Solar Industries India Ltd

NSE:SOLARINDS

Earnings Call Analysis

Company Projects 20% Volume Growth Amid Challenges

The company anticipates a 15% international volume growth and a 20% increase across the overall business next year, including India. It's aiming for 20% volume growth this year, up from a previous estimate of 15%, bolstered by a significant order from Coal India. Realizations are expected to stabilize, although commodity prices remain uncertain. Capital expenditure (CapEx) for the year is projected to be around INR 650-700 crores, currently at INR 230-240 crores. However, hyperinflation, particularly in Turkey, has hit EBITDA margins by approximately 2%, amidst ongoing foreign exchange volatility due to geopolitical tensions.

Significant Quarter and Half Year Financial Performance

Solar Industries India Limited reported a strong financial performance with a consolidated revenue of INR 1,347 crores for the quarter, achieving an all-time high EBITDA and PBT margin of 25.52% and 21.12%, respectively. This impressive margin growth was attributed to falling commodity prices and stable currency movements. For the half year, the revenue stood at INR 3,030 crores with a reported EBITDA of INR 675 crores, a robust growth from the previous metrics.

Robust Order Book Promises Future Growth

The company has amassed a significant order book value at INR 3,912 crores, including substantial orders worth INR 1,800 crores from Coal India Limited. Anticipating a higher volume growth of around 20% in FY '24 as compared to 13% in the first half of the financial year, the company is well-positioned to capitalize on the escalating demand from the housing and infrastructure sector.

Prospects in Defense Sector

With the successful completion of the final trials for Pinaka, and RFPs already floated, the company is poised to cement a significant milestone upon securing these orders soon. An order book of INR 1,050 crores in the defense segment underscores the potential for substantial revenue growth in response to the current geopolitical climate.

Challenges and Opportunities in International Ventures

While moderate raw material costs have been favorable, geopolitical tensions, rising interest rates, and hyperinflation leading to foreign exchange volatility have posed near-term challenges for the company's international business. Despite these hurdles, progress has been made in capturing global food trends and expanding the defense product portfolio, indicating a potential for EBITDA margin enhancements.

Comprehensive Cost Management and Sectoral Revenue Composition

The company has demonstrated prudent cost management with raw material consumption costs significantly reduced from INR 933 crores to INR 653 crores for the quarter. The revenue composition across different sectors witnessed a stable mix with a slight increment in defense sector's contribution from 7% to 8%. Particularly, the defense sector saw a staggering 49% year-on-year increase in absolute terms. Employee costs and other expenses also reflected controlled increments, contributing to the overall strong financial performance for the quarter and half year.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day and welcome to Solar Industries India Limited Q2 FY '24 Earnings Conference Call hosted by Nirmal Bang Institutional Equities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.[Operator Instructions] I now hand the conference over to Mr. Prasheel Gandhi from Nirmal Bang. Thank you and over to you, sir.

[Prasheel Gandhi, analyst]

Thank you, Niral, and good morning to all the participants. Nirmal Bang Institutional Equities welcome you all to 2Q FY '24 earnings conference call for Solar Industries India Limited.On the onset of the call, I would like to thank the management of Solar Industries India Limited for giving us an opportunity to host the call. From the management team, we have Mr. Manish Nuwal, Managing Director and Chief Executive Officer; Mr. Suresh Menon, Executive Director; Mr. Milind Deshmukh, Executive Director; Mr. Monish Agrawal, Joint CFO; and Ms. Shalinee Mandhana, Joint CFO. Before we begin the call, I would like to remind there will be a hard stop at 10:45 due to time constraints.And I now hand over the call to management for opening remarks, post which we can take call questions from participants. Thank you and over to you, sir.

[Aanchal Kewlani, executive]

A very good morning dear stakeholders and well-wishers. My name is Anchal, and I would like to welcome you all to the second quarter and half-yearly conference of Solar Industries India Limited. Before beginning, I would like to wish my stakeholders a very happy Diwali in advance.To be honest, every shareholder of Solar is already celebrating Diwali and enjoying the explosion happening in our shares. I hope this Diwali of SI keeps filling our stakeholders like this. To begin with, I would like to remind you that during this call, we might make projections or other forward-looking statements regarding future events and about the future financial performance of the company. Please remember, that such statements are only predictions. Actual events or results may differ materially. And our website will be updated with all relevant information timely.Now, I would request Solar's CEO and MD, Mr. Manish ji Nuwal, for his opening remark. Over to you, sir.

