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Earnings Call Analysis
Summary
Q1-2025
In Q1 FY '25, the company saw an 8% increase in total income to INR 248.3 crores and a 15% quarterly growth. Domestic revenues grew by 14%, while export revenues fell by 6%. Despite global challenges, such as high freight costs and economic slowdowns in Europe, the company maintains strong liquidity with INR 213.4 crores in cash. The Indian market showed robust growth, aligning with the country's leading role in steel demand. The company expects to double revenues in the next five years, driven largely by tripling growth in India's market and successful capacity expansions, including new plants expected to contribute significantly by FY '26.
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Ladies and gentlemen, good day, and welcome to IFGL Refractories Limited Earnings Conference Call hosted by Monarch Networth Capital.
[Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you, and over to you, sir.
Thank you, Dan. Good evening, everyone. On behalf of Monarch Networth Capital, I welcome you all to the Q1 FY '25 Earnings Conference Call of IFGL Refractories Limited. We are pleased to have with us the management being represented by Mr. Arasu Shanmugam, Director and CEO India; and Mr. Sikander Yadav, the Chief Financial Officer.
We will have the opening remarks on the management followed by question-and-answer session. Thank you, and over to you, sir.
Yes. I'm Arasu Shanmugam. Good evening, ladies and gentlemen. Thank you for joining us on IFGL Refractories Limited Q1 FY '25 Earnings Conference Call. Along with me on the call, we have our CFO, Mr. Sikander Yadav; and SGA, our Investor Relations Advisor.
We have uploaded the results and the presentation on the stock exchanges and I hope everybody had a chance to go through the same. The global steel industry has faced a challenging environment in the recent time with performance being subdued across key markets. This can be attributed to a confluence of factors with fluctuating steel prices and widespread economic instability, playing central -- playing central role.
Inflationary pressures have surged globally, making raw material cost unpredictable and skewing margins across the industry. The supply chain has been significantly disrupted, particularly due to the ongoing Red Sea crisis, which has caused delays and increased cost for shipping and logistics. Furthermore, geographical tensions, geopolitical tensions have further exacerbated these challenges, creating an atmosphere of uncertainty that has stippled investment and growth across manufacturing industries.
For IFGL, overseas business, things have planned out on the similar lines, mainly in our Europe and Germany operations in particular, which have been impacted with economic slowdowns, adding another layer of difficulty as markets have experienced high inflation and interest rates along with increased labor and energy costs for manufacturers in the region.
However, we have taken several priority measures within our overseas subsidiaries to counteract the slowdown, particularly in Europe. As previously discussed in our earnings calls, we are implementing automation and robotics to reduce costs and enhanced operational efficiency. By leveraging technology, we are not only improving our production processes, but also positioning ourselves to be highly competitive when demand picks up.
Our commitment to innovation and efficiency will enable us to navigate these challenging times and emerge stronger, ready to seize growth prospects in future. Apart from Europe and Germany, our other overseas business operations experienced growth in this Q1 FY '25. However, we anticipate gradual improvements in the second half of current financial year FY '25. We remain confident that the strategic initiatives in place will drive growth across our global markets as conditions stabilized.
Commenting on the Indian steel industry, which demonstrated remarkable growth in both production and consumption in the post-COVID era according to the World Steel Association, India has been a leading driver of global steel demand since 2021, with projections indicating more than 8% growth in the near future. This robust demand appeared by continued expansion across all steel using sector, particularly infrastructure, bode well for our continued success in the domestic market.
Our focus on the Indian market has proven crucial to our ongoing success. This shift allowed our domestic operations to succeed with Q1 FY '25 witnessing a 14% growth in the domestic market. We have grown domestic business by 30% in the last 3 years. We remain highly optimistic about the Indian growth story, which has prompted us to explore new opportunities.
As previously guided, we have entered the Non-ferrous refractory segment, which we believe holds significant potential for our future growth. We are actively exploring to expand our offerings in cement, glass, coke and other nonferrous refractory materials. This expansion is a key part of our strategy to capitalize on emerging opportunities and strengthen our position in the market. With these strategic initiatives in place, our R&D center will play a pivotal role in driving future growth, leveraging technology, transfers from our overseas operations, particularly from Sheffield refractories, we are poised to enhance our capabilities in India.
