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Mishra Dhatu Nigam Ltd
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Good day, and welcome to Q4 FY '22 and Business Update Conference Call of Mishra Dhatu Nigam Limited hosted by ICICI Securities Limited. From the management team, we have with us Dr. Sanjay Kumar Jha, Chairman and Managing Director. [Operator Instructions] Please note that this conference is being recorded.
Without further ado, I now hand the conference over to Dr. Sanjay Kumar Jha for his opening remarks. Thank you, and over to you, Dr. Jha.
Yes. Good afternoon, and I welcome all the investors and the stakeholders for this -- today's conference. I'm very pleased to announce here the highlights, which first initially I will start with the Q4 results.
Q4 for '21/'22, we have sales of INR 323.29 crores against INR 345.87 crores from the previous year. And VoP for the fourth quarter of this '21/'22 is at around INR 352 crores against the previous year of INR 271 million, registering a growth of around 30%.
Also, we had the PBT, which is INR 110 crores against INR 101.53 crores, which we have recorded in the previous year, registering a growth of 8.8%. Similar trend is seen in the PAT also, where our Q4 PAT against INR 74.62 crores of the previous year, the quarter 4 of '21/'22 stood at INR 80.99 crores.
This year also, if you see the overall for '21/'22 around the full year, from this year of '21/'22, we have achieved a turnover of INR 859 crores against the earlier last year turnover of INR 813 crores, registering a growth of around 5.7%. VoP also, we had an increase of around 28% corresponding to the previous year. Against INR 771 crores from the previous year, this year, we have achieved INR 988 crores.
And there is a corresponding increase in the PBT also and the PAT also. And PBT stood at INR 239.12 crores against the previous year of INR 226 crores. And PAT is INR 176.31 crores against the previous year of INR 166.29 crores. So this is the total -- the financial performance, what I've put in briefly here. And our results are already out, it is available for further details.
And considering that this year, we have paid a dividend of -- already interim dividends were paid of INR 1.56 per equity share. And now we have decided the equity around INR 1.54 per equity share is the final dividend we are going to pay for '21/'22, which is also the highest. In fact, it works out to around 33% of PAT and highest dividend paid by the company so far in its history.
So this all performance, there has been some difficulties. As you are aware, in the last quarter, we had -- there is some impact of the current conflict, which is going between Ukraine and Russia. And also, that has put a lot of pressure in some of our raw materials as well as the sales also. So we could not realize certain amount of sales in the last moment due to this affecting -- due to this war. And initially, the first quarter of the company's performance also affected by the second wave of pandemic had also has slightly. But then this is all, it was common for all these companies for this year.
Order book position, I just want to highlight here that our order book stands almost similar to that what we had on the 1 April 2021. It is coming to around INR 1,317 crores. The reason behind that buildup of the order book is mainly today, we are not getting any orders, which can go for the couple of long term. What we are getting the orders now is that we can get the orders, and we have to receive within a very short time.
This year, to highlight, as I said, about the significant jump in VoP and also the export has gone almost -- it has touched more than 4x. Of course, base was very less. But nevertheless, export jumping to 4x. And we have to also see the disruption in the supply chain due to the pandemic impact in the globe. This has been a very significant achievement for the company as far as the international market is concerned.
I would like to highlight some of the other achievements. Our facility, which has come at Rohtak in Haryana, which is exclusively for the armor facility, that facility has already been established. And we are starting this -- the facility. Already, we have the booking of more than INR 100 crores of orders for this facility. So we have -- starting the facility with a very good note.
We also started our Wide Plate Mill, which was coming from since long time in last -- in this '21/'22. And we have got established the entire product range, which includes low-alloy steel, seller steel, titanium alloys, superalloys, armor steel, varieties of products already we have demonstrated. And it is expected that [indiscernible] of getting orders from a different source, which includes a small token of export also, we are trying to get from this facility.
This year also, you have seen that our 8-tonne vacuum induction melting, which has been a long requirement to enhance our capacity and manufacturing of [indiscernible] steel and superalloys have been already commissioned. And it is already -- it has been proven that this equipment can be used successfully. And you will find that the contribution of this facility in the current financial year. We have also started, sorry, a very important facility for making titanium alloys. Already we have, but to enhance its capacity, we are making a titanium [indiscernible] sorry.
