provision we were carrying on. After the High Court order, there was no need of tax provision and we had to reverse it.
Understood. Okay. This is according to the High Court order. Okay. And sir, lastly, on the Jal Jeevan Mission side, government, when they came out with this mission, they had set out an amount, roughly INR 3.6 lakh crores, that they wanted to spend. Till date how much has been completely spent in that? So just to understand how much more is going to be allocated in the budget?
About INR 3.1 lakh crores.
INR 3.1 lakh is done? So in the current budget, we cannot expect more than INR 50,000 crores? Or would that amount also be revisable?
No, we are expecting more than INR 50,000 crores in the current budget. And we also expect this mission to move further from here.
Understood. Okay. Okay, so anticipating more than INR 50,000 crores. This figure to be extended, okay. That's it from my side.
The next question is from the line of [ Subhash ] from Value Investments.
So in Q2 earnings call, you mentioned that you would be net long-term debt free by FY '25 end. So is this plan still intact considering the expansions in Kalahasti and land acquisitions in Odisha?
As explained to the earlier callers, this money is lying with the company for acquisition of land and expansion of Kalahasti. So there will not be an increase in the debt for these 2 [indiscernible].
Okay. So you would be long-term debt-free by FY '25 end?
Come again?
He's saying that you'll be long-term debt-free by '25 year end.
Yes, long-term debt free in the year '25, but for doing the Odisha unit, we have to borrow something, but that will be decided later, not now.
Okay, sure. And also, you mentioned that the order book visibility is for up to 6 months, a few minutes ago. But in the presentation, I see the visibility is up until 10 months. So which is the correct data?
Yes, it is around 9 to 10 months.
9 to 10 months. Okay, sir. And the value would be around INR 5,000 to INR 6,000 crores?
INR 4,500 crores to INR 5,000 crores.
Okay. I mean just to get an [indiscernible] -- I don't want to poke too much into the 500 acres land since you've got too many questions. I'm sorry about this. So can you give me an example, let's say that in Kalahasti you said you have 5.5 lakh tonnes per annum capacity, right? So how many acres of land do you have in Kalahasti in the existing plant?
350 acres of land approximately is the total land available to us.
Okay. And that's completely utilized in Kalahasti, 350 acres land?
No, no, no. There is some further scope.
The next question is from the line of Saket Kapoor from Kapoor Company.
[Foreign Language].
[Foreign Language].
[Foreign Language] as on 31st March '24?
Khardah capacity and Kalahasti capacity put together will be at the level we mentioned just now. That we will be at 5.5 lakh tonnes...
5.5 lakh tonnes plus 1 lakh tonnes...
No, plus 1 lakh tonnes will come in '25-'26. So '24-'25, we'll end at 5.5 lakh tonnes for Kalahasti.
Sir, I am asking, as on 31st March '24, what is the Khardah capacity and Kalahasti capacity?
Around 7.75 lakh tonnes.
7.75 lakh tonnes, okay. And we are guiding for 8.5 lakh tonnage for FY '24-'25?
Yes.
Okay. And this is post this shutdown or the repair work which we have done, for which we have incurred a cost of INR 60 crores. This will ramp up our capacity, the debottlenecking exercise, by 75,000 tonnes annually?
Yes.
Okay. Right, sir. [Foreign Language] then also there is an increase of INR 40 crores on a Q-on-Q basis on the other expenses. What explains that, sir?
[Foreign Language].
[Foreign Language] so what is that?
[Foreign Language].
Sir, I'm asking about other expenses. If you take the consol number Q-on-Q, the number stands at INR 586 crores, or precisely INR 587 crores vis-a-vis INR 486 crores. So if I net off the INR 60 crores also, then we are also left with INR 38 crores, INR 39 crores increase, whereas the tonnage has remained same. So what explains this Q-on-Q increase to the tune of INR 38 crores to INR 40 crores?
Mr. Kapoor, I was expecting this question from you. Let's just do the detailed analysis. Actually, there was a fuel surcharge imposed by government. And in Kalahasti, in quarter 4, we have provided INR 14 crore as fuel surcharge. This we have to pay, we may not have to pay also. But for the better understanding and better results and [indiscernible] to the shareholders, we have made a provision of INR 14 crores in Kalahasti in Q4 only.
Similarly, in Khardah also, we kept on providing this, and in some portion also provided in quarter 4. It's just a provision, that's why you're seeing other expenses.
[Foreign Language]?
We are hopeful that in next financial year it will be settled down by the government and by the court and either it will be reversed or we have to pay.