Sheffield's advanced product and technologies will be adopted and integrated into our India operations, following -- follow benchmarking at our research center. One of key developments will be the initiation of refractory recycling, which will significantly reduce input costs and contribute positively to our bottom line. This focus on innovation and cost efficiency is expected to deliver substantial benefits as we move forward, reinforcing our commitment to sustainable growth and profitability.
We are confident that with our major capacity is now in place and increasing utilization rate, market is poised to outperform. This strategic positioning will enable us to capitalize on the growing demand and drive substantial growth moving forward.
Now let me give some insights what we have done, the CapEx and the quarter gone by. We have successfully completed our CapEx of around INR 175 crores, which was announced for last -- for all 3 manufacturing units in India. We recently inaugurated state-of-the-art castings plus granules production unit at Visakhapatnam with an annual capacity of 18,000 metric tonnes. This facility, part of our Phase 3 expansion feature cutting-edge technology, including fully automating batching and spraying -- spray drying. This investment aligns with our "Make in India" commitment and supports enhanced refractory manufacturing through research and development.
We also launched the new Magnesia Carbon production line, part of our Phase 3 expansion. The facility with an initial capacity of 9,000 metric tonnes annual will enhance performance, longevity and reliability in high temperature applications. This will allow us to generate a revenue of INR 100 crores, plant capacity will be enhanced to 24,000 tonnes per annum in a year time for the capital outlay of around INR 3 crores.
Our Kalunga Unit in Odisha now houses a new Tar Impregnation Plant. So this addition will bolster our production capability enables us to meet industry demand for improved performance of our light gate place, which is enhanced capacities and new product capabilities, we expect to improve the scale of the business, which will lead to scale benefits and operating leverage paying out in the long term for the company. Now I hand over to our CFO, Mr. Sikander Yadav to take you through the financials.
Good evening, everyone, and thank you, Arasu for giving me this opportunity to brief the audience on the financial performance of the company. So starting with the standalone financials.
Total income for quarter 1 FY '25 stood at INR 248.3 crores, up by 8% on a year-on-year basis and up by 15% on Q-on-Q basis. EBITDA for quarter 1 FY '25 stood at INR 44.4 crores, down by 4% on a year-on-year basis and up by 18% on Q-on-Q basis. EBITDA margins for Q1 stood at 17.9%. PAT for the quarter was at INR 22 crore, down by 2% on year-on-year basis and up by 41% on a quarter-on-quarter basis.
Domestic business stood at INR 161.4 crores with a growth of 14% year-on-year basis. Export business stood at INR 80.2 crores, saw a decline of 6% on year-on-year basis.
Moving on to the consolidated financial highlights. Our total return decreased by 1% year-on-year basis to INR 421 crores for the quarter 1. Sluggish demand in the overseas business due to slowdowns in Europe and other key markets. EBITDA for the quarter stood at INR 53 crores, down by 11% year-on-year basis. This is mainly due to higher employee cost due to restructuring of team and high freight cost because of Red Sea issues, which Arasu has already highlighted.
EBITDA margin for quarter 1 FY '25 stood at 12.6%. PAT for the quarter was at INR 24.7 crores, down by 17% year-on-year basis. With respect to liquidity conditions, we remain net debt-free with a strong balance sheet. Cash and cash equivalents stood at INR 213.4 crores on consol basis as on 30th June 2024.
With this, I can now leave the floor open for Q&A. Thank you.
[Operator Instructions]
The first question is from the line of Harssh K Shah from Dalal & Broacha Stock Broking.
A couple of questions from my side. So firstly, in the within the standalone operations, we now see that the India business contributes somewhere around 67-odd percent of our revenue. So what's the target in terms of, say, in the next 3 to 5 years, where do you want to take this percentage to?
So you're talking about India percentage?
Yes. Yes.
So, since we are around 60% currently, we have a target of taking it to 70%, 75%.
In what period?
So maybe in the next 3 to 5 years?
Okay. Got it. And secondly, you did mention that the incremental CapEx for the Magnesia bricks will be some where around INR 3-odd crores. So would that be incurred in FY '25 itself? And if yet, then what would be the potential revenue post this incremental CapEx from the Magnesia bricks plant?