Okay. So our titanium facility, now we are putting exclusively for making titanium production in a single place, which will meet the requirement of the international companies or the aerospace companies, beside the aerospace companies, and so that our product can be used in the moving parts of [indiscernible] and components.
So these are the few -- some of the highlights which I have presented. Now floor is open for discussion and any of the queries. And with me, Director of Finance has also joined. So you can put your questions now. Thank you.
[Operator Instructions] The first question is from the line of [ Sri Jawaani ], an individual investor. And the line from the participant dropped, and we move on to the next participant. The next question is from the line of [ Kaitav Shah ] from White Equity Investment Advisors.
So I have two questions. The first question is relating to the inventory. So you have a subline item which is called internally generated scrap and rejected material. So if you see over the past 5 years, that also as a percentage of inventory is increasing consistently. Over '16, it was around INR 17 crores and the percentage of inventories was around 6%.
And that increased to INR 217 crores and 27% of inventory for the FY '20/'21. So can you please throw some light on this, why these [indiscernible] is increasing? And is the company planning to use this material for some future projects? Can you please throw some light on this?
You have basically told that whether the company is trying to use this inventory. First of all, our company, we are manufacturing very special alloys and special materials. Now these materials, whenever we generate the scrap during the process, it cannot be sell outside and sold outside. And basically, they are very valuable in nature. And our orders are not having uniformity. We cannot get the same order [indiscernible] basis. So whatever we generate, probably we have to store for some time.
And then when the next order is coming, I'll be utilizing that -- those things. So this is the reason [indiscernible] that it is going up. But at the same time, certain things are also not moving very fast. Because items which we make the certain scraps, you cannot sell in the open market, even though you are not able to move it for a long time. You cannot sell in the open market because these materials are very [indiscernible] in nature. So these two factors are, I think, are important. Any other part is there, I will ask our Director of Finance to add here.
Okay. Okay, sir. So adding on that, so if the balances are increasing, so any plan to [ recome-up ] in the near future of these inventories?
Yes. We have -- if you see our -- this consumption of internal scrap, I don't know if it is appearing in our financial years or not. But our convention of internal scrap has increased progressively year-after-year. It is mainly because we are trying to see that the scrap can be used for certain customers who were not monitoring them. That means their requirement is not for using the pure metals.
So we are having -- making the balance on that. And also, we have modified in our processing technology, which has helped us to consume more and more quantity of scrap. So that work is also primarily going on. And that -- we see that encouraging results are coming. The last year itself, this current financial year, we have sales of around INR 40 crores, INR 43 crores of raw materials by utilizing our internally generated scrap.
Okay. And sir, second, just a small question. So you are providing the account of the employees. So can I get count of how many are in the admin staff and how many are in the technical staff? So if you can give some idea on that for the current year and over the trend over the last 5 years.
Okay. I think you are looking for the number of technical and nontechnical staff.
Yes, yes, yes.
We will provide you that information.
The new production and technical side only, more people are there. Because this company is a quality-oriented company and more testing environment, inspections are required, so we have a big bunch of quality control people. So comparatively, compared to admin, production side is more, including our overall recruitment in maintenance team also.
Okay. And the trend is true for the last 5 years, right?
Yes, trend is still that. Trend, there is no change.
[Operator Instructions] The next question is from the line of [ Aditya ] from [ SIBM ]. Sorry, your voice is coming a little feeble. Sir, there's a lot of echo from the line now.
Is it better now?
Yes, sir, slightly better.
Yes. So just wanted to understand, we have been targeting export growth for the last 2 years. So just wanted to understand which countries are we targeting? And what kind of products are we looking to export?
Export the country, which we are targeting, there are almost -- I don't have the list as readily available here. But I will tell you, we have -- we are targeting Germany. We have given to Turkey. We have given to Hungary also. France, also we have given. We have also supplied to U.S. also, U.K. also. And we are also making the [indiscernible] export. So there are various sectors where we are giving our export is going on.
And I tell you, it's basically the beginning. Because in the international market, unless -- since we are entering the first time, our products are being tested for quality, for processing, for certification. And that's why the volumes are now increasing year-by-year. Because once a customer is satisfied, that one grade is successful, they are increasing the quantity, provided the price are given on a completed basis.
So these things are happening now. And I am sure that, in fact, if you see our targets from the ministry that I have to take it further, from INR 80 crores, INR 87 crores for this year, we have to go to more than [ INR 380 crores ] in next 2 years, next 2 to 3 years. So what I said that there's a lot of intent from the ministry also and we are working towards that.