[Foreign Language] which asset are you attributing to this loss of INR 26 crores?
Saket Ji, we have to buy pipe molds, which are used for manufacturing of the pipes. And every year, it gets discarded. [Foreign Language], it is not that we have sold any fixed assets, it is some of the fixed assets which gets discarded at the time of the production of the pipes.
[Foreign Language].
[Foreign Language].
[Foreign Language].
[Foreign Language].
[Foreign Language]. Nityangi's voice was there in the background, but she's not part of the call. She came and she has gone.
There was some prompt, so that was the reason I asked. It is always good that the promoters participate, and we have requested and our request has been adhered and now it has been effective. So I congratulate the promoters also to take keen interest in addressing your investors.
The next question is from the line of Radha from B&K Securities.
Sir, my first question was that you mentioned that next 2 years, debt will be repaid according to the schedule. So could you quantify the schedule that is there for the next 2 years?
Next 2 years, we have to pay INR 330 crores.
So sir, you are expected to generate about -- if we take conservatively, INR 1,600 crores, INR 1,700 crores PAT. So from there, we'll be paying INR 300 crores. What would the remaining profit be used for?
That will be used for CapEx, so what we have just said you.
All right, sir. And sir, secondly, in the balance sheet, the consol balance sheet, so there is an item called other financial liabilities in the noncurrent liabilities for INR 250 crores. Could you tell me what is this regarding?
There was an arbitration case with railway by the company and the arbitration was awarded in our favor, in favor of your company. Then railway went to High Court, and High Court single bench also given the reward in our favor and instructed railway to deposit INR 252 crores with the company against the bank guarantee. So what we did, we have deposited INR 252 crores with the bank and taken a bank guarantee [indiscernible] committed to the Kolkata High Court. This is the answer of this question.
Understood. So we are still expecting a favorable outcome?
Come again, please.
Are we expecting...
We are always expecting for a favorable outcome. The Kolkata High Court single bench has given the decision in our favor. Now the railway has gone to the divisional bench and we are waiting for the hearing to happen.
[Technical Difficulty]
Okay. Sir, I have one question to ask. This is Sailesh. So unlike peers, we have a lot of [indiscernible] in the overseas market, and there are a lot of opportunities in the MENA and Africa region. But why you are not sounding very positive for the exports market? You are saying our supply will be balanced out for both domestic and exports. So what is restricting us to cater more demand in the exports market when there is a good opportunity? So we are expanding the capacity. Profitability is better in the overseas market. Then why we are not very bullish in the overseas market, sir?
I don't know what I said to make you feel that we are not bullish in the overseas market. So let me correct myself, we are bullish. And all I was trying to convey is that from period to period, we have to plan how much we should try to sell abroad and how much we should try to sell in India. That's all I was trying to say.
The next question is from the line of [ Dipesh Sancheti from Mayanka Finance ].
The question was regarding the plant shutdown which we took. As you had mentioned that it was a 15-day shutdown last quarter and the rest of the days were for this quarter, and the total cost was around INR 60 crores, INR 62 crores. Was it divided quarter-wise according to number of days or it was completely taken in Q4?
No, no. It was mainly -- there was shut down in previous quarter, quarter 3, and 15 days' shutdown in quarter 4.
Okay. And the entire cost was taken in quarter 4?
No. INR 13 crores was taken in quarter 3. Whatever bill we have received in quarter 3, we have considered in quarter 3 only. And balance material we received in the month of quarter 4 only. That's why it is booked in quarter 4.
Okay. So what do we expect from this shutdown and maintenance? I mean how much more capacity increase would have been done with this plant shutdown?
This will increase the efficiency of the plant. And since the efficiency of the plant will improve, [indiscernible] capacity also -- not capacity, basically productivity.
Okay. So directly, the effect will not be on top line, but on the bottom line. Is that what...
Both ends.
Both ends. Okay. And what is the capacity utilization in this quarter for the same plant, which went for...
Q4 you want to say?
Yes, Q4.
93%, due to 15 days shutdown.
Dipesh, do you have any further questions?
No, I think I'm getting some disturbance. I'll fall back in line.
Ladies and gentlemen, due to time constraints, that will be our last question for today. I would now like to hand the conference over to the management from Electrosteel Castings Limited for closing comments. Over to you, sir.
So I want to thank everybody for taking the time out to come and talk to us about what we are doing, how we are doing, and together how we see the future evolving out. That's it. Thank you very much.
Thank you, everybody.
Thank you.
Thank you. On behalf of Electrosteel Castings Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.