Magnesia bricks plant, right now, we are starting with actually 9,000, but we're going to put up one temporary film, which will take -- which will -- the capacity will be taken to 24,000 tonne a year means we will be producing 2,000 tonnes. That will happen. The plant will start producing from FY '26 Q2.
FY '26 Q2, the incremental capacity?
Yes, incremental capacity will be available in the mid of FY '26 because we are already in '25. So roughly 1 year from now, the 24,000 tonne capacity will come.
Got it. And what was the CapEx that we spent on the casting flux plant, if you could quantify that would be helpful?
What is that?
The CapEx that we incurred on the casting flux plant?
Casting flux plant. Yes. Understood. So we will come back with numbers. So let's get on with the other question. The exact number just will come back.
Yes, yes. Okay. So thirdly, so now that we have done almost 14% kind of growth on a year-on-year basis and in our India business. So it should be easily crossing the 17% growth on a year-on-year basis, say FY '25 to FY '24, which you kind of alluded in the last quarter con call. So would you like to kind of up your guidance in terms of the India business growth.
India business growth is definitely because now if you look at the first quarter, even the steel production of big houses have also a little bit low due to many factors. So overall, FY '25, 17% guidance of domestic market remains. We will achieve that.
So my question was that it seems that you should be easily doing more than 17%. So that was I understand.
We expect, yes, we also expect the same.
Okay. And also on the margin front, so when we look at stand-alone margins excluding the other income, it comes at somewhere around 15.6%. So now this was -- this is also above our standalone margin guidance of 15%, which we gave in the last quarter. So if you could want to maintain this guidance and if you are not upping your guidance, which would highlight the reasons for the same.
No, no. We maintain our guidance of a 15% because there are a lot of other penetration in the new market and other things will come. So right now, we are holding on to that guidance of 15% on Indian margin.
The next question is from the line of Mayank Bhandari from Asian Market Securities.
My first question is on the new facilities you have inaugurated. So these facilities will largely be used to cater to domestic demand or we will start export from India out.
There are two. Magnesia carbon bricks and the casting flux granules, both, we will be serving for both domestic and export. But predominantly, it is domestic than very few exports. But otherwise, predominantly -- the magnesia carbon predominantly will be for the domestic market. And 1 or 2 supplies to neighboring countries so that we get ourselves registered to only that the trial purpose, magnesia carbon. But on the other side, if you come to granules, so yes, it will be for both domestic as well as export.
Sir, if I were to understand the competitive scenario and just on the pricing perspective, our ore bricks cheaper than what Chinese suppliers sell in the overseas market? How will...
You see, now [ label ] management where the magnesia carbon is spot out, there it is more and more coming as a total package that the bricks and as well as total maintenance and also the downstream like [ SGR ]. In that case, what happens the capability of taking such orders are only remaining with the top 3 players and we are emerging as one of that 3, 4 players.
So though the challenges remain the same, but as a local player, possibility of capability of having packaging it with other products, ours will be not going to be affected much.
You mean to say that you price competitive in the overseas market?
In Indian market, it is going to be good and in overseas market because most of the thing which is now happening, our competitiveness is questioned because of that Red Sea and ocean freight trend. Otherwise, we are. But ocean freight anyway, it's going to be level playing field, one thing that is going to be reimbursed by the customer, so we are not going to be. So that's the competitiveness will remain.
Okay. My third question is on after so much of product -- new product development initiative and R&D initiative, have we been able to add any new customer in the last few quarters in the domestic market?
So he's asking what will be the market in the coming quarters.
Can you repeat the question.
Have we been able to add any new customer in the last few quarters?
See, we have added few mini steel plants. And particularly with our cost-effective products of this, we name it as Electrosteel casting -- electrical steel making some sector, where we are fast growing and adding new accounts. But are coming to integrated steel plants, it is more of increase in share of spend than addition of new customers.
Okay. So okay -- so you are basically trying to penetrate more into the existing customer.
Yes, because where our products are gaining popularity and we are growing faster. So there, we are adding new customers. And with the R&D and new products, we are increasing our share of spend with the existing major customers.
Okay. Sir, you were highlighted in the last conference call that where you're looking for acquisitions in India as well as in the U.S.
Go ahead and complete.
Yes. So is there any update on that?
Yes, yes. See, we are definitely actively looking forward to our inorganic growth, both in India as well as outside. And as of now, we do not have anything concrete to share with you, but the work is on progress. That much I can tell now.