And sir, just wanted to understand which are the products and sectors you are targeting?
First are in the niche category. First, I would say we are giving the titanium alloys. We are also making the special steel. We are also giving the superalloys. So all major, these three areas we are targeting. [indiscernible] product portfolio, we are serving that.
Right. So unlike India, where in many of the [indiscernible], you are the real market leaders. But when we move to international markets, the competition will be higher. So just wanted to understand what gives us the confidence to improve our export share [indiscernible]?
Confidence comes from your quality and then what is the price. These two aspects are very important. So in the international market, the price is the first thing and then next comes the quality, unless those two things are not met. And for me, the main part, I would say the quality is very, very important. Price-wise, we are not finding much difficulty in the sectors which I have told you.
But of course, the margin is less. Because initially as we have to sell it in the market, we have to be slightly cheaper compared to the established player. So to penetrate the market initially, we have taken a conscious decision by the Board that we'll offer a very less margin, so the less margin and with the better quality we are operating. But as we are progressing in some places, we are getting good margin profit also.
Right. And in your previous call, you had mentioned about NADCAP certification for aerospace international companies. So where are we -- or what is the status for that?
NADCAP is at advanced stage of approval. We are expecting by next 6 months, we are expecting that to be -- we'll be getting that.
What kind of opportunity will it be to open for MIDHANI?
See, NADCAP is the one area, if the NADCAP certification is there, you can enter in the international market for aerospace industry. Then for the aerospace industry, unless a NADCAP-certified company you are, you cannot get the orders. So the main objective of getting NADCAP is for that purpose. And considering that NADCAP certification, not only international market, even in the domestic industry also, the foreign OEMs, right now, they are buying material from the outside and then manufacturing the product in India. They will also certify you, and you can be a supply chain partner for this industry also.
Right. And in terms of our raw materials, how much of it is imported? And what would you say it was 3 to 4 years [indiscernible]?
See, today, the raw material, which we are discussing mainly required from MIDHANI are imported only, very less [indiscernible] is there in the country. So far, some this -- during this period, we have taken effort to minimize highly voluminous requirement of pure iron. We have minimized in our company with the support of our R&D. And we are consuming that. But the resources of the nickel, cobalt, moly, it is not [indiscernible] by our country. So that's why you have to depend totally on import. So wherever it is possible, we are minimizing and then see that similarly the case for titanium also.
Right. So are we dependent on any one or two countries for supplier of our raw materials?
Yes, yes, yes, definitely.
Sorry, I did not get it.
Yes, we are depending on that.
No. What my question is, are we dependent any one or two countries for the supply of raw materials? Or is it diversified?
No, I am just trying to affirm, I am telling that whatever is the question, the answer is yes.
The next question is from the line of Abhijit Mitra from ICICI Securities.
I hope I'm audible.
Yes, sir, you are.
Yes.
Yes. So I have four, five questions. First of all, if you can lay down the CapEx, that schedule for Wide Plate Mill, armor plant, spring plant and the powder plant, if you just tell me the CapEx numbers for each of these plants, the total CapEx that you are scheduled to do.
Already for Wide Plate Mill, our CapEx expenditure is completed now. And our CapEx was around, if I remember correctly, around INR 500 crores. And for armor also, our CapEx already we have completed more or less, very little hardly left now. So they are almost around INR 60 crores we have spent. And the third area you have talked -- about asked about?
Spring plant.
The spring plant, also our CapEx expenditure is coming to the end now, hardly 10% left. But there, we have almost placed around INR 30 crores, INR 30 crores. And then you said about powder?
Powder, yes.
For powder, we have not spent so far. Already, it is in the stage of now tendering. And we have estimates of around INR 35 crores to INR 40 crores.
INR 35 crores to INR 40 crores. Sir, can you lay down your estimate of the maximum revenue that's possible from this plant starting from the plate mill?
Yes. Plate mill maximum revenue that we can get to the full capacity is around INR 500 crores.
It depends on the product mix. If I do more special steels than my own product class, then my revenue goes up. Because today, I'm also [indiscernible], whatever the plates needs to be to be sold and getting outside. Now whatever I'm getting outside, I will roll only inside. That itself will save me [ INR 60 crores ]. And further, if I roll titanium and other things, where the prices are more, I will get more revenue. If I go to commercial steel, like what I supply to railways, are stainless steel, then my value will be less, even margins are a little bit less.
