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Ladies and gentlemen, good day, and welcome to the Q3 FY '23 Earnings Conference Call of IFGL Refractories Limited hosted by Monarch Networth Capital. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [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, Rutuja. Good afternoon to all. On behalf of Monarch Networth Capital, we welcome you all for the IFGL Refractories Q3 FY '23 earnings call. We are delighted to host the management. And from their side, we have Director and CEO, Mr. Kamal Sarda; and also along with him is SGA, the Investor Relations advisory team. So without any much time, I will hand over the call to Kamal, sir, for the opening remarks. Thank you, and over to you, Kamal.
Thank you, Sahil, and thank you, [indiscernible]. So I will -- what I'll do is -- our Managing Director, Mr. James McIntosh, could not join. He's somewhere traveling. So his phone cannot be connected. So I'm reading out what he had to say. And the rest of the questions, I will be taking up. So the speech of Mr. James McIntosh, what I'm trying to read.
Good afternoon, ladies and gentlemen. Thank you for joining us on IFGL Refractories Limited Q3 and 9 Months FY '23 Earnings Conference Call. I hope you and everyone around you is in good health. Along with me on the call, we have Mr. Kamal Sarda, Director and CEO; Mr. Amit Agarwal, CFO; and SGA, our Investor Relation advisers.
We already uploaded the result and presentation on stock exchanges, and I hope everybody had a chance to go through it. As we all know, the sluggish global economic environment continues where the inflation risk materialize along with other major headwinds, namely the Russian-Ukrainian war, China lockdown. Although the Chinese lockdown seems to have come to an end, the Russia-Ukraine war continues, the inflationary pressures ignited by the post-lockdown supply and demand imbalances.
In particular, in Europe, where dependent on Russian gas supply is high, economic activities as well as confidence are heavily affected by the energy crisis, especially throughout the winter months.
In the USA, with Feds' aggressive interest rate hikes and strong U.S. dollar are continuing to stress the capital inflows in the emerging economies, increasing the financial strength of the embedded countries and consumers. Rising interest rates and high inflation will affect investment in consumer spending. This, as we predicted last quarter and affected the output of steel and steel intensive sectors such as construction, machinery and consumer wearables globally.
A shining light in the global steel industry in India. Which as you all know is the second large steel producing nations. But more importantly, for our company is fastest growing. Last year, the steel industry in India grew about 6% at a time when most of the steel countries were slowing down. And this year, even more impressively, will grow by 7%, which among the top 10 steel-producing countries, it will be -- India will be the only major country to record growth.
Obviously, our focus on Indian markets and investing in India is in the right strategy, as we are confident of our country continued strengthening. Update on our major projects with the company, our new R&D and technology center in Odisha is on track to be operational in the first half of 2023, '24. This technology center will enable us to develop better products and to increase our understanding of material used in each application.
We had no goal of [indiscernible] the company as worldwide supplier of specialized refractories and provider of services to the producers of iron and steel. Phase 2 of our newest plants in Visakhapatnam will now complete, and we have started receiving orders from new products for our company allowing us to enter new markets in the [indiscernible], large precast shapes combined with our computational fluid dynamics capabilities.
As we have said in the past, many of our new products will be new to India and will improve our customer processes in our [indiscernible] contract. Projects at our overseas subsidiaries are also going well. In the U.S., we have completed the relocation and modernization of our [ clay ] graphite manufacturing plant for the foundry products in Michigan and have completed the initial customer trial phase successfully, and we'll now look to build the business.
In the U.K., a largely automated manufacturing system for our activated gel casting project is almost ready to go with the robots already installed and we programmed allowing us to manufacture larger, more complex and high-value products than before.
In Germany, our new plant expansion has commenced with the foundation of the new hall being laid and as project completion date within a new year. Our new modernized website is nearing completion, to go along with our recently introduced corporate identity and is aimed at improving our interface with customers, prospective employees, suppliers and all other stakeholders. With this, let me now hand over the call to Mr. Kamal Sarda. So I'm already there.
So I'll take over on the financials. Let me just give you a short brief on the CapEx first. As mentioned earlier, the expected project cost was INR 166 crores. However, it has been amended to -- sorry, INR 177 crores majorly to new outlay of building, a new lab in Kandla and changes in structural plan in the [indiscernible].
We have tied up a term loan of INR [ 150 ] crores for this and rest will be financed by internal approvals. So far, we have spent and/or committed over [ 40% ] of this and are very hopeful that we'll be able to complete all the planned projects within FY '24.