[Operator Instructions]
The next question is from the line of Jigar Shah from Elevate Research.
Sir, keeping us at the export side of the business. Could you provide some clarity on how the domestic business has performed in terms of margins on a year-on-year basis? Specifically, are the margins sustaining around 12% level?
So the margins are more or less in both the segment is currently at a similar level. Why because in the export, we already had good margins but because of the uncertainty into the freight market, as you know, that because of the rate, the freight has gone up from $2,000 to $6,000 in some sectors. So which has caused a lot of dent in our profitability.
So if I talk about this quarter, margins in both the segments, export as well as domestic is more or less on the similar lines.
Got it. And my second question is that can you give us some views on demand outlook for the non-ferrous refractory industry?
No. Demand outlook like basically, as you all know, that it is derived industry. So the steel growth and cement growth are projected, though it has not happened in the same rate in the first quarter but we are expecting to pick up 8% -- 6% to 8% growth in steel. So to that extent, our refractory demand also will raise. So that is the expectation now.
Okay, sir. Got it. And lastly, sir, where do we currently stand on the CapEx plan of the INR 150 crores for the manufacturing of -- manufacturing unit in Odisha. I mean has the land been allocated or I mean, when can we expect to see the commercial production begin? Can you provide some light?
Yes, the land allotment is almost nearing because after this election results and everything is over, new government has come in place. So we are going to get that within 1 month's time also. So we are working on various possibilities. I think probably in the next call, we will have some idea about the exact project. But otherwise, it is in progress.
Next question is from the line of Amit Kumar from [indiscernible] Investments.
Just one question on the Europe side. So between the last few months, you've seen Tata Steel decide to shut down the U.K. blast furnace and even the Liberty Steel Group across a couple of locations, it's facing certain challenges, I just wanted to get a sense how much exposure do we have to these different types.
And a related product question, if you could give us some color in terms of your top 3, top 5 customers in Europe. So obviously, the market situation there still remains -- I mean, I think barring ArcelorMittal, the market situation still remains fairly fluid.
So in Eastern Europe, whatever you said is correct. And then in the other part, like in addition to ArcelorMittal, if you look at [indiscernible] they are all on there though they are not growing, but they're maintaining. Okay. And then there are some few small accounts. You are correct because Europe is totally dull. And even as you are again actually right, in England also like what some of the making -- steel making capacities are closing down. Yes, that's why even our actual performance in Q1 in export also has come down and that's mainly moving to that lull condition in Europe.
But barring that two Tata Steel in U.K. and Liberty in two locations, other people like [indiscernible] ArcelorMittal, they maintained a very slight reduction. But otherwise, the show is going on.
Just to understanding how much of exposure of the European business last year about INR 400 crores in terms of revenue. Any sort of sense in terms of how much exposure do we have to Tata Steel and Liberty Steel. I mean again, Liberty Steel some sites are doing okay. Some sites are problematic. So on the problematic side, how much of exposure do we have to...
Let me answer this question. In terms of exposure, we still have good exposure with ArcelorMittal, and we don't see any challenge in terms of any liquidity issue. In terms of other customers, yes, we are very cautious with respect to Liberty Group. And because of the last quarter, we had -- in December quarter, we had provisions and write-offs. So we are very, very cautious on that group and we have taken actions in terms of deliveries and payment terms and other things.
So this year, if I talk about -- you're talking about the exposure versus the last year. In terms of top line, I think we will be maintaining a similar kind of turnover or maybe plus 10% maximum growth this year compared to last year.
[Operator Instructions]
The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.
Yes. Congratulations for decent set of numbers in such difficult times. So my first question is, when do you expect some kind of recovery for the Overseas business, the [ intrinsic 16 ] demand recovering and thereby, we also showing some strong growth for the Europe and Americas side of the business. Do you think it's possible next year? How do you see the ground [Technical Difficulty]?
See, the data as indicated from the economic front, Germany is not doing good but some indicators is suggesting that from the quarter 2, there will be some uptick in the demand, okay? So I think then German companies will start being good. So I think calendar year, if I talk about then from quarter 4 onwards, I think the demand is expected to pick up in the European steel market.
And for America, sir?
Yes.
For America?
America will remain same almost. America, we have, I think, supplies in Mexico and all, those will remain as it is.
