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Mishra Dhatu Nigam Ltd
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Ladies and gentlemen, good day, and welcome to the MIDHANI Limited Q2 FY '22 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities. Thank you, and over to you, sir.
Yes. Thanks, operator, and good afternoon to all the participants, and thanks for joining in. We are here to discuss Q2 FY '22 results of Mishra Dhatu Nigam Limited. We have from the management Dr. Sanjay Kumar Jha, Chairman and Managing Director; and Mr. Gowri Sankara Naramsetti, Director, 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.
Okay. First of all, I welcome all the investors. And just I would like to start from our results. In fact, if you see our Q2 results and compare to the Q1, there is substantial improvement in all the parameters in terms of revenue, VoP, EBITDA, PBT, PAT. At every aspect, parameter, there is significant improvement. It was earlier last year also because last year also, if you see the Q1, 2021 and Q2, 2021, there was a lot of change and improvement in Q2 compared to Q1. The reason being obvious, well-known that in Q1 of last financial year, also, we had the COVID lockdown. And this year also, Q1 was affected badly because of COVID second wave. But then problem is it is not that -- the difference is that whatever we have learned from the first wave was very -- a lot of things were unknown to us, and it was the first time. Very difficult to manage the things, and we had to do a lot of planning. And our steps, very, very carefully to plan our activities. But in the Q1 of this financial year, well, without -- even though it was second wave, we could able to perform well compared to the previous financial year because we are knowing how to work. And even in spite of the lockdown, we managed to operate certain equipment. And that's why our VoP side, if you see, there is a substantial increase. If I take the half yearly result of last financial year to this financial year, there is an increase of around 17% there. So that type of -- 25%, yes, in fact, it is 25%, 25% increase there in the VoP. So that also indicates that this is the one thing which company has -- and not only MIDHANI, across the thing, it has moved. Only aspect is that we have half yearly result, if you see, the revenue growth is only around 9% from the previous half yearly result, mainly because you know that our products take a lot of time for getting converted into the sales because we have [ missed ] area of our business. And there, you need a lot of processing states are there. So this is one thing which is the revenue has that side. And coming to that, another challenge was that how we can quickly start our ongoing projects because I've been interacting with all of you from last couple of years. And we have seen that there's a lot of anxiety from the investors that what is the investment is going to give the output for the company. So now I could tell that there's a number of -- a lot of developments took place during this period, and one very important project was called the Wide Plate Mill. There, we have got a lot of success now, and it is in the commissioning stage. And during the commissioning stage itself, we have started doing some business. Of course, it is very small at present, but the initial indicators are very good that the equipment is performing. And also, we have significant increase -- change in our project status or the -- in armor facility. There also -- we, in fact, last month itself, we have booked around INR 5 crores worth of order for that facility also. And we are hopeful that in next couple of months, that production also will be coming out from that facility. So this is the overall status for the company. And in addition to that, as this company is known for R&D, innovation and making the -- making India [ up ] in different type of products, so with that type of our commitment during this period, a lot of innovation also took place. And there, I would like to mention that we did the steam generator tubings also we have made for our nuclear power application that was also made by us and supplied. We have also developed a different type of special steel, which is being used for oil and gas industries. And it is, in fact, going for the export. So in the export front also, the company has done exceedingly well. In fact, if you see the quarter in our half yearly results, this is the highest ever export we have done so far in that quarter 2. So this is the one and the good indication from the export side. We also -- we feel that there's a good opportunity in the export market for the company, and we have ambitious plan to increase the export. In fact, last year, there was growth of around 80% from the previous year. Of course, base was very low for the initial export value, so we had a growth of around 80%, 86%. But this year also growth will be good. I am expecting that export also will pick up and we'll win in export front also in the good now. This is the one part, and then coming to that human discourse side. You know that today COVID is a very main norms for any industries or how we are able to come -- overcome the menace of this COVID-19. And in that also, MIDHANI has done exceedingly well. In fact, now our -- 99% of our staff is vaccinated. We had a massive vaccination program. So from that front, also, we have -- company has done exceedingly well. So these are the different areas, and the opportunities are there now today for different defense [ innovation ] programs are there in the country. So we are very much attached to that. And also, we have certain requirement of, let's say, armor-plate, steel. So there also, we have opportunity, and we are trying to see that how best we can perform there. And in addition to that, diversification, as I have told that our Wide Plate Mill, we have started from supplying to railway. And those plates are going for making the LHB couches for -- in Integral Coach Factory, Chennai. So like that, this is the type of our involvement in different activities, and I'll be sharing the information as and when to the investors when our Wide Plate Mill is getting fully commissioned because this mill requires a lot of different types of commutation and combination. So this mill is very versatile, and it can roll varieties of products right from a carbon steel it can go to high-end nickel-based alloys, titanium alloys. So it's very unique of its kind. And in India, it is the first mill of this type of caliber. So these are the different highlights coming out from the company, and now I am leaving to the investors, and I'll be more happy to give the answer rather than giving the all other status about my company.