I'll just give you one example recently by interacting with Airbus. They said that if India can supply titanium because they have a problem now today with the Russian supply chain. And you know in the international market for titanium supplies, Russia plays a very vital loan. They have a huge capacity amount. So if we can fill up the gap, we can get a very good potential market. So we are trying for that, basically.
So what is our Director of Financials adding to that, if you are going for special materials, special alloys, naturally with the less volume, you can go for higher turnover. And our main purpose target is for that only. Our team is working towards that. And we have some small progress also we have made. And we'll be updating you as and when we'll get the good amount of orders.
Sir, the maximum revenue you see from this mill is around INR 500 crores, that's what you say?
Yes. It could be less, but it may change. It may go to higher also.
Have you booked anything in '22?
Yes, we have booked for our orders, around, I think -- around INR 5 crores' worth of orders. But it's very -- it is a small beginning only, I will say, as of the [ quarterly order book ].
Because their margins are very thin, there is a lot of competition to take commercial steel, carbon steel or stainless steel. Margins are thin and lots of competition in there. And this product also, Wide Plate Mill is kept with the funding by the government agencies and is a strategic in nature, base materials. And then some materials still end up to go that -- this plant as planned.
So this is an additional plant capacity of 30,000 tonnes. In the 30,000 tonnes, only 5,000 to 6,000 tonnes only with main special steel and important titanium will come. Balance, 25,000, now I have to see how to utilize the market at a very competitive market. And the other important thing is the Wide Plate Mill in the [indiscernible].
The Wide Plate Mill, I can roll up to 3 meters width, which is not available in most of the places. It is unique. So I'm trying to capture the market and the customers also. If we are able to capture customer's confidence, I get the market with some additional premium. The normal [indiscernible] it is going at INR 250 or INR 260. I may get [ INR 2 ] more, but it's wider plate.
Okay. And any revenues that you have thought out in '23, '24, '25 from this project?
Revenue we have thought of, we are planning to have more additional impact. Still, I am for my own requirement of the armor plant, I am already manufacturing and getting to that. So it is not that only I'm getting the product from that from the mill, we are also doing the value addition so that our turnover will go up. And also, we are taking up some of the requirements of [indiscernible] also.
From a Wide Plate Mill perspective, can we expect INR 50 crores, INR 100 crores of gradual revenues in the next 2 to 3 years? Is that possible?
Easily. That is not -- we are targeting much higher than that. We are targeting at least INR 230 crores this year.
For FY '23, sir? Okay.
Yes, yes, yes.
Okay. That's comforting to know. And sir, what about the armor plant? What is the maximum potential revenue that we have seen possible from the armor plant?
Armor, this year, we have the order book of INR 100 crores. I'm expecting that not less than INR 60 crores, INR 70 crores we'll be having this year.
Okay, okay, okay. And what about spring plant, sir?
Spring is the only where we are depending exclusively on the one customer. It is a railway. And railway certification is now underway. And after that, I have to look for the orders. And we are ready now in all aspects that, that work is going on. So I'll be coming to you, the investors, whenever I get a good breakthrough in that side.
But there also, I say that once the plant is moving, we'll have a continuous inflow of the orders.
Not only railways, we are seeing other [indiscernible] also, where other people also wherever springs are used, those customers also we are trying.
But what is your expectation of the maximum revenue possible from this plant, from the spring plant?
Plant can give revenue of not less than INR 25 crores to INR 30 crores per [indiscernible]. So let us see that how much we can get this year. That's a challenge. We are trying to regularly, we're working on that.
Okay. And what about the powder plant, sir? What is the maximum revenue possible from the powder plant?
Powder is basically -- this is not a project, this is R&D. In fact, powder has -- we have started with the R&D type of activities. And that will require some time to establish our product in the market. Because normally, the product producers across the world, they are certified by certain companies, [indiscernible] manufacturing companies. So we have to [indiscernible] that area.
And that work also has to take off. Maybe if we take 1 year, 1.5 years to get the [indiscernible]. It will take some time, by the time I feel that technology also is mature in the country. Today, we talk about [indiscernible] manufacturing. But the users are also very limited. People are not using the components so easily. But it is progressing now. You can even find that certain startups, they are making the rockets also using the [indiscernible] manufacturing technology.