Okay. So nothing major expected this year, maybe America could improve next year?
Yes, possible.
Okay. Okay. Second, if you can just throw some more details on -- the reasons for the 14% growth that we've achieved, I mean, steel production grew by 4%, 5% in 1Q FY '25 year-on-year. So I mean it is because we've got more ladle furnace contracts. Is this we want few new product contracts? Or is it because the new additional customers? And if you can to help us understand.
Your voice was not clear. We were not able to hear the line -- can you repeat.
Yes. Is this better now?
Yes, it's now better.
Sir, my question was that in 1Q '25, the steel production grew -- domestic steel production grew by 4% to 5% year-on-year basis. But our domestic businesses grew well above that 14%, 15%. So what were the levers? What were the drivers for this? Was it the more ladle furnace contracts that we've signed up or with some new products that we post or was it some new customers? What's the developments have been for us working to -- working for us?
I would say that it's a combination of new customers. We have acquired one big customer in this quarter as well as, as Arasu already explained that we have been getting good growth in the ESM sector, that is mini steel plants. This is the second thing. Plus, we are getting management business lower in the big plants. So these are addition of new customers getting I think...
We are now spent with the share of existing customers as well as...
These are the 3 major factors which have given this kind of growth in this quarter.
And just to get this correct, so mini steel would now be roughly 50%, 20% of our revenues, mini steel plant -- revenues coming from mini steel plant?
So if I talk about domestic thing, then it will be almost 25% share of domestic business, okay.
25% of the domestic business. Okay. Okay. Okay. Got it. Got it. I understand. And this is commendable. The next question that I have is that sir, what are we doing on the non-ferrous side of the business? I mean, if you can name a few products that we'll be developing and trying to push on what kind of customer traction we have, where can we see this segment going in, say, 1, 2 years?
You see as far as -- we call it as Industrial segment, which comprises of cement, glass, gas indication and some of the non-ferrous metal. Predominantly, it is led by cements now. At the moment, we have already got kind of India's #1 and #2 cement producers have already given some trial orders and we have already supplied.
And to the extent I can say like around alumina bricks, which is -- which we are supplying to the tune of INR 8 crores, the first time we have taken that. And also some castables monolithic refractories. So alumina family of product we are getting into this Industrial segment. And so we are already doing some kind of marketing partnership, sales partnership, people established vendors for doing basic.
So these all products we are. I mean, we are already selling. We have got kind of we were instrumental in getting orders of close to INR 60 crores for the cement bricks, where it is not on our top line, but we are associating ourselves, which becomes an enabler for pushing other products of alumina in the same customer.
Got it, sir. Got it. So this is very encouraging to hear, sir. And lastly, if you could give me the revenue from Sheffield. Its possible, I mean, are we at the same number when we acquired it, roughly, say, INR 45 crores, INR 50 crores of run rate quarterly at Sheffield.
So Sheffield, yes INR 45 crores to INR 50 crores roughly on a quarterly basis.
Got it, sir. Got it. I think this is very encouraging the new efforts and new initiatives that you're taking and all the best sir.
[Operator Instructions]
The next question is from the line of Atul from Progwell Securities.
I just had two questions. First one is, what will be the peak revenue from the current CapEx that we have done [indiscernible] CapEx.
Peak revenue, we have already indicated that once when you reach 100% [ EU ] capacity utilization of flux plant, that's going to be around INR 80 crores. And magnesia carbon with some debottlenecking and the other thing once when reach, it will be INR 100 crores. So it could be totally both the new lines will add INR 120 crores when we reach -- INR 180 crores when we reach full capacity.
Okay. Okay. Got it. And the second question is what will be on long-term guidance for revenue and margins?
We could not get you.
Sir, what will be your long-term guidance for revenue and margins in the long term, I'm saying.
So we think we have already said that because [indiscernible] 5 years from now, we are doubling. We are doubling top line for sure.
The next question is from the line of Raj Mehta from Wisdom Advisors.
Sir, in your opening remarks, you mentioned that our exports were impacted because of the Red Sea crisis. So going forward, how do you see demand coming up from the exports front?
No, coming forward, we do not see anything, it's close to 4%, 3%, that kind of a growth, maintaining that because mainly by converting it to the areas they are slightly growing like Turkey and some market in UAE, all those places. But that will be only compensating our less revenues from Europe and others where it is not growing.