[Operator Instructions] We have the first question from the line of Bhagyesh Kagalkar from HDFC Mutual Fund.
Yes. Actually, my first question is regarding the Wide Plate Mill itself, sir. Can we see a substantial amount of revenue next year? And then the second question is INR 1,370-odd crores order book, the breakup in defense and space. And what is the outlook in both sides, defense and space, as well as the margin outlook?
Are you talking about this -- the business in the next year, next financial year and for Wide Plate Mill, is it not?
Yes, yes.
So Wide Plate Mill is basically -- the capacity of this plate mill is 30,000 tonnes per annum. And initially, the first year, I expect that it will be -- will be starting with, let's say, around 60%, 70% of its capacity. Now in this 30,000 tonnes, it depends on the product mix that what value of products you are going to sell. So the consignment, which I said that we have sell to the railway, there, our margin is very less. In fact, it is running without a -- very small margin. Because initially, our idea was to do the testing of the equipment. And for that purpose, we have to do a lot of trial rollings. So in this case, we have not invested any revenue assets, but then the quality of the product which has made it started coming good. So that's why we have supplied to the railway. Now our other grids of the high end, like seller steel, titanium alloys, super alloys, so there, the rolling is planned and mill is going -- is under the testing. And I hope that by this quarter end, I'll be getting most of the information to be ready. And once we are ready with all the products to portfolio, then we'll plan that how much -- which sector we should target. And definitely, our aim will be to go for high-end products. But the high-end products, that quantity volume will be very less. So we have to see that we have to also increase our volume as well as the high-end products also. So it's that type of commitment, our marketing is working, and I'll be sharing the information. But definitely, I expect that this year itself, we have planned around INR 100 crores worth of business on that facility, but that is only I'm targeting maybe only 4, 5 months because a lot of other inputs I have to manage. In fact, we have to also infuse some working capital because the -- these products are not going to have a market where I can get a customer who can give me the order for a longer period. So you have to supply within a very short time, a certain amount of working capital also or inventory or to maintain, then only we can be in the market. So we are working towards that. The business model is all being worked out. But this is about our plan in there. Next year, when we are confident of all the grids, I will definitely give the product mix and that will be communicated to you. But right now, we have the indications of going for -- mainly for low-alloy steel and also some stainless steel for different customers.
Okay, sir. And breakup of the current order book?
Order book currently, we have around INR 1,400 crores. And breakup is around -- I think I'm not getting the exact figure, I'll tell you. So this, I'll communicate to you. But approximately, I am seeing around 50% around, we have supplied business is there. But in the order book, it will be around 55%. And this is sales figure, and we'll give you that figure, and I'll share this information to you. This figure we'll share with you, but it will be around majority today, also space only we have. And defense is picking up. So I'll just try to answer here. Out of INR 1,400 crores, precisely it is INR 1,382 crores, we have around INR 863 crores from the space. Then we have around INR 300 crores to INR 400 crores around from the defense and aerospace and balance others. So it is going to be around 60% is in space and around 30% coming from -- 35% in the defense sector -- defense and aerospace. And balance, you have others in the distribution.
Okay. And on the margin trajectory?
Margin trajectory. I will leave it to our Director Finance will reply it.
