Mishra Dhatu Nigam Ltd
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Mishra Dhatu Nigam Ltd
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Yes. Thanks, operator, and good afternoon to all the participants who have joined in for Q2 FY '21 results conference call of MIDHANI Ltd. We have with us today from the management, Dr. Sanjay Kumar Jha, Chairman and Managing Director; and Mr. Gowri Sankararao Naramsetti, Director of Finance and Chief Financial Officer. So without further ado, I hand it over to Dr. Jha for his opening remarks. Over to you, Dr. Jha.
Good afternoon to all our esteemed investors. For [indiscernible] already you're aware, so I don't want to delve in that, but the major highlights was that in Q1, we had a problem of serious lapse from the VoP [indiscernible] was very less. We had a very big shortfall on that -- the VoP, and also, we had -- [indiscernible] had been slightly from negative side. It was not very high. It was actually around 40 -- around the tune of around INR 40 lakhs. But the Q2, because of our resilience from the company and then operationally getting it stabilized in the entire 3 months, we could be able to get VoP of almost around INR 183 crores. And that was in comparison to the INR 87.97 crores of Q1. So there was an increase of 108%. Also the EBITDA, we had an increase of around 30% over the Q1 and PBT of 27% increase and the PAT was around 20%. This is what the Q1 and Q2 comparison for this Q1 '20 and Q2 '20. So this is already reflected in our performance in terms of the supplies for the defense customers. And now we are in Q3, we are gaining similar momentum. The company is doing well, then in the sense that we are now trying to impact as you see the Q2 '20 comparing to the Q2 of '19, the reduction in the -- our sales revenues hardly by 3%. It was almost around less than when we -- 3% was the reduction from that year. And VoP was on slightly the lower side because of the comparison to that, we are not come -- touched the VoP of Q2 '19. But in the Q3, we are already going very well. And I'm sure that we'll be almost crossing the level of that also. But as and when today, if you see the type of cases coming from the COVID and where we are operating today, this area, city and the state is doing well in terms of the number of cases appearing and the cases have come down drastically. So is the case in the company also. So that way, I see that the performance wise, it should not have reflect in the -- Q3 will be good. And coming to the order book position. We have met the similar level whatever I was -- I told last time at the end of the Q1. We have in the tune of around INR 1,680-plus crores of order book value. So we have booked around INR 240 -- how much it was - around INR 243 crores of order booking was done in this quarter also. So that way order pools also is good. And we have the good visibility for the future also. And one way, we are getting a good support because of the Atmanirbhar Bharat, whatever the Government of India has taken a stand that less than INR 200 crores worth of procurement will not go on the global vendors, which has helped the Indian industry at large and MIDHANI in particular, because we are also getting lot of benefits because of this restriction and the change in the procurement policy. And as you know very well that on the defense manufacturing areas in terms of Atmanirbhar Bharat, there's a lot of impetus now on indigenization of some of the items that are being imported. So I'm just taking the reference of recently announced that was in the month of August, 111 (sic) [ 101 ] items were declared in the negative import list by Government of India by MoD. And also recently, our Honourable Raksha Mantri has launched a citizen portal where more than the 5,000-plus items are listed for indigenization. So this -- and after that, even the DRDO has come out with 108 items in form of assembly or subassembly to be designed in the country. So overall, considering those changes and also -- India also has decided to go for the development of advanced multi-combat aircraft, AMCA project has been launched. And added to that, there is some ARISE-ANIC program also going in the country. So considering all this ecosystem -- defense ecosystem developing within the country, there is a lot of possibility in the -- for the -- for MIDHANI to get some of the -- like material requirement and which you can convert into the different types of product. And I'd also like to mention here that this company has also started working for making that value addition in the metals and alloys which we are producing, and essentially has been -- already we have supplied the HP disk -- high-pressure disc, which is used for the aero engine overall of Jaguar aircraft. So this has been already designed by the company, and it is performing well. And there, we are expecting, again, a new supply order for those requirements also. So these are the different areas where we are focusing as far as the new business in the core area of our competency is there. And we are doing well. And other than that, it is also very -- this quarter, I will say -- not this -- I mean quarter 3, our armor facility -- armor plant, so armor business also has picked up. And first time, we did some activity or -- in the work -- in our Rohtak facility, where equipment was installed. And after installation and commissioning of the equipment, immediately some of the products, we could use that equipment, and we are going to supply for our armor application. This is going for MPV. MPV is for our defense department. So these are the different active -- areas that business also is growing. It's moving now. I expect that we'll get good -- real revenue in FY '21, coming from this facility.This is the picture overall, I can say about the company today. And I would like to close here. And more than that, I'm looking forward for some of the questions coming from the investors. Thank you very much.