So I'm hopeful that in -- by the way, our [indiscernible] is progressing. By the time our technology is available, we'll get very good customer there also. But we are -- financing part of it has been done for that product. I don't have the exact number, but we'll let you know.
[Operator Instructions] The next question is from the line of Romil Jain from Electrum Investment Managers.
You can hear me?
Yes.
Sir, my question is on the defense side. I think our government is very vocal about defense. And a lot of opportunities have come up in the defense space, okay, right, from shipbuilding to Army and everything, aerospace and all.
So what kind of overall effect do we expect in our business? Because a lot of these special steels will also be used in the defense category. So can you just shed some light on that maybe in the next 2, 3, 4 years, where do we see ourselves in terms of revenue or EBITDA margins and all?
First of all, I would like to mention here that the strategy itself, the Defence Acquisitions Council has cleared that year-end that acceptance for [indiscernible] equipment. So that has been already cleared by DAC, Defence Acquisitions Council, and which caused for that investment of around INR 76,390 crores. Now there if you see the classification, I would like to draw one area. That area is they are talking about the minimization of materials for Sukhoi engine. You know that today in our country, Sukhoi is the main -- one of the biggest squadron fleet for our entire aerospace -- Air Force.
So for the Sukhoi engine, if they want to start the minimization, MIDHANI has a golden opportunity. Because many of the alloys, which is being used for the Sukhoi application, we have technology to manufacture those alloys. And also, we have a very good system in place to get certification for aerospace materials. So considering these two aspects, I see that we have a very good opportunity in the area of aero engine materials. And that is going to rule for future in the country.
And not only that, in addition to that, you see our -- for our light combat aircraft, which is [indiscernible] developed, for that also manufacturing of the engines has to come in the country today or tomorrow. So once we get this experience for the materials, we can begin in that area also. And there, there is a huge business coming up for the aerospace materials, [indiscernible] which is basically in the engine.
Okay. So sir, this Sukhoi that you mentioned, I just want to understand the timeline for that, let's say, I mean, of course, from Indian timeline. But how much kind of certification will it take when we start this process? And as you mentioned, we have the technology. So do we have the capacity if we get the certification in the next 6 months, 1 year? I don't know how the process works. But by then, can we expect some kind of revenue to come from this?
I'll tell you for Sukhoi materials, we'll not -- MIDHANI will not wait for certification. Our metal is already certified as far as material is concerned. Only for the component, which has [indiscernible], there only will require some time for certification. For raw materials, we are already certified. And we will not need a timeline for that.
Okay. And so what kind of opportunity size will that be on the entire aerospace?
Today, our business in aerospace is very less compared to that -- in India, I think the activity is less. So I see that future, if you see our [indiscernible] what our -- if we are able to get the right quantity of the orders and all, it will be fairly tilted towards the aerospace industry.
So you may see that, you'll find that 30%, 40% of our revenue may be coming from the aerospace. So I cannot discuss what will be the requirements of the materials as of today. Because initially, for how many sites we are going to replace the material. But this is good volume, a good area.
Okay. So sir, let's say in the next 4, 5 years, where do we see ourselves? Because the opportunity size is so huge overall and the exports will also increase. So what kind of estimates? Because like some -- let's say, next 4, 5 years in terms of margin and the top line.
Yes, I'll tell you today, with the -- you might have seen the Ministry of Defence, they are trying -- they're talking about $5 billion export, $25 billion of production. So that increase itself is coming to 2x. Whatever we have today, it has to go to double. So there is a target that unless you grow at the rate of 20% to 25% per annum [indiscernible] to that level. So wherever you see now the requirement coming from the defense industry, either PSU or private, any industry, and especially, I'm talking about the PSU, which we are seeing from the close quarters, definitely, we have to grow at the level of not more than 20%, 25% per annum.
Okay. And the margins will also be healthy, right? I mean, [indiscernible]
I cannot tell you because margin is today, whatever we are having, that results a very high margin. And you know in the country today that lots of competition is coming in the materials also. I can -- MIDHANI cannot claim that MIDHANI is the sole manufacturer of everything in the country today, it was [indiscernible]. So there will be a pressure on the margin. But then if somebody has to improve their efficiency, there is a lot of opportunity in that.