With this enhanced capacity and new product capabilities, we expect to [indiscernible] the scale of our business, which will lead to our scale benefits and operating leverage playing out in the long term of the company. We foresee a huge demand of refractory due to the very big allocation of CapEx in Infra by the Indian government to the extent of INR 10 lakh crores in the budget 2023, which will boost demand for steel and consequently, of refractories.
And these efforts are going to be higher and higher by the government of India in the years to come. Let me give you a brief on financial highlights for Q3 FY '23. On standalone, the total income marginally decreased by 6% year-on-year to INR 184 crores.
EBITDA stood at INR 29.6 crores, down by 16%. EBITDA margins were about 16.1% for the quarter. PAT was down by 30% year-on-year to about INR 12.3 crores. [indiscernible] concern, total consolidated income in quarter 3 marginally increased at about INR 318 crores. EBITDA for quarter 3 was down by 7% to INR 36.7 crores. Consolidated EBITDA margins of 11.5%. PAT was down by 16% to INR 15.8 crores.
As regards the [indiscernible], we remain to be net debt free with a strong balance sheet. Cash and cash equivalents stood at about INR 130 crores as on 31st December 2022. I would be happy to take any questions, queries on the business. I now hand over to the operator.
We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Prachi Sharma from Ace Capital.
I just have 2 questions on my end. Firstly, post our capital expansion, what will be the capacity to all the 3 plants? Secondly, what will be the potential revenue from the planned CapEx?
Your voice was cracking, but I have understood what you want to say. The product capacities are in way with the expansion are in various products, the product capacity will be difficult in such a short time. We normally take our sales CapEx ratio of about 3 to 3.5x.
So whatever we are CapEx, we can easily say 3x our revenue potential.
Does that answer your question?
Yes, yes.
The next question is from the line of Sanjay Nandi from Ratnabali Investment Private Limited.
A couple of questions from my side. Sir, what has been the volume growth in this particular quarter?
See, this quarter has seen a slight flattish on volumes. In fact, maybe a slightly drop. I don't have those results. But there has been a slight drop in volume that I can only say that our Kandla plant was not operating to the 100% level. it's Operating at about 65%, 70% level. There has been a volume growth primarily on account of the demand slowdowns in Europe, our business in CIS countries, business in other West Asian countries together.
Okay. Sir, on Indian operations, you could find a drop of roughly INR 20-odd crores, INR 20 crores to INR 30-odd crores in the top line, like India last -- from last quarter of September quarter. So is it because of the volume drop? Or is it because of the drop in realization as well?
Yes. So on the standalone, you are talking?
Yes, yes, exactly. So from INR 211-odd crores in September '20, do the sales dropped to INR 182-odd crores in December '22 quarters? Like is it because of drop or...
Sorry.
Is it because of volume drop? Because if we go by the EBIT margin. So there, the margins remain flat, like it's on a higher side only compared to last quarter. So what has led to the reason of that, sir?
The primarily, as I said, a bit of a margin drop also. And it could be a product mix of -- basket of domestic export sales could be a reason for this overall realization part. But as I mentioned, the volume growth drop has been due to our poor sales, I would say rather low sales in the country. Lower sales in the Europe market and all those put together. The export market has taken a bigger hit.
In Europe market, we could see like some spike in the sales. Like last quarter, we registered sales of INR 56-odd crores. Whereas in this quarter, we registered sales of INR 61-odd crores. But the EBIT margin has been like better, like we used to maintain a 4% kind of EBIT margin, which is like minus 2% in this quarter.
I don't know what figures are you talking of, Mr. Nandi.
I'm talking about that, sir, the country-wise breakup, which you gave the EBIT margin and the sales on a consol basis?
Okay.
On the country-wise sales, you have given, sir, INR 56-odd crores of sales in the month of -- in the September quarter, whereas our [indiscernible].
Our sale from individual operations. So that means that is a sale which our U.K. operation has done and the German operation had done in those countries. Those may have marginally improved there for some reason or the other. That our sales from India to those countries have been lower.
Okay. And why the EBIT margin has dropped significantly, sir? Is it because of the cost pressure or certain change in the sales mix?
[indiscernible] as compared to which period you're talking about.
Compared to last like we used to maintain an EBIT margin in the Europe of roughly 4-odd percent. Whereas in this quarter, we have dragged a loss of 2-odd percent in Europe continues.