[Operator Instructions] The first question is from the line of [indiscernible] from [indiscernible]
So I hope the entire team is good and safe amidst the pandemic. So I just got a few questions. So starting. With the current reforms that have come in the sector that is the 101 banned list and the 75% FDI, then the 3 indigenous aircraft programs that is Tejas Mark II, [indiscernible] and AMCA. So what is the size of opportunity that you are seeing that will come to MIDHANI in the coming 3 to 5 years?
Are you asking about the volume of the business from that?
Yes, sir. So overall, the macro, not just the program.
Not less than INR 12 crores. Around INR 12 to INR 50 crores is there.
INR 12 crores to INR 50 crores per annum?
Not per annum. It may go over the period of maybe 1 and 2, 3 years because these all -- what was discussed here are projects we're discussing, they are in developmental phases. So developmental phase, we meet the requirement from [indiscernible] and it's matured in the form of the [indiscernible] night aircraft, [indiscernible] aircraft. And then they go for production [indiscernible] conventional piece. Quickly it is transferred into the product [indiscernible] only that type of [indiscernible] takes around 4 to 5 years to mature. So we are in the very beginning phase. As you have mentioned about AMCA and then Tejas like Mark II -- Mark II of the LCA. LCA Mark II. Both are in developmental phase, but we are very much in there. In fact in the Tejas initial also we have developed a lot of products. But the one thing is that, I'd like to mention here that the aircraft, what you have mentioned about the Tejas or AMCA or even that Mark II, a lot of materials are still imported because if you see the same structure, normally, aluminum is -- we are not able to produce in India, that is [indiscernible] aluminum. Those things are imported. Fiber, the carbon-fiber which is being used extensively, that also we are importing. And some of the other items, like -- I don't know, idea about the electronic parts. But as for the material part is concerned, those 2 major areas of materials like fiber, carbon fiber and aluminum alloys, those things are getting imported where the company has to yet make the product for those applications.
So just briefly can you also touch upon the other 2 reforms that is the 101 items that were banned? And also there other items that could potentially be banned in future, and also the 74% FDI limit that's been held by the government. So in terms of, like, -- so in terms of the ban, the possibility of the items being indigenously made and the raw materials being outsourced from MIDHANI. And also in the FDI part, the possible MoUs and JVs that you could sign with foreign vendors or foreign peers for catering some of the defense needs. So on that part. And sir also one thing, as you said that aluminum is being imported, so there was a JV that was going to be made between MIDHANI and NALCO, so -- which was around a CapEx of around INR 4,500 crores. So also there, can you briefly touch upon, like, the segments which the JV could cater? And also, as you said that the materials for the aviation-grade aluminum has been imported. Will it be catered by this JV in the coming years? And what would be the time line in which the production from the JV could begin? And what the opportunities it could also mean for us?
So you have asked first -- first question, I think you asked about the FDI, and...
Yes, the 74% FDI that's been allowed in defense.
Okay. The 74% FDI is, of course, it is a very welcome step in defense. While we are not looking for that type of investment as of today. I'm not having any proposals for such. But definitely, we are looking for some of the foreign partners to join us and development [indiscernible] which can be utilized for this aerospace [indiscernible] and there I have mentioned about the full type of material, aluminum and carbon fiber. Carbon fiber, we are trying to tie up with some foreign partners where we can -- either we can get the technology for making the fiber or we can make the [indiscernible] from the current fiber supplied by them. So we are trying to take some foreign partners, already. We are -- discussion is going on. And at the appropriate time, I will tell that what is -- with whom we are going to have this JV. So that is one part we are trying to address as far the carbon fiber is concerned. Second part aluminum alloy, we have made one joint venture in the month of August last year with NALCO. And so far the progress is that land we have acquired -- land acquisition is over. We have also started taking for the environmental clearance for the project. We have recently also launched -- are ready to launch almost within a few days on the EPCM contract, where we are going to hire a consultant for making our -- detailed [indiscernible] report for the entire plant. And additionally, some of the technology providers also we are looking for. But the major part is, today, we have not addressed so far is the funding. Funding is the one area where we are now trying to see that what is it our mode of funding so that this project can get -- generate almost -- we are going to get the money of support of around [ INR 4.12 crores ] [indiscernible] loan. But the requirement of the materials, aluminum alloys, currently this kind of project is going to take care of aerospace grade. Aerospace, defense, and in addition to that, we'll be also looking towards other commercial applications either in the form of transportation or in fact, it is also used for electric vehicles in the future. So these are the different applications where aluminum alloys, which is coming out -- will be coming out from this facility can be utilized. Time line is of course, as we had told that once we place order on the equipment manufacturers, from that time, it will be a -- take around 3 months to come in from the project -- 3 years, sorry 3 years. So which we have not done so far. I'm assessing that it will take another 1 year of making the order on the difference -- so we have targeted '24, '25 early this project would take off, [indiscernible]
And lastly, on the book keeping side. So there's an R&D that we have done of around INR 300 crores in the last 4 to 5 years, but the revenue has been constantly in the range from INR 700 to INR 750. So sir, when will the R&D expenses that we've parallelly that we've done will flow in terms of revenue and the other benefits to the company?