Okay. So sir, last question from my side. I just want to understand whatever orders we get, the order book and everything, is it largely tender-driven or it is how that process goes? Or it is directly driven [indiscernible]?
Majority of the orders we are getting by the standard tendering. We are not getting on nomination. Nomination era is almost over. Very limited orders are coming on nomination, where you have exclusive technology we are holding, exclusive patents we are holding, exclusive -- we have that testing facility and all we are having, where we are finding some orders are coming on a nomination basis, but they are very limited. So majority of the orders, you have to be on the [indiscernible] basis only.
So the competition is very high. How many such companies would be there who would be competing with us, let's say, for a couple of tenders?
I cannot tell you for every tender, there is a different type of grade. Every tender, you may find either one competitor, sometimes there are two competitors, depending on what is the type of grade. And sometimes even though tender is there, we are the only [indiscernible] in the country. So it depends on what is the type of tenders. But today, I will say that MIDHANI's product portfolio is very wide. So we are finding ourselves not so much effort in getting the tender, in winning the tenders. But competition is there, definitely.
[Operator Instructions] Next question is from the line of Abhijit Mitra from ICICI Securities.
I hope I am audible.
Yes, sir, you are.
Yes.
Yes. So just to sort of continue the previous questions, on the armor plant, what is the maximum potential revenue that you can see, sir, per annum?
Other plant is?
The armor plant.
Armor. Armor has a great potential. The country is -- we have an estimate, it was not by me. This was given by a consultant. We see that there is a potential of INR 250 crores, [ INR 280 crores ]. [indiscernible] is the total volume, volume in the country. But we can see that MIDHANI can grab 10% also of that. It will be not less than INR 300 crores.
And capacity is enough to address that?
No, we are not -- right now, we are adding further. We are in the process of improving the capacity. Certain supply chain also is the issue because all materials are not available in the country. So we have to depend on the import. So those type of activities are going on. But it has a very big, bright future, the armor industry is increasing. Everybody now is looking for safety for higher standards. And then you need a lot of improvements in that area. So we are working towards that.
Okay. But as of now, you mentioned that in '23, you are targeting a revenue of INR 60 crores to INR 70 crores.
Yes, we are starting with a healthy order book position of INR 100 crores right now. But I am just saying that if we are able to complete 80%, it's also fine. But I'll be seeing that how can I maximize the revenue by doing more and more.
Okay. But then Wide Plate Mill and armor put together itself can add around INR 300 crores revenue in FY '23. So understanding...
Yes, yes, yes.
Okay. And that INR 300 crores can increase that to almost INR 500 crores in the next couple of years easily?
Definitely.
Got it. And also if you can give your expectations of order inflow for the next year?
Next year -- this current financial year, no?
FY '23, yes, FY '23.
Yes. We have almost a visibility of around INR 100 crores of orders.
Okay. And what has the [indiscernible] target for...
Sorry to interrupt you, your voice is breaking.
Targets we have for this year, around INR 1,000 crores.
Okay. That's all from my side.
The next question is from the line of Shalabh Agarwal from Snowball Capital Investment Advisors.
Many congratulations for a very decent set of numbers. So the first question is I just wanted to maybe see more color on how the profitability is getting managed. Because we've seen most of the raw material, most of the metal scaling new highs in terms of prices, whereas we've been able to maintain our margins despite having fixed price orders. So just wanted to make a sense of how we are doing it. And what do we expect for the next year? Do we expect to maintain the profitability or not, given the surge in the prices of raw materials?
Yes, you have really mentioned that there is area of concern for all the metal -- especially the special alloys and metals producers in the country. Because you know that there is a lot of volatility in the price of raw materials. So it is a -- that is putting the pressure in our profitability in margins and all. We have also faced in the current financial year -- the previous financial year, our expenditure has increased because of the increasing price of raw materials because even the price of the fuel.
So there are a lot of other reasons that are also there, power cost. My summation is that this is a part of the industrial hazard. It is -- we have -- anybody is going to face. So the margin depends that what is that -- is like how much efficiency you are doing in your operations. If your efficiency is improved, you can get the margin. Otherwise, in today's condition, whatever the raw material price is there, very difficult to sustain the profit, very difficult. So we have faced in the last year. Otherwise, we could have gotten a better financial results.
[indiscernible] In this last year, our actually gross margin has actually gone up. In FY '21, we were at 74%, I'm talking of gross margin. There is now reported around 78% almost. So despite having fixed orders and the raw material prices going up, our gross margins have actually gone up. So that is what I wanted to understand, how have we been able to manage that?