Primary reason is our general operation. It's normally the quarter 3 of -- for financial year and quarter 4 of their calendar year is always lower in chains. German operation has always seen a historical December month. It's 15 days sales and [indiscernible] usually. So December 1 in quarter 3 will always remain lower in Europe.
Got it. Got it, sir. Got it. And in India also, we could find some spike in the EBIT margin. Is it because of the drop in certain costs or in raw material costs or something like that, sir? Like in last quarter, we have having a 9% kind of margin, whereas this time it's 11%.
Yes. So primarily, there have been some softening of costs also. And then overall, raw material costs are also getting softened. And Asian freight, which is one of the key significant [indiscernible] sector, which is also getting softer a little bit. Not significant, but marginally, yes. And of course, the product mix also can make a big difference.
Mr. Nandi, may we request you to please rejoin the queue. We have participants waiting for their turn. Our next question is from the line of Anusha from Sina Securities.
Sir, can you tell us the export and domestic revenue? Can you give us a breakup for Q3 and 9 months FY '22?
I don't have readily. I think maybe we can -- I'll request Watson to coordinate with you.
Can you hear me?
Yes, yes, yes.
Yes. Okay. Fine, sir. Can you please share some insight on the refractory demand from the Indian markets? How have they been in the last few years?
The market for Indian steel, I think I read my speech. Part of it is written by Mr. James McIntosh. So in Indian market -- Indian market is growing 6% to 7% CAGR now. Indian refractory industry looks to be very excited, very good. And also now with this in the budget, the reallocation on the per sector spending. That will also help the core sector like steel and of course, in the turn our industry will be in benefit. So we feel that Indian market looks to be very, very good.
[Operator Instructions]
The next question is from the line of Riya Varma from Mina Securities.
Am I audible?
Yes. Can you speak a bit loud, please?
Yes, sure. So I just had one question. Do you foresee further EBITDA margin compression in the view of rising inflation going ahead?
As of now, I think -- our feeling is that Europe's major problems are over because they have now been able to wither away the peak of winter. The situation is expected to improve from here.
The next question is from the line of Keshav Garg from Counter Cyclical PMS.
Sir, I wanted to understand that what kind of price cuts have you taken on your products on a blended average basis?
There has been no significant price cuts in the last quarter. Okay. So we have been able to maintain our prices because you see the prices -- costs are now going down. So possibly in the coming quarters, maybe we'll be able to pass on a bit. But still, we have all inventories and all things. So maybe -- in this quarter, there has been no price increase.
Sir, So in that case, how come our operating margins have not improved since quarter-on-quarter all other input prices must have gone down. Since steel is -- itself is down and freight rates, et cetera, everything is down quarter-on-quarter and Y-on-Y. So but still, there is no improvement in the operating margin?
If you go through the -- our quarterly results on a stand-alone basis, if you look at the last quarter, previous quarter of September and we had an EBITDA margin is about 14% and now it is about 16%. So there has been an improvement in this quarter.
Right, right. Sir, also on a consolidated basis. If you see the Americas business has done really well for the -- this quarter, as well as for the 9-month period, so is this a sustainable number that we are looking at around INR [ 2.7 ] crore EBITDA?
Yes, yes. Yes.
And sir, the European business -- in your judgment, when is it expected to break even?
It is already in a positive side. There is no negative as such.
No, if you see the consolidated segment result, there is a loss of INR 1 crore in this quarter.
Possibly for one particular quarter. As I mentioned in my speech, you have to go through the entire speech. I mentioned in my previous answer that December quarter for ceramics is always a lower size.
Right. So basically, it's a one-off. And going forward, we are expecting this division to break even?
Yes, please. Not breakeven, we will be at profit.
Right. So if we see another -- when do you foresee us coming back to around 15% operating margin on a consolidated basis?
I've never mentioned that it will be 15%. I said it will be above 13% into the [indiscernible].
Okay. So 13% consolidated operating margins. And when do you expect that?
Let's see. I'll not be able to give you a guidance on that. But that's our effort.
[Operator Instructions]
The next question is from the line of [ Nehal Chin ]from SK Securities.
I just wanted to know what is the working capital cycle for our company versus the industry average?
I think we are more or less comparable to the industry average. I think not all -- our net working capital would be about 120 days or so. We should be somewhere around -- I don't have the steady figure in front of me. But it should be somewhere around that.