So we are -- the export will continuously focus but we'll see that at least we grow by 4% to 5% every year on our export sales. Why did we say that it has been impacted because of the Red Sea is because of the unprecedented drives in the freight rate, we had to both inbound and outbound. So it has impacted the turnover and all those things because customer delayed this and that. So we can see the progress in the next quarter. The growth wise, what Arasu has said, that is there. But whatever is in the basket will be delivered when the situation improves going forward.
Got it, sir. And sir, from the previous participants, you mentioned that you are targeting to double your revenue. So what are the year growth drivers you are expecting from which we can achieve the target?
Yes. So what I will tell you because we mentioned already about our focus -- greater focus in our Indian market. There we are seeing almost a possibility of tripling it in 5 years. So that is how overall for the company, it will be double. But in Indian market, we will grow more than double. So that is how overall we are growing. On a consolidated basis, double but standalone basis, it will be much more than double. So that's how we have done.
So basically, what is -- we are targeting is that if you see the Indian steel policy. As per that, we are already at 160 million tonnes in a year. So that is growing to 220 million tonnes or 250 million tonnes in the years to come. And definitely, that growth in the steel sector would give growth to the company.
Got it, sir. And sir, one last question from my side on the subsidiaries part. So can you share the revenue numbers for subsidiaries and throw some colors on how they are performing and what is the demand scenario?
I think we have already given in the presentation. No.
Okay sir, I will just cross check.
Just cross check. And if it is required, then you can connect me separately on to it, okay?
[Operator Instructions]
The next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, about the product profile part currently with the CapEx at Vizag. Do we have this comparison to our peers, the entire product portfolio, are we catering to all categories?
Yes. See, once when we come out with -- other than 2 major bricks, which the major players like are the top 2 major players in India, there, which we do not have will be dolomite bricks and silica bricks. So other than these 2 big items, where we do not have any product, rest all other we have in our product range. So the whole range we are also one of the full rich player barring these 2 big players.
Okay. And what is the market size of these 2 types of bricks out of the total portfolio, the dolomite and the silica bricks?
Dolomite in India and the silica bricks put together around -- it will be around, you can say, around 4,000...
In revenue terms, also, sir, you can tell.
It's close to around -- it's a market of around INR 470 crores to INR 500 crores, overall market.
Okay. Overall market. And we have our R&D center now up and running, we have done a lot of CapEx, I think, so closer to INR 150 crores, INR 175 crores. So are we in the process of including these 2 also in the product profile going ahead?
No. No, because our R&D is because we have to do a lot of work in stepping up our stature in our existing products, plus -- then as I mentioned already, we are entering into industrial non-ferrous sector with alumina and castable in that area and also absorbing our Sheffield technology into India for short creating and other things. So we will be concentrating only on that.
These two bricks, what I've mentioned is not going to be in our radar, at least for time to come for 3 to 5 years. We don't even think because we need to stabilize and grow the existing products.
Okay. And coming to the R&D part once again, sir, the investment that we have made for the R&D center, how was be reaping the benefits of the same in terms of efficiency? And now you just mentioned about Sheffield also technology being imbibed into -- from the R&D from India. If you could just explain and what is the thought process for the current year, what kind of efficiencies are we looking from reaping the benefits from the R&D investment.
So R&D equipment, for example, I have explained earlier also most of our strength is the capability of taking up total management, where the performance of our products directly impacts on our bottom line. And particularly R&D, for example, the new facility for Tar Impregnation Plant, which we brought up in our Rourkela is enhancing -- it's going to enhance already initial trials have given very encouraging results of enhancing our performance. That will add like the number of heat increase and other things.
And also, we are benchmarking -- through R&D, we are also benchmarking about our product performance [indiscernible]. So -- and then particularly bringing technology and making it work with the local raw materials. These are the great work in this area, our R&D is going to concentrate, and we are seeing encouraging results, particularly on performance improvement through our Tar Impregnation and R&D involvement.
So in absolute money terms or can you give some bit of the savings -- annual savings that we will be securing out of this investment.
Right now, I don't have the readily available, we will work out and maybe next time we can do. And another area we say we are going to work on through R&D that recycle the material usage. So those things will bring us a cost benefit, but to put a number directly immediately, it's too early because we are working on that maybe by H1 end, we will have some kind of idea.