Yes. Presently, wherever MIDHANI's products like titanium alloy and special steel, where we are only a producer like majority of the production, there we have good margin, and that's why we are able to maintain our PBT at 24% for this quarter. Overall, we are maintaining at the same level of 23%. Coming to other what our CMD sir was telling about this low-alloy steel, where the competition is more, definitely margins will be less. Even though margins will be less, we are also seeing since we have a capacity, increasing the capacity, I can increase even the volume. Even though margins are less, increasing the volume, I will get the, in absolute terms, more PBT I'll generate. I'm also looking at both the aspects. One is by increasing margin. The second one is increasing volume so that my absolute terms, I will increase my revenue and as well as absolute PBT also, PBT of or PAT.
We have the next question from the line of Pritesh Chheda from Lucky Investment.
Sir, on the existing capacity, when do you think you will hit the peak utilization? Because it is still underutilized on existing capacity by at least 25%. So when do you think? And we are kind of stagnated at a certain revenue for like quite a number of years whereas the existing capacity can churn out INR 1,000-odd crores revenue. So where are we on that phase?
Yes, we are very much on track. In fact, for revenue last time last year, still we have seen. But even though our VoP was less because of COVID and all last financial year, we could increase our revenue by 15%. So I expect this year also the revenue generations will be not less than 15%. In fact, we are targeting for beyond 20% -- 20%, 20% plus. So let's see, and we are right. We're in the part of doing that. But we'll communicate you as and when we get that estimate. But we have -- as you said, that stagnation is -- already, we have broken the jinx last year, last financial year. You might have seen from INR 713 crores, we have gone to INR 813 crores. So definitely now we are on the upward trend only.
Sir, when you say 20%, so have you shared any revenue target with the ministry for FY '22?
Yes, we have shared with the ministry, and it is already under -- they have not -- it has not been formalized yet. So once it is getting formalized in the form of MOU, I'll communicate to you. It has been under consideration now. And in fact, ministry has not -- whatever we have given, they have not accepted, and they are going to review it. So once they've reviewed, I'll communicate to you.
And sir, on the plate mill side, when do you think you hit peak utilization in plate mill? And for this project of -- it was a INR 500 crore project, if I recall, as CapEx. But when we saw the capital work in progress number at the end of H1, it is higher than INR 500 crores. So is the specs of this project revised over INR 500 crores or we have begun some other capital expenditure program also which is reflecting in CWIP?
No, no. I think we are talking about the CapEx.
Yes, your observation on that, you're seeing the balance sheet whether our CWIP is more than INR 500 crores. In addition to the Wide Plate Mill, we have other projects like you know, we have started a project at Rohtak. Rohtak project is there. And to meet the capacity utilization and the balancing, we are also going for a give me 8 tonnes, where additional facility will come. There also we are investing nearly some INR 60 crores and odd. So these investments also still all these assets will become for capitalization during this period. So that's why it is more than INR 500 crores, and some balance payment also is there.
And when will plate mill hit peak utilization? And do we have to assess the business there from scratch? Or do you think that there is already some business available and the plate mill utilization ramp-up can be fast?
I'll just try to answer the questions in the perspective of the plate mill. See this plate mill is a customer-funded facility, and it was given mainly to make as a strategic facility. So that -- and that time, the business viability of this plant was not considered because it was meant for the strategic application. However, we have -- once we have started the project, we decided that we'll also use it for in the full commercial scale. So you can say that it was not a -- full business plan was not at level before going for this facility. However, over the period of time, we have worked out. And utilization part fully, as I said, initially itself, it depends that how we are going to make the product mix because this mill is having a tremendous capacity. And if we can get a good market of the high-end alloys, where the possibility is there, we can definitely get the good business from that. But how much and when, I'll try to answer in a different way that we are now -- the acceptance -- provisional acceptance of the equipment itself, we are planning by the this, I think by mid of the last quarter. Maybe around fourth quarter, we'll be getting the provisional clearance. So after that, we will see that how much we can utilize. So meanwhile, we have also booked the order of around -- not booked fully, but we are expecting order flow -- inflow of around INR 50 crores from this mill as of today. But I expect that something more will come as and when we are ready. So this is how the business is there, but it will take at least 1 year time, we'll stabilize the full -- to come to its full capacity.
1 year time to reach full capacity?
Yes, yes.