See, I told you normally, any project will start, it takes time to mature and then start giving the revenue. In our case, also, the investment has -- if you see our CapEx has started growing in the last 3 years, and there only the major investment in terms of our project coming, Wide Plate Mill and another is our armor facility [indiscernible] -- armor facility in Rohtak. And then our internal, a lot of more modernization programs going on for our existing core area of working. Core area of working already, we have enhanced our capacity. And last year, if you see our VoP was, that's why it was higher. Even though we could not able to achieve our sales target of INR 800 plus crores, INR 825 crores, INR 830 crores because of the last moment discussion in our sales because of pandemic. But then we are now confident that with the available time and all, this year, we can -- we will try to make up in spite of losing one quarter -- say effectively one quarter we have lost. Then also we are trying to make up in the next 3 quarters. So let's see how we're going to perform in this year but that problem can be addressed. But coming from the sense of our existing -- means from project side, as I told that, armor facility has started working, but full impact or full potential, we can realize in the next year. That was -- that is in FY -- financial year '20, '21, '22.
So for both, the armor Wide Plate facility and the Rohtak...
Wide Plate facility also. Yes, Wide Plate also incidentally is coming in the same time -- almost similar time. But Wide Plate means why I'm not mentioning that immediately because the -- it has to be a huge system. A lot of complications are there. This is to integrate and then some time -- it will take some time to qualify the product also because we are working for the defense industry and defense industry, if any new facilities are installed and cost is coming out, somebody has to certify it. And it should take maybe some time because of that. Otherwise, we'll be starting the production in the financial year '21, '22.
[Operator Instructions] The next question is from the line of Anuj Sharma from M3 Investment.
My first question is, sir, we have seen strong traction in this space [indiscernible] the remaining comes from balance from defense. Going forward in the next 3, 5 years in terms of incremental order book, do you think sales will contribute to the bulk of the order in the tune of the same ratio? Or do you see defense picking up? And in terms of space programs, are you confident that this will [indiscernible]
I think what I understood from the question that you're asking whether space is going to maintain the same level, or more [indiscernible]?
Yes, yes, yes.
No, no. The question is -- see, you must be reading from the media also. And the news is appearing that space program has taken some hits because of this pandemic. There is no doubt there. Whatever launches they have planned for this year, it has been deferred, except the last launch was there in this month, and that was C49. So I expect that there'll be some deferment of the order. Deferment in the sense that order we have but we have to supply in the -- instead of 2 years, 3 years, 3.5 years' time will be given for the supply. So definitely, our volume is going to come down as far as sales is concerned. But at the same time, this company is having one advantage that we are not serving only one sector. We are serving multiple sectors. And if the space is down, defense has picked up. As you know very well coming from the defense media, there's Atmanirbhar Bharat, there are so many projects coming out. So defense is going to definitely pick up. And I'm sure that our -- whatever is our opportunity in the defense will be normal. And our point trying to tell about is that India taking the stand that not allowing the global tender beyond -- means less than INR 200 crores. There also -- not only this from the core sector defense, even the non-defense area also, we are expecting a good amount of opportunity available in the market. So we are certainly tapping that, then we can increase our chance. So the answer of this question is that, this is not at a stage, other sectors also going to give me good opportunity in the business in the coming -- in the future. [indiscernible]
But sir, in terms of space, again, it's more deferment, right? The opportunity in space also continues to be [indiscernible] So about 3, 5 years out, do we expect space to be 70% of our revenue? Or do you think it will be particularly deferring then?
Even this year also, as I have said it will be coming less than 50% in the space. Space is -- it will be touching around 40%, around.
Okay. Okay. And do you think -- okay. All right. So this ratio could be continued going forward as well [indiscernible] 50
That is performance in the graph. You'll find that just 2 years back, defense was on the higher side. Last year, the space has picked up. Again, the defense part is picking up. Those graphs up and down, it will be there. For space and defense, I'm trying to say. But then there are other sectors also that I see there is opportunity for us to contribute. And we get orders from them.