Okay, sir. And coming to the utilization level, when we look at our -- the major part of the contribution is from India, and you also mentioned that going ahead, that is also going to increase. So how are the other geographies going to contribute for the current year in terms of the traditions in Europe, we have already outlined. So for the Americas part -- are these numbers now sustainable? And outside India, is it Russia and the Czech Republic, the major market, if you could just quantify it for us?
No, we are seeing Russia, Ukraine also one of these areas where we are growing. In addition to that, GCC countries and Turkey, these are the area also, we are concentrating more better opportunities to compensate their business de-growth in Europe and some part of America.
But the contribution is very low, sir, only INR 4 crores revenue, Asia and that to the -- there is no contribution to the bottom line. So what kind of numbers are we pending in from Asia and outside India, when we look at the geographical mix.
You want guidance or...
Understanding, sir. We have done a revenue of INR 4 crores only. When we look at the segmental part, Asia, excluding India, and you have mentioned that we are catering to the GCC countries and other than the Russia and the Ukraine part. So what are we working with? And what's the trajectory going ahead since we posted losses also in the segmental PBT number of INR 4 lakhs.
But Asia, Vietnam, Bangladesh, all these countries are coming, not Turkey and all. So these countries will remain in that June only. And we have been trying to penetrate market into Indonesia and this Vietnam. If that works out, then this number will definitely be improved.
Okay. And for the domestic operations, what are the utilization levels currently?
Utilization level is in the range of 65% to 70%. Overall basis, I'm talking about, not product to product. Product to product, it must be a value.
Including the new facility also the ramp-up at Vizag?
Vizag has just started. So I'm not taking that into consideration, okay? For the quarter 1, Vizag contribution is almost I should say minimal. So is that Vizag to form out. I'm talking about Kandla and Kalunga. So Vizag will start contributing in this quarter.
Okay. What should be the run rate, sir, for the remaining 9 months from Vizag?
See, last year, we did around INR 80 crores at Vizag, alright INR 80 crores we did. This year, our plan is to hit to INR 180 crores or so. So at least we will be -- the run rate after this, we'll have to calculate. So total this year, we will do around INR 180 crores -- yes INR 180 crores. So INR 100 crores is addition from the last year. We will do that. Yes.
INR 100 crores from Vizag plant for the 9 months.
Sorry to interrupt Mr. Kapoor, please rejoin the queue for more questions.
Yes, sir was only answering. I was just speaking to understand. No further questions. Complete Sir, you mentioned INR 100 crores from Vizag for the coming 9 months.
Let me give you the questions. You can come back, I will give back exactly.
You please give the details.
Yes, sure, sure.
The next question is from the line of Harsh K Shah from Dalal & Broacha Stock Broking.
So firstly, on the -- in the annual report, the latest annual report, we have mentioned something as within the revenue from operations as revenue from services, which is somewhere around INR 20-odd crores. Could you help us elaborate what exactly does this include?
Come again, please?
Sir, in the annual report, the latest annual report, within the revenue from operation, you are bifurcated into revenue from care of products and revenue from sale of services. So the sale of services constitute somewhere around INR 20-odd crores. So what exactly does this include?
I'll explain to you. So when we take a total refractory management services, okay, it is a total refractory management from companies like Tata Steel, JSW, JSPL. So that total management consists of supply and apply both. So this part is the application part where labor is required to give the services. So there are two components of that order. So this is -- that is how it is bifurcated. Am I able to explain you.
Yes, yes, yes. And secondly, when will the technology transfer from Sheffield is likely to get completed because I believe when you had acquired you said somewhere around 12 to 15 odd months. So when is it likely to get completed?
By end of this calendar year. So that means trial with customers are expected to happen sometime by January, February, March '25.
Okay. Okay. And if you could help us quantify the impact of rate costs in this quarter? That was my last question.
Freight costs quantify due to [indiscernible].
So due to freight, the impact is around INR 6 crores.
Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
We would like to thank all the participants. And we hope that we have been able to answer most of the queries. We look forward to your participation in the next call. For any queries, you may contact SGA, our Investor Relations Advisors. Thank you, and good night.
Thank you. On behalf of Monarch Networth Capital, that concludes this conference. Thanks for joining us. You may now disconnect your lines.