[Manish Nuwal, executive]

Very good morning to everyone. The revenue for the quarter stands at INR 1,347 crores and for the half year, it stands at INR 3,030 crores. In this quarter, we have achieved an all-time high EBITDA and PBT margin at 25.52% and 21.12% respectively, mainly on account of fall in commodity prices and stable movement in the quarter -- currency movement in the quarter. Overall, we have recorded significant improvements in margins, both sequentially and year-on-year basis, aided by continuous efforts and operational efficiencies. The company has received orders worth INR 1,800 crores plus from its prestigious customer Coal India Limited. With a strong order book of INR 3,912 crores, we are expecting a higher volume growth of around 20% in the FY '24 as against 13% achieved in the first half of this financial year.Given the government's focus on infrastructure growth and the consequent rising demand for urban housing, housing and infrastructure sector is poised for strong growth. The final trials for Pinaka are completed successfully. RFPs have been floated and we are expecting to receive the orders very soon. These orders will be one of the biggest milestones for our company. Looking at the geopolitical situations and healthy order book of INR 1,050 crores, we believe the defense revenue should go up substantially now onwards. In our international businesses, though we have been supported by moderate raw material prices but geopolitical tensions, higher interest rates, and hyperinflation resulting into foreign exchange volatility are causing challenges for us in the near term. Substantial progress has been made in increasing global food trends, increasing the product portfolio for defense sector, and increasing domestic presence through acquisitions and initiation of greenfield projects. Now with expected increased volumes from mining, housing infrastructure, and defense in the coming quarters, we are expecting EBITDA margin to increase further, from the earlier guided EBITDA margins of 20% to 22%. With this, I would like to thank you everyone and wish you a happy Deepawali in advance.Now, I hand it over to Aanchal to take it forward. Thank you.

[Aanchal Kewlani, executive]

Thank you so much, sir. Coming to the quarter results, we have shared the investor presentation carrying all the necessary information for your perusal on the websites and the exchanges still giving you a little key highlight. Key highlights for the second quarter and half year are, this time we'll be consolidating the quarter and half yearly results to make it faster. The consolidated revenue for the quarter is INR 1,347 crores against INR 1,567 crores and for half-year, it is INR 3,030 crores against INR 3,182 crore. Our explosive volume for the quarter and half year has increased by 13%. Initiating system revenue increased by 6% in the quarter and 24% in the half year. The percentage of the sectors in the customer basket are as follows. CIL is up in the basket to 14% from 13%, non-CIL and Institutional is at 15% from 17%, H&I is intact at 15% in the basket, export and overseas is intact at 47%, and defense has increased at 8% from 7% in the basket. In the half year, the basket is more or less remains the same, except for the defense which is majorly increased by 3%, that is from 6% to 9% in the current basket. And in absolute term, the same is increased by 49% year-on-year. Coming to the cost, raw material consumption for the quarter stands at INR 653 crores against INR 933 crore, and half year stands at INR 1,615 crores against INR 2,000 crore. Employee cost for the quarter stands at INR 103 crores against INR 87 crore, and half year stands at INR 203 crore. Other expenses for the quarter stands at INR 255 crores against INR 248 crore.And for EBITDA, we reported an EBITDA of INR 344 crores against INR 303 crores, showing a massive rise in the margin from 19.36% to 25.52% in the seasonally weak quarter. We reported half-yearly EBITDA of INR 675 crores against INR 595 crores with a margin of 22.29% against 18.69%. Interest and finance cost stands at INR 25 crores against INR 19 crores and for half-year stands at INR 50 crores against INR 34 crores. Depreciation cost standard INR 34 crores against INR 30 crores and half yearly stand at INR 68 crores against INR 61 crores. PBT stands at INR 285 crores against INR 254 crores with a massive increase in PBT margins, that is 21.12% against 16.18%. And for half year, it stands at INR 557 crores against INR 500 crores with a massive rise in margins at 18.38% against 15.72%.PAT stands at INR 209 crores against INR 189 crores with margins standing at 15.51% against 12.04% and for half-year it stands at INR 411 crores against INR 371 crores with a margin of 13.55% against 11.67%.These are the updates for the quarter and half year. Now, we would hand over to the Nirmal Bang and the Chorus Conference Call for the questions ahead. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Sujit Jain from ASK Investment Managers.