And when it is commercially operational because it is still in CWIP. So when it is...?
I think in the fourth quarter, once stabilization is happening, we will -- it will be commercial will be there. But where is the percentage of utilization, it depends on the internal material generation, which we presently, I'm getting them outside and further low-alloy steel and stainless steel, which I will do additional to meet the capacity of the WPM.
And what will be the margins in this business?
Business margin, I think this stays -- again, difficult to say. It depends on the product mix. As I said, now right now, I'm doing and supplying some plates to the railway. So there the margin is a very competitive bidding. So that margin is very, very less. It is also -- you know that most of the order will come through the competitive bidding. And second part is the export. If I'm trying to also find out the possibility of doing the exports, so there also the market is highly competitive. So margin, we don't expect very high in this mill as of now. But as we progress and if we get some good niche market, it is possible to do. And it is not only the plate, we'll do some value addition also. Like, let's say, for armor steel, we'll make the plates. But that still if I'm using for making the armory of the vehicles, making the -- supplying the -- some of the components for our armed forces in form of the -- that much on different types of armor products on it will be there, products can be made. For that purpose, it will be very useful. So I can combine this with the Rohtak facility, make the plates here and then do some value addition in our Rohtak facility. And that also will be doing some good business.
Sir, can it be -- what you're earning today at, whatever, 30% margin on your INR 500 crore gross block that you have today and you do 2x asset turn, will this the investment of INR 500 crores be similar or inferior in terms of margin and assets?
I don't think it is inferior. It is a very good investment there. But as I told that how we are able to utilize it effectively, that depends on that.
As we rightly said another thing, this Wide Plate Mill is a customer-funded project. Customer-funded projects means when my customers are there, they need some plates. This specialty is given nearly out of INR 500 crores, INR 450 crores is funded by the customer. Today, for the customers, whatever steel, special steels I'm making, I'm sending it outside outsourcing where I am paying whose money. By rolling in my inside of plant, I will feel that whatever outsourcing costs and also transportation costs from MIDHANI to my outsourcing agency and return. Further, time saving, 3 elements are there. In these 3 elements also, company will save money indirectly. It is not margin, whatever expenditure I'm incurring, there will be a saving. That is also one aspect here.
Customer funded means at a later stage, this INR 450 crores will come to you or it has already come to you as well?
Already given. Out of INR 500 crores, whatever MIDHANI investment is only INR 50 crores as of now, another INR 60 crores will come. But INR 450 crores is customer-funded only.
So which means that there is a ready business available. And once you commercialize, the ramp-up can be fast, right, at least...
Only the volume of the business is very less because you know in the defense and aerospace sectors, the volume is very limited today. And as the growth of the industry is picking up, we expect that business also will pick up. But in addition to that, we are also trying to do in the commercial segment where there is a lot of competition. And that competition is coming in the area of, let's say, railways. We are also seeing like for making the plate for the LNG, natural gas pipeline. So there are certain areas where margin -- their margin will be less. We cannot expect the margin -- very high margin there because it's a very highly competitive market, and then we have to compete. And initially to launch our products, probably, I have to give some leverage to the customers. Some discounts, I also have to give. Then only I can enter in the market. So these are the challenges we are -- but we are trying to address one by one. And then based on that, we'll come to you that what type, how much we'll be getting output from that.
We have the next question from the line of Viraj Mithani from Jupiter Financial.
Am I audible?
Yes, you're audible.
Regarding the other expenses, it is shorter in this quarter, would it be a reason for that?
Other expenses, you'll see the higher values. Is it not? Hello?
Yes. Am I audible, sir?
Are you talking about increase in other expenses? Mainly it has come from subcontracting.
I'll explain. The other expenses, which is 2 items. Now you know this is the prices of petrol, the MIDHANI will run with LPG and electricity. The LPG costs have increased, so other expenses have gone up. Others, MIDHANI has taken up a new... [Technical Difficulty]
Ladies and gentleman, we now have the management reconnected. Please go ahead, sir. Sir, would you like the participant to repeat their question.
Yes. We got disconnected in between. So better let them repeat.
Mr. Mithani, could you repeat your question, please?