Sir, my second question is, if you see in terms of number of employees, we have done very well. We have in past 10 years, reduced the number of employees. Do you think now we have reached a stage wherein employee productivity is reasonable and -- or do you see the decrease in employee trends will continue going forward?
No. See, we've always keep it balanced. But depending on the requirements, let's say, my new projects have matured, and we are able to start getting the revenue from that. So definitely, I have to increase my manpower. But then our manpower increase will not be so high so that these figures will come down. But I'm sure that manpower requirements will be seen or will be on the increase or we'll add more manpower depending on the project requirement.
Okay. And sir, the other sectors you were [indiscernible] indicate [indiscernible] have an opportunity like oil and gas, mining, power and [indiscernible]. How big is the size of opportunity in these segments in terms of material we are manufacturing? Just the opportunity size?
That's what I told you, that -- in fact, today also when I was releasing the import data, in this year, that means in 2021 so far, we have imported -- India has imported nickel-based alloys, superalloys, where MIDHANI has a very important role to play, of the value of INR 700 crores plus. Now if you see my business is for alloys, I'm doing very limited, maybe coming to INR 40 crores, INR 50 crores per annum. So definitely there is opportunity for us to factor those businesses. So we are looking towards that. And in defense part, it has increased also. But it is not sufficient since our production capacity also has to be enhanced, so we are done now. As I've told that a lot of modernization or capacity augmentation, we have done in our internal facilities also. So I'm sure that in the coming years, we'll be taking out those materials which has application in the oil and gas as well as in the energy sector, both areas.
Okay. Okay. Sir, and my last question is, sir, our CapEx for that Utkal alumina project, the total CapEx is estimated about INR 4,500 crores.[Audio Gap] And in case of the INR 2 crores to INR 5 crores from our side, and you are saying you're planning some funding structure. Can you just highlight what funding structures are we exploring? And do we have to commit to this amount for that project?
I will give this question -- I'll pass on to our Director of Finance, who will give some highlights that how the finance can arranged. And we are not able to give the right -- exact one, but we will give an overall of what we're looking at there.
This of Gowri Shankar, Director of Finance. Actually, we were talking about the JV where our requirement is INR 4,200 crore. And it is an planning investment by MIDHANI and NALCO, around INR 400 crores. And initially for any project, we cannot go for loan. We are going through some financial planning or some investment in the form of equity if someone participates or institutional investors or FDIs or some technology partner. We will join in -- even in the banks also some financing institutions. Initially, they'll join as equity, and subsequently after some period, let's say before commissioning, before starting the commercial production, the same will be converted into the debenture -- convertible debenture -- nonconvertible debenture so that in the initial period, there will not be any interest burden to the company. And subsequently, once the production starts, there we can pay a memo to them. Those -- in the form of interest. So we have not decided how much in the form of equity, how much in the form of debt. However, in the initial period, we wanted to spend the money of equity only. Only at the latter stage, we wanted to go for debt so that our company will not incur much interest burden on the project as our CMD sir rightly said, the project gestation period is more than 3 years -- around 3 years. 3 years I cannot incur any interest expenditure totally. In the initial period, we would like to start the project with the equity participation, either for the -- from the foreign parties or from the Indian financial institutions. It is what we are planning. For this also, we want to get engaged in a financial consultant, get their views and do some exercise, which one is the best alternative. This is what our plan.
Sir, any outer limits that MIDHANI would maximum invest in this project?
See normally, any company initially will plan 70-30, but then -- debt will be to 70 and 30% equity. And now this INR 1,200 crores, we need in the form of equity. Still we will go for more equity. And afterwards, before commencement of the production, we will come up into the debt, this debenture. There some interest burden will come so that the project will go like faster. There will not be any problem in the arranging of funds. It is what our idea is.
The next question is from the line of Rohit Ohri from Progressive Share.
Sir, my questions are more related to Bhabha Kavach. Sir, as far as the media reports, CRPF requirements are around 1 lakh bulletproof jackets, and the requirement is around 10 years constantly. So what is the contribution from MIDHANI as of now for these bulletproof jackets as Bhabha Kavach?