The next question is from the line of Kanika Kothari from Kothari Securities.
Can you give an outlook on each of our international subsidiaries as to how is the demand shaping up there?
Primarily, I will keep the industry. Industry what we serve is steel industry. So the industry is same. As I mentioned, Europe has been affected by overall poor demand within -- their internal consumption has been lower because of high inflation and also they're trying to conserve the gas supplies. It looks like they are flattening in their -- the downside with their pace. So we hope there will be some improvement in the near future in maybe next 1 or 2 quarters.
India, as I said, is always good. America is getting better and better now in our results to get signed at American results in the quarter 3 has been very good. Quarter 4 also, we expect that operations will do well. The industry scenario in America is getting better. Europe may take 1 or 2 quarters more till they get to the evolution. These I say 2 our major operating areas.
Okay. And there's one more thing that I wanted to ask. So despite a sharp fall in other expenses in Q3 FY '22, our EBITDA margins have seen more than 150 bps dip. So can you explain the reason?
So one of the -- so my EBITDA margins on a standalone basis, as we look at -- on a standalone basis, has improved to 14% to 16% compared to the previous quarter.
Okay. The primary reason for lower other expenses is on account of ocean freight compared to last quarter, September quarter, it is coming down. So that is one of the major reasons of lower cost.
[Operator Instructions] The next question is from the line of Karan Mehra from Mehta Investments.
I just had 2 questions. After the recent rate hike [indiscernible], we have seen devaluation of rupee against the U.S. dollar. So, will this have any impact on the company's exports? And in case it has, can you please elaborate impact?
So for our export any depreciating is always better. Our [indiscernible] are higher to be always like. But having said that, we also have a lot of imports in dollars. So depreciating [indiscernible] it affects our input costs in terms of dollars, like we buy a lot of raw materials in dollars. The ocean freights are paid in dollars. We have some other expenses which are paid in dollars. So depreciating rupee has its benefit in terms of exports and its negative impact in terms of input costs. So there is a balancing. But yes, depreciating rupee has always been historically for IFGL has always help. Since we are a net exporter, net foreign exchange [indiscernible].
Okay. So sir, is there any possibility that we can see promoters bank growth at 15% or 15.5% rate going ahead?
Sorry. Can you come again, please?
Is there any possibility of promoter bank growth at least 15% or 15.5%?
That's -- for this question, I cannot answer [indiscernible] promoter has to answer. But yes, there are promoters, both of them say exactly has been classified and promoters. So any kind of transfer is possible. But I am not the right person to answer in the public [indiscernible].
The next question is from the line of Sahil Sanghvi from Monarch Network.
Yes, I see. So my first question is regarding the utilization levels. So in Vizag, the Phase I that we've commissioned. What will be the utilization level right now?
Sir, it is just commissioned [indiscernible] this month only.
So the Phase I, I'm asking.
Okay. Phase I, we have gone to about 25% level.
Okay. Okay. And the average utilization across the plants, I mean, what's the value?
We will target utilizing about 40% to 50% in the next financial year.
Okay. Okay. Okay. Secondly, the CapEx spend this year, how much have you spent and how much do you expect to do this year -- next year, please?
As I mentioned in my speech, that we are talking of INR 177 crores. And after that, almost 50% has already been spent or committed, and the rest of it will get completed by FY '24. By March '24, I think we'll be able to spend most of our complete -- most of our projects, maybe 1 or 2 projects may get delayed. But the major part of it may be around 85%, 90% could get fully -- will get completed in March '24.
Okay. Okay. Got it, sir. And what will be the net debt or net cash as of December, sir?
Net debt 32%. So that net cash would be about INR 117 crores, INR 117-odd crores.
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, I could not hear out you clearly in the opening remarks. So pardon if I go for a repetition. But what I can make sense of your comments are that for the Indian operations, we are having a better environment compared to other geographies and going ahead on the expanded capacity. Next year, we are expecting 40% utilization levels.
So what Sahil was asking me about the Phase 1 expansion of our Vizag plant. It is not part of the CapEx plan, which we are talking about right now. That has already been completed.
The cost of that CapEx was around INR 32-odd crores. So that got commissioned by September '21. Because we had a 25% utilization levels we have gone up to. And this is what I said, in FY '24, we expect that, that should go to 40% to 50% utilization rate.