Yes, sir, my question was that the other expenses have increased from INR 49 crores to INR 75 crores in this quarter. What are the major components in it? Is it going to be a regular feature or we have made some measures to control it?
So see, in these other expenses, there are 2 elements where the increase is there, as I am explaining during that the line has cut. Actually, LPG, main usage by the -- MIDHANI main usage is LPG and electricity. The LPG prices comparatively has gone up by -- earlier the 36,000. Now it is running at 47,000. That means nearly 30% increase there, more than 30%. And when there is a production increase, automatically consumption of LPG also will go up. That is one element because of nearly some INR 8 crores increase there. Further, we spend, as I said, we have made a new supply of SG tubes to BHEL, which will have further -- input material was generated by us, produced by us and this was given to outsource for making tubes. Further also 50% of cost goes for combustion. Because of that cost and also we have now Wide Plate Mill is -- now it is commissioning, we have get it outsourced activity. In the outsourced activity itself, we have incurred nearly INR 45 crores extra. This is a major element. Whereas in other expenses, there is no increase.
So will it be a regular feature or in going quarters, it will start tapering off?
I expect it will get tapering off because you see that now whatever has talked about the outsourcing cost. And one way of that we may be saving the outsourcing cost also by utilizing our Wide Plate Mill. And at the same time, I expect now that beyond this, if the LPG cost is still going higher, we cannot say that we control, but we have some savings on the electricity. Our electricity cost has come down because of our captive power plant is there, our solar power is there. So from there, we are getting some savings.
Participants, please stay connected. We have lost the line from the management. Kindly stay connected.[Technical Difficulty] Mr. Mithani, I'm sorry for the inconvenience. You'll have to repeat your question again.
Yes. My question was on the other expenses. So -- and it would be a continuous feature or would start tapering off? That was my question to the management.
I think we have already answered that question. Just I would like to repeat further that basically, it was in the area of 2 aspects that LPG, which is used as the main fuel for our heating of the material. And the second part is coming from the outsourcing. So both the things have come mainly because of outsourcing. It's because of one unique product, which we have developed along with the an industrial partner, which is in -- also in the government of India company and it is a Nuclear Fuel Complex Hyderabad.So with them, we have developed. And basically, in this development, what has happened that they asked the money before we sell the product. So this is the type of arrangement we have, they take in advance. So we have given that type of money to them, so we are appearing here. But this contract is getting now over. We have taken for -- maybe one contract we'll be doing in this year also, this quarter also. We have taken the supply of 3 ships. And 3 ships -- out of 3 ships 2 ships already they have supplied, and now third ship is coming in this quarter also. After that, we are not having that type of work.
And as I further as I explained, LPG rates are going up. If it further goes up, the expenditure will increase. As far as we have explained earlier, if the Wide Plate Mill is coming, with outsourcing activity also will come down. So if it has come down, our other expenses includes outsourcing value, and this shall be around INR 55 crore. So that also will come down.
Okay. And sir, this raw material expenses are part of covered by the contract with the client, like they suppose exponential increase in the raw material cost, are we covered or then or we need to suffer on because of that?
No, no. All orders are not covered. In fact, many orders nowadays, they are not giving that type of provision for cost escalation because of the increase in raw materials.
Most of the contracts are fixed priced contracts.
Fixed priced. Only thing is that there are some provisions for the inflation, but also in the limited contracts with the space. So otherwise, all contracts today, nowadays any orders that we received that will be based on the fixed cost only. At that day, at that time, whatever cost is there on that basis only, we'll get the order.
That is the reason we will maintain the inventory also corresponding to our order. We will maintain -- we will see that we will not incur any escalation in the past.
Okay, okay. And sir, my other 2 questions. One is regarding the -- is there in this offer -- OFS priority -- update on the OFS by the government?
Within the government purview, government...
I have no idea on that. In fact, the process was started long back. But today what is the status, we don't know.
Okay. And sir, my last question is, one, there is a lot of activity happening in the private space, private aerospace, I guess like Tesla and all are launching some rockets, launching low-orbit satellites, do we benefit from any development in future from this?