I'll answer, the gross margin also depends on the value of production. Because value of production this year, if you see the INR 989 crores, last year, this is INR 770 crores. Even the prices have gone up. Because I'm able to make more production, my fixed cost distribution is more -- it is taken care. Another thing, if you see my balance sheet, even my raw materials also, compared to last year, I have increased by INR 100 crores.
Luckily, due to this present season of this Ukraine war, Russia-Ukraine war and other things, even though prices have increased, I built up some raw material at a prewar risk. Though I am also facing some problems because of the war increase in prices, where whatever nickel, cobalt I have purchased at a lesser price [indiscernible]. Though I incurred some additional [indiscernible] reduction in my expenditure and also because of my increase in production [indiscernible], whatever gross margin is there will improve.
Okay. So typically, these orders that we have bought and which [indiscernible] mentioned that the time duration of the orders have come down, so what is typically the duration now for the orders that we are getting compared to, say, a couple of years back?
Today, if you see the order requirement is such which I'm getting from the customer, let's say, I'm talking about our new business on the Wide Plate Mill. So the Wide Plate Mill, the orders are there, [indiscernible] 2 months, 10 weeks, they are to supply. So now earlier, we do have the months and sometime in the year also. Now it is coming within the weeks. So these are the different type of challenges we are facing now. And definitely, that is also trying to again improving our -- like cycle time has been reduced, which is good for the company. Because you invest and you get your cash back and the cycle time is less. It is good for the company.
So that we are doing. So these type of orders now is expected. Nobody can wait for the months now for getting orders. It's something we got the order from the railways. On the railways at the moment, we have worked, it has a surprise on the next month. So we have built up the materials [indiscernible] supply. So like that, different types of challenges are coming in the execution of the order.
Different products also now, there's a time-bound. Any project which is being sanctioned, once the raw material -- without raw material product will not start. So the moment the customer is giving the order, we have to supply within a very short time. In fact, we have some example of [indiscernible], which is making that -- some of the component for our railways. There, given the order, we have to supply [indiscernible] of time. A number of things are there.
Sure. And so in your earlier comments, where you mentioned that now you have competitors who are doing all the products that MIDHANI doing. So do you have companies which have started working on titanium alloys and superalloys? Because earlier, I get that MIDHANI was doing it in the country, even though it was a much smaller volume compared to these [indiscernible]. So do you have something you are doing in titanium alloy and superalloys now?
For superalloys, we have one or two companies already getting started. Maybe all grades, they are not able to make. But some of the common grades, they have started making it -- started, there is a small beginning by them, not fully exporting it yet. For titanium, yes, today, we are the exclusive manufacturer. We are -- nobody else has come up. But in certain areas of -- especially in [indiscernible], a company has started working in defense [indiscernible]. So they have started working now. So very shortly, probably there will be the next producer of titanium in the country.
Sure, sure, sure. And sir, are we still working on ASTRA missile because that's been an order which has been phased recently?
Yes. ASTRA, we have released all the materials supplied by MIDHANI only. And [indiscernible], we have supplied for materials for around [ 250-plus ] around the side. So right now, when the order has been placed on [indiscernible], but we are expecting that some orders will start flowing from that. So at present, whatever orders they have got, this is a long time they have to supply. So for initial supply, all the material of MIDHANI will supply in advance.
Okay. Okay. And sir, just lastly, what is the breakup of the revenue, INR 860 crores, that we got broadly in terms of defense and the space segment?
You're talking about the supply mix for this year?
Yes. FY '22, the breakup of [indiscernible]
FY '22, I'll just mention here...
FY '22 of INR 860 crores, 45% is space, 41% to defense, 21% to PSU that is also defense, exports of around 10%. Others also [indiscernible], [ MRG ] and others. So major share goes to space only as of now. But earlier, it is 56% like this. Now it has come down to 45% because of slowdown of space launches.
And sir, because the new orders are coming more from defense, is it right to assume that next year, that is FY '23 current year, the space orders will be far lower in terms of the same?
Not far lower. But I expect that this, whatever, 45%, you have seen, probably it will go to around 40%, 35% in that...
Same level of turnover is there. If my actual somehow goes up, the percentage will come down.
Will come down, yes.