So if we take this tonnage wise understanding, not to go by the utilization levels. If we take the 9 months tonnage for Indian operations currently, and taking into account the expanded capacity at Vizag, what kind of tonnage can we look for the [indiscernible] ahead?
Mr. Kapoor, honestly, a lot of our products we sell it by pieces. So we don't say that all our products, we cannot really quantify into 1 particular unit. There are a lot of products we sell by features. We don't have -- honestly, that's the reason why it's very difficult to give a particular quantitative figure on our entire Indian operations or even global operations. It is very difficult. We sell them by peak. We don't weigh them.
All right, sir. So put it another way, what kind of volume growth can we expect since the Indian operations, we are getting a better understanding and the market is much better for because of the growth in the Indian steel make an outlook.
So going ahead, what kind of volume growth can be expressed from the Indian operation?
I can only say that we will be -- we will beat rate growth rate of either competition or the user industry. that's our target to go higher growth than those benchmark figures.
And what is that trajectory, sir? .
Sorry.
What is that trajectory number, which will be?
Steel growth numbers, I cannot tell you. Steel growth is expected about 6% to 7%. And expecting the refractory industry will also grow to about 3% to 7% to 10%. And our target is to grow higher than that.
Sir, on the R&D lab, the CapEx, which you were [indiscernible]. If you could give us some understanding where are we in terms of that? And I think the last -- before caller also, you did spoke that what kind of goals we will be achieving it over a longer term, if you could throw some light on the same, the amount of CapEx we are doing for the R&D, R&D lab result in Odisha.
So the CapEx is about INR 20 crores, and we are expecting it to be completed in the first half of FY '24. The objective is to enhance our capabilities and product performances, introduce some new products, which are [indiscernible] to, we cannot do a development. Because our poor availability of those resources. So that's our primary objective to improve our product capacities and product capabilities.
The performance capability, use alternate raw material use, some material which we have not yet used. Those are the things which we'll be able to do, then give better products to the customers.
And any payback understanding there was this the amount which we are investing or how can we improve our margins on the basis of...
We have not thought of whether that is going to give a payback. What we only thought of that is going to give us a better product. [indiscernible] we have not [indiscernible].
Sir, in terms of the differentiated margins. When we look at the refractory operation for India and when we look for the outside India, whether it's Europe or America, there is a stark difference in the margin profile. So can you please explain what's the reason why the -- why the business is...
Looking at this, Mr. Kapoor, if you look at the global company scenario also, the other large companies, the scenario is very similar. If you look at our interest rates are about 8%, 9% and global interest in you talk of interest rates in Europe is around 2%, 3%.
So their overall margin level, they will be happy at about 10%. We will not be happy at about 14%, 15% unmet. So that's the difference.
Overall, the global margins are lower. And historically, for us, some of these products are mature products. So the margins are lower. Second presently because the market is down. So the overall net margins are lower. So then, yes, globally, general scenario is if you can go and look at the other refractory industry globally and compare the margins are percentage of lower than any other Indian percentage.
And sir, if I heard you correctly, you did mention to the fact that from the current margin profile on a consolidated basis, we have our target set for a 13% blended margin on a comparative basis. Currently, we did for this quarter at around closer to 7%. So my understanding is correct there, what you said?
Current quarter, Mr. Kapoor, our EBITDA margin is around 12%. And I'm talking of 13%. So we are not very far from there.
EBITDA margin of 12% was consolidated, you are saying?
Yes, yes, yes.
Okay. Sir, if I may add one more point, but I just ask you one more point. So then when we know that the market or the foreign markets are mature and the margin profile is lower. So what are the key incentives of we continuing our first and doing business in the other geographies and not garnering further share for the domestic operation?
Can we say that let's sit down because it is a big question. why we are continuing there that that's a business area where we supply from India, we almost export 50% of our production here. So that is a big market for us.
We cannot grow those markets. Those markets have given huge benefits in the past. And those markets require a good quality refractories. So I think that's our -- we are not a part of our global company that we are an Indian counterpart of the global company we are an Indian multinational where we have [ operating ] all across the globe.
Correct, sir. But when we look at the -- yes, I'll come in the queue.
[Operator Instructions] The next question is from the line of Devendra Pandey from DP Financial Advisory Services.
So I have 2 questions, both of them are on euro. So the first one is considering the economic crisis in Europe, do we plan to rework on our export and domestic strategy?