Yes, definitely. We have one advantage that today in the India, MIDHANI is the only industry where our materials are certified for aerospace applicators. And one of these companies are coming forward and taking our design, Indian design. Definitely, they have to look for the material, which is already approved. But then there is other people also in this field. Customers have -- the manufacturers are coming up, so there will be definitely a competition. Maybe margin may come down, but business opportunity will be definitely there. And MIDHANI is a very strong contender for that. And basically, I will say that, especially today, in titanium alloys, nobody else is there in the country. So we have that leverage advantage of getting that type of business.
So if this low space, low-orbit satellites are launched in India, then we have a good chance of getting the orders from these customers, right?
Yes, definitely. In fact, right now also whatever, ISRO is going to give that launching to some private sector recently. We have already given our -- they have also indicated that they are going to take the material from us. So we are very much in that race, and it is -- that is going to continue with us.
We have the next question from the line of Rita Tahilramani from Invesco Mutual Fund.
I just have one question. Would you help us understand what could be the order inflow for the current year? And which are the projects should we track for monitoring the order inflow for you?
First of all, the project which will be tracked, that's defense -- mainly in the defense sector. This year, the defense order inflow from the defense sector will be quite -- I expect it will be quite good. And mainly, you must have seen that a lot of satellite -- missiles are there, the different type of missiles are coming up. And there, we have the opportunity to get the business for the -- once it is going in the stage of production. So already, we are a partner with them in developmental stage. I know the most -- many of the missiles are there, which we cannot tell the name of the projects and all. These are all very strategic in nature, but very much in part of that. And other than that, also, we have some other strategic projects. But there are also things are that under the stage of development, a lot of development the company has done and especially in the area of technology transfer. So TOT also, we have a job for the products, which is going to be manufactured in the industry in the country. But again, the project name is not possible to discuss openly and this is a public domain. So these are the different sectors we are looking for the opportunities. In addition to that, we are also working on the corporate sectors, as I told in the railways and some of the requirements we are going to fulfill. And also in the armor. Essentially, our facility, which is coming up in Rohtak, IMT, Rohtak. For that facility, we are expected that some business will get from the armor also. In fact, last year also, if you see in our sales portfolio, we could get some sales we have made in the armor also. Every year, we are doing. Last year also, it was quite good business. But now I expect that with our new facility, it will again pick up, it will pick up more.
Okay. Sir, what would be the order inflow guidance for the core business, specifically our defense and...?
Total order inflows so far -- so far, we have already -- if you see as on today, we have around INR 450 crores worth of orders we have booked. And it is coming from the -- maybe from energy sector, space. Combined together, already INR 450 crores. And we are anticipating that another INR 400 crores already, we expect that will come shortly. So it is expected on INR 850 crores. But in addition to that, with our new armor facility and Wide Plate Mill, I expect another inflow of around INR 150 crores. So we are targeting around INR 100,000 crores in this year for the order book.
And how much would this be for next year? Why am I asking you this question, which is if I see for now 2 years, the order inflow has been more or less matching with the revenue or in fact, at an even slightly lower than revenue. So that is what I'm asking this question because you're doing growth...
I'd also like to mention here that the order book also depends that what will be your potential to execute. Like I tell you earlier, we were not having potential to execute the place for manufacturing, supplying for different sectors. Those places were getting imported in the country. I expect that with Wide Plate Mill coming up, those orders will start inflowing to us. While you can say that why you are not booked right now itself all the orders, the products which we are looking for from this facility, nobody can issue the order in advance. They are looking for that, the order is given, and the supply has to be done within 1 month. So that type of commitments are there, and that's where the company is taking a step to build some inventory for the raw material condition. Because as the order inflow is there, we can process and supply to the customer. But that area, I will say that what is the value, how much income, it depends at how fast we can execute and we can see -- we can satisfy the customer. But yes, we are ready to ensure that.
So at this point, it will be difficult to give a '23 guidance in terms of order inflow?
Yes, yes. But I have already -- what I have told you about INR 850 and plus...
Farther to our CMD, I tell you today, our order book position is INR 1,382 crores. And we are expecting another INR 400 crores from the regular business, it will become INR 1,782 crores. Plus we are expecting Wide Plate Mill based in another INR 200 crore. Nearly INR 2,000 crores, what's the margin we will get. But even at already there [indiscernible] , it will be more or less in INR 2,000 crores. We are sure that once our Wide Plate Mill is established and [indiscernible] established, we can resume the other and get some more order also as we -- when we are telling once we execute the order only, some customers will give further under.