Yes. It's very important question from you. Bhabha Kavach, precisely it was enough for considering the requirements of CRPF. From there -- it started from there only. And today, the entire paramilitary force, there was 1 committee formed by these people, and they have already examined the entire performance of this Bhabha Kavach. I am sure they're very much satisfied with the performance. And it has performed very well and entire standard as detailed by MHA has been fulfilled. The only question today is that in this armor, that bulletproof jacket, there are lot of varieties are going in the market. In this process, while going for RSP or going for the right amount of specification. There's no clarity as such among the buyers. So that clarity is not emerging. And that's why the Bhabha Kavach today, demand which we have told about the 1 lakh per annum is not appearing as such today. So if you see that today, our military, they are having some different specification. MHA's specification is different and the Bhabha Kavach is in -- or better than that. Of course, in the Bhabha Kavach, you see the quality of material used and type of [indiscernible] also is very good. And that's why the cost also is slightly on the higher side. So considering that, because of the cost, they are not able to put this Kavach effectively in their procurement processing -- procurement system. So what I would like to say here that there is immense opportunity in this, but then it will also realize it is important. But so far, we have got some order of around 400, 500 numbers, we have received orders from the defense paramilitary forces. And whomsoever has taken from us, they are very much satisfied. Performance has been very good [indiscernible] as seen in the evaluation and all. And -- but we are also now not in a position to supply 1 lakh per annum. Our facility [indiscernible] is in the Rohtak. As I told earlier, we have going to start that plant from -- in FY 2021, '22. So in that period, once that plant is started then at least 30,000 to 40,000 we will be able to manufacture in the country. So that one requirement is there. And let's see that if they are coming for the -- 1 lakh orders are coming, we can enhance our production capacity. And not only our production capacity, in fact I can also -- even if the military decides to go for Bhabha Kavach, then requirement will be much on the higher side. There is opportunity for that. But as far as the product is concerned, product is well established. It has a very good features in that, [indiscernible] comfort-wise, its performance, everything has been evaluated, it has performed very well.
Sir, so when you say that there are a lot of varieties of these bulletproof jackets, so assuming they are ranging from INR 70,000 to around INR 1.5 lakh per jacket, the production of MIDHANI with these high-end and really good jackets that you're talking about would be in what range? I mean, like MIDHANI would be selling at around what range from INR 70,000 to INR 1.5 lakh or what is the range that you have in mind that you'll be selling these products at?
This price, I cannot give you right away, but actually in the terms see, what I will tell you with price is, everything is not in my hand. We are buying today, importing the fiber from the outside. We are also buying it -- that tiles, boron carbide tiles from the other source. So both suppliers -- and on that price only our price is there. So the price we are not able to tell, but we are coming in between. I will say that we are not very -- not INR 1.5 lakh, nor INR 70,000. We'll be ranging around maybe slightly lesser side, on the higher side. Exact cost I cannot tell you, but it will be around INR 1 lakh, INR 1.2 lakh, like that.
Okay. So my second question, you have already touched upon the space. So my question was more related to the Gaganyaan for ISRO, and PSLV, GSLV. So what sort of development or a collaborative work with DRDO can MIDHANI do? And a follow-up for that only. In terms of the BECA, that is the Basic Exchange and Cooperation Agreement with the Geospatial Corporation, what sort of work can MIDHANI do probably in the next 2 years or 3 years when the system stabilizes?
So I'll -- first I'll -- see, the space and DRDO, we can have a separate entity. Space is different, DRDO part is entirely different. In the space, as you mentioned about the Gaganyaan, PSLV, GSLV, already MIDHANI is well versed in the products, material supplying to those sectors, GSLV. And coming to DRDO also, DRDO, whatever [indiscernible] [ commands GSLV ] it is appearing in the media that they have done testing of, say, around 10 to 11 missiles in last 2, 3 months. They are very much our presence in missiles. We'll be seeing that a lot of -- it has gone for the testing. MIDHANI presence will be there depending on the type of missiles they are testing there. So that's why we are in both defense and the space, we are working.
And as far as BECA is concerned, the Basic Exchange and Cooperation Agreement.
[indiscernible] At the time of it is -- what I understand from this agreement is basically the sharing of information, that's satellite -- the communication satellite information between India and U.S. So it is totally [indiscernible] per our security environment. There is a protocol where the data will be online, online data -- the data will be shared among both -- between 2 countries. So nothing to do with our product. But definitely, tomorrow if our space is going to fulfill those requirements in the future for launches and all, very much we are there in terms of supply and the materials.
Somewhat more or less similar like what India has got a relationship with Israel as far as the security is concerned is what BECA is related to, right?
Yes, yes. It is in terms of -- see now -- see what I said that data type of agreements are not only -- that is the one type of agreement where we are paying the information on security scenario now. But it also giving the confident down the line that on the manufacturing side, on the level of your -- like getting U.S. from establishing their facility in India. So those things are supposed to increase by this type of agreement, by -- these are confidence building measures. So I see opportunity on those areas. That is my thinking as far as opportunities are concerned.
[Operator Instructions] The next question is from the line of Sagar, an individual investor.