[Sujit Jain, analyst]

Manish Ji, congratulations on a great margin performance. What I'm keen to know is, while we are talking of 20% volume growth, just wanted to understand this 20% volume growth is for the explosives business in India or for company as a whole? Hello?

[Manish Nuwal, executive]

That was basically for Indian market.

[Operator]

Sorry to interrupt you, we were not able to hear you. May I request you to repeat the answer from the beginning?

[Manish Nuwal, executive]

Am I audible?

[Sujit Jain, analyst]

Yes, I can hear you.

[Operator]

Yes.

[Manish Nuwal, executive]

The volume guidance is for the Indian markets, which is 20% growth for this financial year. As far as international markets are concerned, we are expecting a volume growth of 15%. But going forward, we also are looking at increasing the volumes in the tune of 20%.

[Sujit Jain, analyst]

So you're saying 20% for business as a whole next year in terms of volumes, 20% for India business this year, and 15% for international business this year. That's the guidance?

[Manish Nuwal, executive]

Yes.

[Sujit Jain, analyst]

Okay. And this 20% in India includes initiating system as well?

[Manish Nuwal, executive]

Yes, 20% for both.

[Sujit Jain, analyst]

Okay. So how much would have been the volume growth this year including initiating system?

[Manish Nuwal, executive]

It is in the same range, around 10% to 13%.

[Operator]

Next question is from the line of Dhananjai from Ask Investment Managers.

[Dhananjai Bagrodia, analyst]

Congratulations sir on a very good set of numbers. Would we assume now [ price] per ton would be stabilized with realization now stabilizing or how should we look at that?

[Manish Nuwal, executive]

We expect that there has to be some stabilization in realization. But we cannot say with 100% guarantee that it will be remaining like that. Because commodity prices are keep fluctuating and we are expecting that prices should bottom out in this quarter. Now onwards prices can go up, but there is no surety on that front. That's why we believe that the volume guidance, which we have given, that we are expecting a 20% volume growth and EBITDA margins are going up. So that should suffice our overall purpose for which company is working.

[Dhananjai Bagrodia, analyst]

Okay. And sir, in terms of markets, how -- we've obviously received a very large order from Coal India. How are we seeing that execution? Will that full order which you've got this quarter come in the last consolidated order book or is there still some left?

[Manish Nuwal, executive]

The Coal India orders, which we have received, has started already from the month of October, and we are expecting that it will impact our overall volume growth now onwards.

[Dhananjai Bagrodia, analyst]

Okay. So the full already would be in the order book, right, if that's right?

[Manish Nuwal, executive]

Yes. And this order book is for the 2 years.

[Dhananjai Bagrodia, analyst]

Okay. And so what would be the -- lastly, what would be the CapEx for this year -- this year, next year.

[Manish Nuwal, executive]

CapEx, this year, we have earmarked that we will be doing around INR 700 crores. But as of now, we have already done around INR 230 crores to INR 240 crores and we are expecting that CapEx will go up now onwards. And we are expecting that we should be doing around INR 650 crores to INR 700 crores in this financial year.

[Operator]

Next question is from the line of Noel Vaz from Union Asset Management.

[Noel Vaz, analyst]

So in your press release, it was...

[Operator]

Noel, sorry to interrupt you but you're not audible at all. Can you please speak through the handset?

[Noel Vaz, analyst]

I'm speaking through the handset. Can I still be heard?

[Operator]

If we can speak a little louder, please.

[Noel Vaz, analyst]

Yes. Can I be heard now?

[Operator]

Yes.

[Noel Vaz, analyst]

Yes. So my question was regarding the press release, there was a statement regarding overseas segment. And there was a statement towards some kind of volatility and FX-related issues. So I just wanted to get some idea about are we seeing some problems in some specific geographies or do we expect the second half for the overseas segment to be relatively subdued compared to first half. So I just wanted to get an idea about that.

[Aanchal Kewlani, executive]

Yes. So we have mentioned that [ currently ], the challenges are going on, so, for example, Turkey...