Yes, yes, I got that. I got for '22, I was asking for the next financial year.
Oh, next financial year. Okay, okay. Very difficult to predict. The market is very volatile and we are basically in the raw material sector. So we'll be sharing the information with you as and when the order starts.
Facilities will be bright because while new facilities are coming. So we expect there will be a bright future to MIDHANI in getting to the oder front.
In fact, right now, if you see India, a lot of numbers in [indiscernible] being imported. India is also importing a lot of titanium alloys. India is also importing a lot of pallet steel in the higher region. So we are trying to fill the gap. And the volume is enormous. It is not in the 100, it is in thousands of crores. So that analysis already our people there, we have done that. I don't know how much we can capture. It depends that our -- how fast we can execute the orders and what competitive rate. So we are very much in that, and we are trying to see that best of our ability we can utilize for getting the good segment of the market.
We have the next question from the line of Gokul Maheshwari from Awriga Capital.
So the gross plus from -- for the company is around INR 1,100-odd crores post the commissioning of the new facility. Given the historic asset terms of around 2x, would it be fair by FY '20 end, you could achieve revenues of close to around INR 2,200-odd crores?
I'm -- you are -- can you -- if I understood correctly, you are asking that investment is around INR 1,100 crores. Is it not?
That's right. Yes, recurring gross loss, including the capital work in progress.
That, I'll tell you, the investment is not so much. We have to correct it. And also all the investments are not going to mature at one moment of time. We'll take some time, it's one part. And second part, you said that what was the turnover by FY '22 is around how much?
No, no. I said FY '24, given the historic asset turns has been around 2x. So directionally, would you be getting to like that kind of a sales figure over the next 2 to 3 years?
Yes, definitely, definitely. Otherwise...
Otherwise, the company will not -- the investment of this much, INR 1,000 crores never were in the company earlier. No, I am investing around INR 600 crores, so if you see in the CWIP, which will become asset this year and next year, I should increase turnover in the same way as the facilities whatever is coming. It's new facility and an additional facility. It is not the existing business and further the new build and it whatever work that I am doing. Whatever right place I'm doing, whatever spring plant I'm doing, which is all new business. In addition to that, I am also enhancing my existing business, where I have already MIDHANI established. It is definitely, if you said '24, we are accepting the future. It also depends on the competition and who new people, who are entering into the market, We are having that all. We are towards the same goal. You're right.
In fact, our approach would be that we can see for it has been better moving up to FY '24, if we can go to keep on the FY '23 will be better.
And this also, saying 2x. We are expecting more than 2x.
Great, sir. Great. Secondly is what I understood from the new facility, which is coming in -- what you're saying is that from your customers or the customers who asked you to sort of put up this facility, the volumes from these customers is going to take a lot of time to ramp up. So in order to fill up the capacity, you might be taking some commercial projects which are going to be lower margin. Is that correct?
Yes, yes.
Yes. So directionally and as time passes, you would be actually be filling up your capacity with your core customers as their volumes scale up. So if I take a more longer-term view, which is more like 3 to 4 years, the margins from the newer facility will keep on improving as the mix improves.
I'm not talking about the old customer and all, but I see the facility which we have installed in this company, they are all basically very unique in nature. And certain technologies out there, which we are already developing the technology in-house. And if those technologies have matured, then definitely, as you said, that will be -- this mill also will be working in the niche area, and we'll be getting a very good margin from there. But then at this juncture, I cannot declare that and I cannot say it is there, but we are working towards that. And there are several products which is being imported in the country, we know very well. And there, there is no competition in the country at all. And this type of products, we are already developing. We're trying to develop with our in-house R&D facility.
Okay. Just lastly and a question on the data. When you're making an investment, what's the minimum threshold IRR do you work with when you're making such a big investment?
IRR.
Normally, we see more than 15%.
15 plus is the main.