Sir, in one of the meetings, like in one of interviews you had told that you will be incorporating AI into your business. Could you please throw some light on it, like how are you using this -- how far is the progress?
I didn't follow your question. Can you repeat?
Like, in one of the interviews, like MIDHANI had mentioned that they will be using artificial intelligence?
Okay. Okay. Absolutely.
Yes, so like how far is the progress. Can you throw...
Yes, yes, yes. See artificial intelligence, we have 2 aspects in our company. The 1 aspect is that whatever is our processing technology, where we are processing our material, the process optimization or process improvement can we do using the artificial intelligence, that was the first question, because we have -- and you know, basically, the artificial intelligence is basically nothing but utilizing your historical data. And based on that data, you decide that what could be your method of working, what would be the parameters, how you should work. So since we have the legacy data for our equipment, which has performed from last 25, 30 years, that we want to utilize AI. And we have done a good progress. One [indiscernible] area we have collected and we have done good -- reasonably good progress on that. That was the first part. Second part, we have taken AI using the alloy designing. In normally materials design, if you see in India, we are depending on the 2 different sources of grades coming from the sell-side or our [indiscernible] made. So from both the sides if you see, our more or less you find India, that type of materials only are used in our defense applications. But we also thought why not India should have its own alloy and whatever alloys we are making, can we improve upon. So for that purpose also AI was planned, and we are working for this -- this, there are 2 agencies involved with us. The first one is from IIT Madras, and second from University of Hyderabad. These 2 organizations are working with us. And there, we could not make much progress so far because of this pandemic and academic institutes not able to means cope up with that. But now it has picked up, and we are sure that we'll get some reasonably good results after some time. But if that type of -- [indiscernible] system we develop, it will be a good -- like system for our country, unique work in our...
The next question is from the line of Abhijit Mitra.
I have few questions. First, on the mix of revenues, which you mentioned that 40% will be paid this year. I mean how will it impact the margins you feel? Can you maintain the gross margins? And if you can also help us understand, in the first half execution, what has been the mix from space and defense? That would also be quite helpful.
Okay. First half, how much we have done for the space? Abhijit?
Yes, yes, yes. First half...
Yes. 46% we've done for space and defense around 22% -- 24%.
46% and 24% you said.
Yes.
Okay, okay. And this decline in space execution from almost 80% to 40%. I mean how...
Last year, it was -- see, overall it is -- last year it was 55%. So now it has come to 46%. It was not 70% or 80%. Order book was there. See, order book -- if you see the order book -- but we are talking about the sales.
Right, right. So you feel you can maintain this margins at the gross level, the one which we are seeing?
Normally, our product is same, similar lines. Products are almost same type. So I'm not seeing that change in -- coming in the margin because of both sectors are having [indiscernible] material. And MIDHANI has capabilities to produce [indiscernible] materials and there we have the market. So both the sectors, which we are mentioning today, are taking that high value materials only. And we see even titanium is going up, requirements are going up. So there also we have reasonably good margins.
Yes. But our understanding was that maraging steel has a bit of higher-margin and higher value.
Both are maraging only. If you see the defense and the space, the majority share is of maraging steel.
Okay. Okay. And you mentioned superalloys also previously, INR 700 crores of superalloy imports. Which -- our understanding was actually a higher realization linked to that vis-à-vis maraging steel also. So how quickly you feel you can capture this INR 700 crores or a part of this INR 700 crores opportunity? I mean, what's the process of capturing this opportunity? Has the process started? Or do you feel that it's few years away still?
Which, INR 700 crores? Nickel import. Okay, okay. That you are mentioning. Yes, yes. We are now filling that gap. See, there was comfort earlier for import. So with this comfort, people used to import easily. Now with the change in this import, there's a lot of restrictions in import, we are going to get a lot of internal requirements coming from difference sources. So it is not going to improve immediately, it will take some time, but nevertheless, now superalloys is picking up. If you see on our business also, the last year, product contribution was quite good. I cannot tell the exact figure here, but it has improved. And even now this year, I have said, again, it will be a -- good value will come from superalloys.
Right. Right. And just to understand the mix a bit better, you said 40% of your execution will be paid. What percentage of your top line will come from maraging steel, similar 40%?
Yes -- no, no. Are you talking about this -- revenues of -- contribution of maraging steel?
Yes. Revenue contribution of maraging steel?
Revenues will be similar. I think last year, how much was the maraging steel contribution? Maraging must have contributed last year also about 80% -- between 70% to 80%. So this year also, we'll have similar type of -- similar...
70% to 80% of revenue contribution.