[Operator Instructions] The next question is from the line of Anuj Sharma from M3 Investment Private Ltd.
My question is just on..
Anuj, may I request you to speak a little louder, please?
Yes. My question is an extension to the earlier participants. So of the INR 3,000 crores ASTRA order, what will be the size of opportunity for us?
Right now, I cannot translate. We are having a number. But I expect that from there, MIDHANI may get around INR 250 crores to INR 300 crores, INR 250 crores, around INR 300 crores.
All right. So approximately 10% of total order value is our addressable opportunity, 8% to 10%.
Pardon?
Approximately 8% to 10% of the order value will be our opportunity size, correct?
Yes, normally, yes.
My second question is we had signed an MOU with Lockheed Martin in Feb 2021. And we were expecting some revenues to flow into FY '22. So could you just explain where is -- where are we in terms of this MOU and any progress in terms of financial milestones?
For Lockheed Martin, we have not signed an MOU. It was only the MOA was there. That was not converted to MOU because we are discussing on four, five projects with them. And at the end of the -- our discussion has came out, but they are basically interested in trying to get some technology transfer to us, not getting the business flow from the India. So that has not made us to progress much.
Because technology transfer asset for MIDHANI, we don't need the technology from the outside. We have already our in-house technologies fully -- which is totally mature. So unless we have the agreement that Lockheed, they can give technology, then they can buy the product also, then when it is possible to have some sort of MOU. But that didn't click so far. So we have restricted to that level of discussion only.
All right. And my third and final question is in defense, you are seeing a lot of usage of composites and carbon fibers, and we also plan to have tie-ups. Any progress on the carbon fiber tie-ups?
Yes. We had recently -- already we have furthered our DPR for carbon fiber. And shortly, You will see that announcement will be made for setting up this facility. And this is being done with the support of NAL technology, which is our newest technology. And MIDHANI and HAL both will be doing this work. And location has been almost decided. But I'm not able to tell you at this juncture, unless it is officially declared. But we have progressed a lot during this period.
The next question is from the line of Ronak Chheda from Awriga Capital Advisors.
My first question is on the space program. We have seen the budget for the space [indiscernible] market has scaled up in the last 2 to 3 years. So what is the sense of the opportunity here from next 3- to 4-year perspective?
Yes. In fact, in space program, there is a shift in country's policy, where India decided to go for public-private participation. And now they are looking for investment by the private sector. So this is a time where they are trying to reconcile and see how the private sector can participate. So recently, for the five launches of PSLV, already the funds have given a bid. And I am sure already they have selected some sort of a consortium on the private and public participation.
And then that is where the investment is coming up now. So you may not find their budget increasing as far as [indiscernible] is concerned. But definitely, investment will pick up. And now it is going for the -- some sort of a commercial type of business. And that is because of launches have to be done by the private sector now, it's going in that direction.
Sir, would it be fair to assume that our margins on the product would be similar with respect to ASTRA now?
This is very difficult because the customer -- margins are basically decided by what type of orders you are getting. If you see the commodity scale, if you are trading in that, margin is very low. If you are trading in a very high-end material, margin will be higher. So MIDHANI has the majority of our orders are from the high-end materials only. But there also, for high-end fields or high-end materials [indiscernible], there are a lot of suppliers coming into the country. So definitely, there will be a pressure on the margin in the future. But as I said earlier, that our -- MIDHANI technology is so versatile that if we can able to improve our operational efficiency, we will get a good margin.
Ladies and gentlemen, we'll take that as the last question. I now hand the conference over to Dr. Sanjay Kumar Jha for closing comments.
Yes. And I'll say that this interaction has been quite sort of very nice. All the participants have put very apt questions and queries. And I was very happy to answer. Some of the things which we could not answer, you can take it from our financial results and other data. But we are very fortunate to have all of you who are standing by our company.
And I can also tell you that this company has a great potential in the future. Because some of the products which we are developing for which we cannot put in the public domain for strategic applications have a good potential as our defense manufacturing has picked up. So that is an aspect which we are having. So we hope that our progress will be very good in the coming -- in the future.
So once again, I thank you all for this [indiscernible]. I don't have any other information to give you. But I can only say that your company is one of the [indiscernible] the knowledge base is excellent, so a very good team for R&D and innovation. And I think that is driving strength for us and having an edge over our competitors. Thank you. Thank you very much.
Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.