[Operator]

Ma'am, sorry to interrupt you, you are sounding a little distant.

[Aanchal Kewlani, executive]

Now it's better?

[Operator]

Yes, ma'am.

[Aanchal Kewlani, executive]

Yes. So Turkey, we have been seeing hyperinflation is there, continuous hyperinflation. So around INR 31 crores has been taken in other expenses on account of hyperinflation. So around 2% has been hit on the margins with regards to EBITDA. And also ForEx, volatility continues, because we have been operating in so many geographies and looking at the current geopolitical tensions. So currently for the short term, the volatility continues. But how the same will pace out, it's very difficult to speak at that moment.

[Noel Vaz, analyst]

Okay. But just to clarify, we are not expecting to seek any kind of slowdown in terms of volumetric kind of...

[Aanchal Kewlani, executive]

No, no, no. Nothing in that perspective. Yes, just sharing the challenges which have been going on.

[Operator]

Next question is from the line of Amit Dixit from ICICI Securities.

[Amit Dixit, analyst]

First of all, congratulations for a splendid set of numbers. I have 2 questions. The first one is going back to, again, volume growth guidance. It is very reassuring that you have guided for 20% volume growth. However, that implies that in H2, volume growth should be around 27% to meet 20% growth, essentially. So I just wanted to understand the key drivers for these growth with or what all sectors you expect the growth to come from?

[Manish Nuwal, executive]

Yes. For this year, we have revised our volume growth guidance from 15% to 20%, that is for the whole year. And the positivity for issuing such statement is that, we have received a big order from Coal India. And if you look at the coal mining growth, it is growing at a very fast pace and they are increasing overburden removal in much larger quantities. So that is the key reason. And another reason is that the thing which we were saying from last couple of quarters, that because of the high commodity prices, definitely our finished good prices are also high -- were also high. And now, since prices are bottoming out or at a much a reasonable and sustainable level, so demand for these products are -- has to go up. And if you look at infrastructure side also, after the monsoon is over, second half is always better than the first half. So based on these positive factors, we believe that we should be able to achieve 20% volume growth in this financial year.

[Amit Dixit, analyst]

Wonderful, sir. The second question is essentially on defense. So you have very explicitly stated Pinaka order in the press release. Now, just wanted to get a sense on when we can expect this order? While I mean, I know the timelines are not in anyone's control but when do you expect that you will get this order? And what would be the execution timeline? Also in terms of defense, if you could just highlight some of the key developments that the company is engaged in currently, that would be great, sir.

[Manish Nuwal, executive]

Yes. So like we have said that, the trials, which we were expecting to conclude in the last quarter are already being done and the products are successfully being tried out at the various areas for qualification programs. So now with this, RFPs has also been floated and in one of the RFPs, we have already participated. In another RFP, we are going to participate in the month of November. So looking at these kind of development, we expect that orders should start flowing from the month of December or January '24 -- December '23 or January '24. So these are estimations. Definitely, like you said that in defense, things can go here or there by 3, 4 months is not a big deviation. But we fairly estimate that we should receive these orders in the next 3 to 6 months of time. And that should help us to start producing the products and supply from the next financial year. And if you look at the kind of development which we have been doing from last couple of years, especially, in last 12 years, we have not only set up the most integrated facility of ammunition, which is one of its kind in the world. And after setting up those facilities now, we have developed plenty of products, which can go for a variety of usages for our armed forces.Now with these geopolitical tensions, which we all are aware of, which started almost 1.5 years back, and now it has increased in the Middle East also. Based on these factors, we are expecting that the kind of capabilities, which our company has created, will be utilized in a much better way in coming years. Based on these kind of development, we believe that the sales of products for this sector should go up from the next quarter.

[Amit Dixit, analyst]

So sir in the beginning of the year, you gave a guidance that defense revenue could be INR 800 crores. So any chance that we would exceed this guidance this year?

[Manish Nuwal, executive]

We have given the -- a guidance that we should cross INR 700 crores and we maintain that we should be doing around INR 700 crores in this financial year because there were some delays in execution side in this quarter. So which will definitely shifted some of the revenue to the next quarter. So that kind of shifting can go -- can continue and as a result, we are still expecting that we should fairly do around INR 700 crores in this financial year. But the major jump will start from Q4 or Q1 of the next -- Q4 of this financial year or Q1 of the next financial year.