So what's [indiscernible] unlikely this year certainly it is going pick up. See, both maraging and titanium has a very good leverage means margin. So titanium also has picked up this year. So this year titanium and maraging is going to rule. The total -- means our sales, if you see, mainly coming from titanium and maraging steel.
Okay. Okay. So mix is not deteriorating despite customer set changing some space to...
Not there. No, no.
Okay. And what about working capital? That is going to be stressed as more execution happens towards defense?
As you said that delay in getting to receivable, you were talking about...
Yes, yes. Receivables, inventory because I think space is more advanced than defense.
Advance -- it was -- this was the unique one, but normally advances are not being given today, even by the -- earlier you used to get advance from the defense also. But advance, we cannot rely on the advance today. So we have to arrange our working capital based on the amount receipt of the advance. So at least in that front, we'll see in our -- even now in the balance sheet also, you'll find that the cost to some capital -- working capital will be there. We'll be having -- [indiscernible] now our interest part, interest burden is even greater.
[indiscernible] But not so much because of the [indiscernible] receivables, there is a -- because of the pandemic certain issues, receivables also are not in the same momentum. So we are depending on the certain working capital. But those working capital also we are trying to get at the lowest interest rate that we're doing. We are [indiscernible] interest of this one. So far, the company has not drawn any CapEx, even the CapEx expenditure is there, we have not drawn CapEx loan. We are managing lesser interest rate of working capital only. But also we are not crossing the limit whatever is sanctioned to the company. We are managing, but receivables [indiscernible] but there's a little bit --
We also see the balance work. So -- but definitely very upset.
Yes. And lastly, if you can help me with the utilization of the melt shops overall, it's not on an individual basis. But what utilization would the melt shops be running now? And how much you [indiscernible] for the ramp in capital...
[indiscernible] of our melt shop is almost [indiscernible] We are not having -- except 1 melt shop, which is meant for the low alloy steel and all, there only, we are not getting fully loaded. But other than that, entire melt shop is fully loaded. In fact, we are not having enough capacity. So we have lots of augmentation is going on in our capacity enhancement. So whatever our -- some of our old equipment lying idle from last 4, 5 years, 6 years, those equipments also we have reside. And we are going to utilize those equipments also. The melt utilization 100%, we are having full load on the melting. And we are not having any -- except 1 melt shop, which is meant for low alloy steel. There also we have some load, but we are not able to operate it fully today, certain manpower and all is there. So we have -- but other one is making effectively.
The next question is from the line of Dixit Doshi from Whitestone Financial Advisors.
Yes, most of my questions have been answered. Just couple of things. Firstly, if I see our first half performance, so due to the ramp-up in the second quarter, our first half was down around 6%, 7% only. So can you say that H2 will be better than the last year H2, and therefore, more or less, in full year, we will meet at least what we did in FY '20?
Definitely. We'll definitely will have our H2 better than the last year because of last year, the last month -- March, we suffered a lot because of this pandemic and the type of situation in the country today, we expect that, since we'll be running in the similar way, some up and downs will be there in the COVID cases, but I'm sure that Indian industry will be running smoothly. And overall sentiment is highly positive, so is the case for MIDHANI also. And since we have -- our order book position very good, we have the requirement from the customer. Customer is having -- a lot of demand is there in the market. So I'm sure that we'll be having a better H2 compared to the last year. And if the better H2 is there, definitely we'll be crossing '19/'20 performance. We'll be doing better.
Okay. Secondly, sir, can you give the breakup of order book in terms of space, defense and other segments?
I will send the communication, but roughly, I can tell you, [indiscernible] total order book is 1,688 -- 1,689 is the order book position. And in that, if you see the percentage, percentage is around 60%, space around 1,100. Around we have -- 60% space is there. And the balance will be around 30% defense and then 10% other one.
Okay. And one last clarification. Sir, you mentioned that once the Rohtak armor plant start, we can do 30,000 to 40,000 bulletproof jackets. So that comes to around INR 300 crore, INR 400 crore kind of top line, that whenever we do, maybe a 3 years, 5 years. But is that understanding right?
Definitely, the plant has been made for that purpose only. And I'm expecting that with the type of sentiment in the country for Atmanirbhar Bharat and not depending on the imports. So whatever jackets are coming today in India, bulletproof jackets, lot of import components are there. Our jacket is totally indigenous except a raw material of fiber is only coming from the outside. Other than that, everything is indigenous. So -- and performance also is superior. So they are trying to [indiscernible] situation in the country. And I am sure that with the ability of this bulletproof jacket, specification will be a standard throughout the country. And that will help us in getting the [indiscernible] business. Driven by perception and understanding today let's see how we are going to go in the future. Bulletproof business is having a lot of competitors in India. And they have a different source of getting these products. And that's why I said specification also is varying. So let's see our product, it has tested. It has -- well, it has given a good performance. So I'm sure we'll be having a better time.