No, no special work is to be done. Europe going to go back to normal. I think that's our feel. Maybe in 1 or 2 quarters. Domestic strategy, yes, definitely, as I mentioned earlier, the entire CapEx plan is based primarily on the Indian growth story. Indian will be higher than in Europe.
And sir, as you mentioned in your opening remarks that there has been energy prices in Europe due to heavy dependent on Russia gas supply. How the current business panning out, especially in Europe?
I think they have some amount of the crisis. There have been no major prices which we have see we may have had some emergency plans. The industries are running as normal. Of course, overall, the demand is lower, the inflation is very high. I don't think -- I think the crisis will be lower. Looks to be.
The next question is from the line of Keshav Garg from Counter Cyclical PMS.
Sir, I want to understand whether in the current quarter, fourth quarter, are we hearing demand, for price cut from our customers? And if so, then what in your judgement is the average price for that we will be forced to think?
We have not had any discussion on price cuts so far. So this is something which I don't know, honestly.
We have not had any price cuts in quarter 3, as I mentioned earlier.
Yes. Yes, yes. That I understood. But I'm saying should we expect price cuts going forward?
I don't know. We'll have to wait and see.
Okay. No. Because last quarter, you mentioned that customers are demanding price cuts.
The customers are demanding for quarter 3, as I mentioned. Quarter 2, we have not had any major price cuts. So we'll wait for quarter 4 and see what the customers want.
Right. Sir, also, since you mentioned that we should be expecting only 13% consolidated operating margin on a steady-state basis. But I was going through the earlier call. So last quarter, you mentioned that our consolidated margin should be between 14% to 17%. Quarter before the consolidated margin should be higher than 15%. So why is there such a drastic reduction in our steady-state margin expectation?
No. I think maybe I'm -- there is some kind of a misunderstanding. I'm talking of Indian operations and the global operations. So maybe there is -- Indian operations, the margin will be somewhere between 13% and 17%. Global margin need to be somewhere around 13%.
Okay. And sir, lastly, sir, if you see we are the only refractory company in India, which is trading at below net worth and our net worth is around INR 950 crores, whereas our market cap is less than INR 900 crores. So then since now we have a Japanese partner, [indiscernible] 15% stay. So it makes a lot of sense for the company to buy back its shareholding at these current depressed prices so that many purposes can be solved from that -- from the share buyback.
So kindly consider that and finally take that proposal to the promoters.
I will do that. I will pass on this message to them.
The next question is from the line of Sahil Sanghvi from Monarch Networth.
So sir, I'm asking about the trends, which is witnessing right now as compared to 3Q FY '23 levels. Are you seeing further reduction for the correction in [ RM ] cost right now as compared to 3Q levels?
It looks like the production, as of now, we'll get flattened because we agree where the costs have gone up. So I don't see a major reduction, maybe 2% to 5% could be there. But however, I think whatever reduction has happened now, I think we are looking at almost like bottomed out.
Okay, okay. And similar is the case on the freight side? Or is a bit different over there?
Freight size also. Freight size are actually steeply falling in the last 3 months. It is currently -- for I don't know what is the reason for this fall, but they suddenly falling very steep. So I think I were talking to some shipping company, they also claim that -- that like we also felt that it is bottomed out. I don't know. I'm not seeing anything going up right now, but further drop has stopped. And I don't see any drops.
Right, sir. And my second question would be, do we have any kind of exposure to Turkey or Syria?
In Syria, we have exposure.
Yes, because now the earthquake has ruined a lot of things. So is there a risk of losing volumes come there? Is it a substantial volume? What percentage of...
Turkey has always been a good market to us. Syria, to have to access it to. It is not in the area where our customers are. But in any case, any such kind of natural calamity, which calls for a huge reconstruction.
So I'm not saying that is good. But then that usual phenomenon that with any kind of such large natural calamity will talk of entire thing to be reconstructed. But since it is very new, we have to -- we have to really assess that situation. But my first impression is that [indiscernible] information in the it has not affected any of our customers.
Okay. And just, sir, how much will be as a percent of revenue, how much is the exposure to Turkey and Syria. I mean Syria is not [indiscernible] to Turkey. How much is it [indiscernible] to Turkey and Syria?
Not there. I think Turkey will be less, less than 4% or 3% or something like that.
The next question is from the line of Saket Kapoor from Kapoor & Company.