Normally, we see more than 15%. And whatever projects this -- you're talking about the Wide Plate Mill, strategy is on it. That's why customers are funded. And there are other projects, we will see, at least minimum should come. And you go normalized work go 70-30, 70 debt and 30 equity. But still, I see normal out projects whatever is their debt price is now at that level, at a very lesser compared to earlier periods. So we are taking 15% if it is coming it is what.
We have the next question from the line of Shalabh Agarwal from Snowball Capital.
So the first question is, would it be correct to assume that most of the Gaganyaan project-related orders have already come in for us?
Yes, yes. Already order has been completely placed on us and we are executing also, and it is moving in the right direction. There were some delays because of this COVID thing, but then it is moving already. So Gaganyaan, already everything has been placed and whatever was supposed to. Maybe the small things are coming up now, which is not very high events.
Sure. Sir, any other big ISRO project, which may come up a couple of years down the line for which we may get bulk orders. Anything expected?
I know that your recent space policy, you must have the change in the policy has come. And basically, they are trying to reconcile that. That what will be their approach in the launching of the satellite. And with the forming of the new space, India, NSIL and all this public sector entity in space sector, they are picking up the major shift in the -- they have given a major shift in the policy. And I expect that will clarity emerge in the next few months. And then you'll find that a lot of private players will be coming in India, and they will be lining up for getting this launching of the satellites. So this sector is not going to stay the way it is today. I think this is going to get a great growth in the country. Whether MIDHANI is getting the advantage or somebody else is the question mark. But this industry is still -- there's a lot of potential there, and India is going to be the major hub for space launch program -- space program. So we expect all of this to come because space has got a lot of development program also. And one advantage of MIDHANI is that we are very exclusive in this middle portfolio. So definitely, as and when the programs have decided, definitely, we'll be getting the good business from there.
Sure. And sir, coming to your Wide Plate Mill project, it was stated that around INR 450 crores has already been received from customers or -- towards CapEx of the project. So just wanted to understand how it has been allocated to different customers because the project is still in the commissioning stage? So have the customers been identified and some kind of an allocation being done to get to that INR 450 crores?
No, no, no. It is not that. It has come like a grant, onetime grant to us with the certain conditions that whatever the product they need for their program, we have to support the program on as a first priority. And in that first priority, we have to see that technology because the MIDHANI has in the technology to process. It is not that they have grown just like that. Since we have a technology level and we have developed it since long, so based on that only, they have given to us.
So this INR 450 crores is coming from multiple customers, right, across multiple customers?
Not multiple customers. Only 2 customers. One customer is from DRDO. And the other is from Ordnance Factory. That now they have come to the defense PSUs.
Okay, okay, okay. And sir, like in coaches, you said the -- during the commissioning stage, we supplied the sheet to the coach factory in Chennai. So how was the coaches being manufactured earlier? Are we -- have you replaced something?
No, no. They are also buying the place. Not that they are -- we are -- MIDHANI is giving the first time. I have supplied earlier also. But that team, our mill was not there. I used to outsource and get it done outside. Now available on facility. There's a change in the business, this type of execution.
Changing the business and increasing the business because unable to find it.
Sure, sure. And sir, just lastly, if I can please one. The -- last year, if I look at the annual report, the fuel cost, the power and fuel costs decreased substantially despite our revenues going up from INR 700 crores to INR 800 crores, the power and electricity charges reduced from INR 61 crores to INR 41 crores. So was it primarily because of the solar capacity that was created because of which the power charges reduced?
Yes, yes, partly solar, but this last...
Yes, production also less.
Production, we have been less. So definitely, that has rented in the lower content power and LPG, both.
The 19 would be [indiscernible].
Ladies and gentlemen, due to time constraints, that was the last question. I would like to hand the floor back to the management for closing comments. Please go ahead.
Yes. In fact, I appreciate that interest shown by all the investors. And especially, they are -- more than the present, they are looking for the future, and we are also aligning with their thoughts. Companies also very much interested. And since lot of investments are getting matured and we have a lot of infusion of the CapEx. And we have an team, and they are very committed people here, so I feel that with that type of -- and also we have a very good technological base. So I feel that with this type of knowledge base and then having the commitment to do, I expect that the company will perform better in the future. And definitely, we'll be very happy to answer any queries in between also. But I hope when we come to the next time, we'll have many more to offer to our customers. Thank you very much.
Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.