And we invested INR 40 crore to INR 50 crore in this plant, right?
Plant investment is -- total investment if you see, coming to around 60 -- yes, around INR 60 crores, yes.
INR 60 crores?
Yes.
The next question is from the line of Rushabh Shah, an individual investor.
I just want to understand, sir, broader strategy of the company in the -- and the road to achieving INR 1,000 crore top line. What are the strategies or challenges and the time lines? If you could give some sense on that, sir, and investments that will be required to achieve that?
For INR 1,000 crores, I don't need extra investment. Whatever investment we have made is sufficient to -- if I want to utilize effectively, it's fetching me a turnover of more than INR 1,000 crores. So as the investment -- as far the investment part is concerned, more or less, we have done except, which is ongoing, things are already there. Those things we have to complete. And coming to the level of INR 1,000 crores or INR 2,000 crores or some more [indiscernible] that will decide as for the business, which we can be able to attract utilizing that collateral. So we are sure that we'll be able to cross -- our idea is to of course, even for the next year, but let us see how quickly we can convert. So as I told earlier that in defense products it takes some time to approve your entire products online. So that [ setback ] slightly, but once it is approved, we can get a good business.
So sorry, just to confirm, did you mention your target is to achieve INR 1,000 crores in next year, FY '22?
I have not mentioned that, but let us see. We are working towards that. And at the appropriate time, we'll tell you because lets me first close this year. This year I'm closing period than the last year, then definitely team will be motivated and at least be having an opportunity to cross even INR 1,000 crores turnover.
Just a follow-up on that, sir. So once we suppose we achieving that number. What is the measure that you'll be taking to help sustain that number because ours is a very lumpy business?
So business for any business, there is not out there. See, I Can tell you, this is a very competitive market. And the market is so competitive, we cannot say that whatever business today I'm having tomorrow, somebody else will not take away. It is highly competitive. So it is not that -- even though I have a the facility as a -- and people are waiting for it for our sake. It's not that. What I'm trying to say that we are now -- whatever equipment we are setting up and if we are able to utilize it, certainly by attracting the market and getting the business, we can cross 1,000, that's not the problem. But we have to do that, that we are now at the stage of...
But sir, do you believe the currency is a factor, whatever the factors are as geopolitically or even in India, the time is right for the company to take -- capitalize on the opportunity?
Are you talking about the security scenario, is it not?
Whatever, whatever the current situation is there. So is this not a best time for the company to capitalize on the opportunities? Just trying to get that sir.
Yes, yes. It is a good time. It is the ideal time for the company. Our capability -- and you ask me, I'm always a positive man. I've seen the different direction not only today -- I have brought this facility, even 2 years back also. I could have been a good leader from there. But if I'm getting tomorrow, and I have seen a business is there, a lot of imports in India is taking place for the flat product. Flat products are being imported today in a large quantity. So our aluminum project started as having 30,000 capacity. Again, able to roll as a frequent rate and the competitive rates, definitely I'll get a good business. It is not only Indian market, but in export also.
The last question is from the line of Manish Kayal from Nippon Life India Asset Management.
Sir, I have a couple of questions, mostly from the raw material. If I remember it right and one of the parts mentioned that you have 3, 4 months of raw material availability? And if I understand it right, a substantial portion we source it from China. So I wanted to understand in this current scenario, are we taking any [ improvement ] in procuring raw material availability? And second is on this pricing. And also wanted to understand if -- suppose there is an unusual rise in the price of the raw materials, can we pass it to our clients? So that's my first question. And second is just the data point, that's the CapEx for the price we gave for FY '21 on
You're asking government
Yes, Sanjay.
Raw material supply is not in there.
Okay.
We're not [ sourcing ] any product from China. But as you said imports from China. China imports, already we're [indiscernible] not only from China, from other sources also [indiscernible] It's at the same time, I'm finding that industrial activity has [ another platform ] entire level it may picked up, probably the will be there on raw materials to the supply. So we have to seen this is a dynamic situation. We have to see how it is going to change. Then accordingly, we have to take our decision. And as I said, we are stocking around 4 months of -- 5 months of raw material. It has helped us in this pandemic period. Able process [ are specific ] [indiscernible] effectively depending on the [ situation ]. Okay?
So CapEx part, if you can share with us what our CapEx plan for FY '21 total?
CapEx plan is INR 230 crores.
Ladies and gentlemen, this was the last question for today. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.