Yes. When we look at the consolidation -- consolidated numbers, the revenue increases from the standalone is to the tune of around INR 135 crores, and the employee cost change is around INR 35 crores. So just to understand the cost part of it that on a revenue increase of INR 134 crores, the employees cost goes up by INR 35 crores. So is it the lower utilization levels in the other geographies that are not commensuration with the employee cost? Or how -- what should we be the rationalized cost as a percentage of sales?
I don't know which figures, Mr. Kapoor, we are talking. I am not able to correlate that. Why don't you do -- why don't we do it [indiscernible]. Your queries we can sit down with you and [indiscernible] can [indiscernible] your queries, whatever you have. But I don't -- I'm not able to see any of your figures..
Okay, sir. But it was just a number, INR 318 crore revenue on December quarter on competitive basis, standalone is INR 181 crores. So when I just suppress the number, the revenue increase is INR 134 crores. And similarly, on the employee benefit also, I can get it offline, sir, no issue with that. So if we take...
Maybe I will get back to you on that.
Okay. Okay, sir. And sir...
I got your point now, but I will have to check. We have not checked because most of the employee costs are -- 95% are fixed in nature. Okay? They are not variable in wages. So whatever there will be a reduction in turnover, the employee costs will not reduce proportionately.
So sir, in other geographies of Europe and Americas, what has been the utilization levels? And going ahead, what is the trend indicating to you whether we can expect an improvement in the same for 2 because America -- you categorically mentioned, I think, so that we are seeing good traction.
Yes. In ceramic is operating at a good level, about 90% plus. The other geographies are Monocon U.S. and Monocon U.K. operations would be somewhere around [indiscernible]. Hofmann is at a good level, barring the December month, as I mentioned that December because the [ Christmas ] holiday their last 2 weeks offtakes are almost lower. But otherwise, Hofmann has also been operating at a very [ reasonable ] level. We are overall operating at a good level.
These are the normal cost structure. We are not going to expect any change in the same? If you are operating at the normal level, then these are the cost structure will remain the same?
The employee [indiscernible], we cannot take employee costs as a cost structure. Employees are generally a fixed type of a cost.
Right. And My understanding was there if they're operating at the optimum level the employee cost -- there is no significant increase we can expect in the revenue going there?
Yes, you're right. Right.
Okay. Sir, when you were mentioning about this export aspect, if you could explain towards the export that happens from the country. So that revenue is booked -- the export happened to the subsidiary to the foreign subsidy and then it is sold to the end client or it is directly?
Still direct. Most of our sale is direct to the customer.
Okay. So how does it impact whether we maintain our operations at Europe and Americas to the exports we are doing from Indian operations. And I just wanted to I understand what you are trying to say?
I don't get your query. Please can you repeat?
Yes, I'll repeat again. You mentioned that we have a lot of exports that happened from the Indian subsidiary. And it is important for us to maintain these unique companies of Europe and Americas since a lot of export happened from domestic. So I just wanted to understand the correlation.
[indiscernible] in those geographies.
Come again, sir?
They help in those geographies. Like In U.K., our U.K. sales team helps. In Europe, we have some sales teams which helps. In U.S., we have a [indiscernible] team which helps selling IGL products also plus our market presence is like that, that those geographies have those products, a bundle of products we can sell.
Right. And what percentage of sales from India are marked for exports?
Sorry?
What percentage of sales from the Indian operations are marked for export?
There's nothing called marking. It is -- so I'll clarify that. The products in the overseas companies are not same what we make in India except EI Ceramics. So the products are complementary to each other mostly. [indiscernible] and what we make in India or they make different products, we make different products.
No, sir, when you mentioned -- yes, yes.
Nothing familiar marking. It is the market share what we are able to take. There's no marking as such.
Okay. But sir, what is the export number then for the 9 months from Indian operations, how much has the revenue being happen as a part of export?
It Will be about 50%.
It's 50%. And sir, earlier, you mentioned that...
[indiscernible]
Why don't you ask a few questions, but still I'll answer. Why don't you talk to me separately, please.
I will do that, sir.
Or you can contact Watson in SGA, and then we will clarify all your points.
I'll come down, sir. I am from Kolkata.
So that [indiscernible].
Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone. I think it was a wonderful Q&A session. And I hope I've been able to answer most of your queries. In case there are still some points left, I would say that you may contact SGA, our investor relation advisers. And we look forward to your active participation in the next quarter. Thank you, everyone, and stay safe. Bye.
On behalf of Monarch Networth Capital, that concludes this conference. Thank you for joining us, and you may now disconnect the lines.