[Operator]

Next question is from the line of Dipen Vakil from InCred Equities.

[Dipen Vakil, analyst]

Thank you for taking my question, sir. So my first question is on our realization, sir. Sir, you mentioned that the raw material prices have gone down and similarly, the rates have also gone down by almost 14%. So can you help us with how much has the raw material prices gone down and what can be expected in, say, at least one quarter going ahead with respect to the commodity prices?

[Aanchal Kewlani, executive]

See, year-on-year basis, the ammonium nitrate prices have gone down by around 50%, and with respect to that, our realizations are down by 29%. So going forward -- so currently, we see the raw material prices stable at this level. However, it's very difficult, as the Manager had spoken earlier, to speak on the volatility, because we see that from next -- current quarter onwards, the prices may start going up. So difficult to predict where the same will be.

[Dipen Vakil, analyst]

But has it remained at similar levels in October and November?

[Aanchal Kewlani, executive]

Yes, yes. And since you know the falling dominant prices also is very good for our industry as well as for the infrastructure sector.

[Operator]

Next question is from the line of Amit Vijay from A1 Investments.

[Amit Vijay, analyst]

Happy Diwali, Manishi Ji and full team of Solar. Sir [Foreign Language], we have order book of INR 3,912 crores. Approximate defense order is INR 1,050 crores as of now. What will be the order book approximate in next year?

[Aanchal Kewlani, executive]

So current order book which we have is INR 1,050 crores, it has to be executed over a period of 1.5 years. And currently, as we spoke, that we're expecting Pinaka orders in next 2 quarters. Obviously, when the order comes, we'll update on the order book.

[Amit Vijay, analyst]

Any percentage terms of guidance?

[Aanchal Kewlani, executive]

It's very difficult at this stage to give that.

[Amit Vijay, analyst]

Okay. And this INR 1,050 crore order book consists of hand grenade and other materials?

[Aanchal Kewlani, executive]

They are a basket of products. Hand grenade and all, basket of products, which is rockets, even the Armenia export order also is there.

[Operator]

Next question is from the line of Rohan Gupta from Nuvama.

[Rohan Gupta, analyst]

Congratulations on a strong set of numbers. Sir, a couple of questions. So first is on our defense business outlook. Though you mentioned roughly INR 700 crore is likely to be maintained, we have seen that there has still been a quarterly volatility in defense, which we understand in the nature. If you can give some sense with the changing geopolitical tension and you rightly mentioned that the world market was already seeing Russia-Ukraine now increasing tension between Hamas' trial. So how the defense business in this scenario is likely to change for us more importantly in terms of exports. And if you can give some sense over the next couple of years though initially you mentioned roughly the defense business should go up to roughly INR 1,500 crores to INR 2,000 crore over next 2 years to 3 years. How do you see that the scenario changing, if you can give some thought process if you can share on that, sir.

[Manish Nuwal, executive]

Yes. Like I have already shared that, recent -- in last couple of years, we have seen geopolitical tensions are going up. And with recent kind of conflicts in Middle East is definitely creating an environment where demand for products, which we are making, should go up and that should help us. And another positive factor is that we have created a lot of facilities to handle a variety of products for different, different requirements or different applications. So looking at these kind of scenarios, we expect that orders from exports or orders from overseas customers for defense should also go up substantially.One of the orders we have already shared in the last year that we have received orders for Pinaka rockets from outside India. And we believe that such kind of orders for other products will also keep coming. So that is what we can share as of now. And the current order book stands at INR 1,080 crores and with Pinaka, it comes up in next 3 to 4 months or 5 months time that we'll lift the overall order book from different sector substantially and based on that, we can give a guidance for the next year or maybe '25, '26. So let us wait for some couple of months till we receive the orders from Pinaka and other products which we have been developing and showcasing to our valued investors. So let us wait for some more time till we receive some concrete orders, we will definitely share with our valued shareholders.

[Rohan Gupta, analyst]

Sir, my question was more in terms of geopolitical tension. We are in war since last 2 years, slow war, and it has just only escalated. There is a continuous decrease in global inventories of arms and ammunition and it will only accelerate. We have seen that US and Europe are almost getting out of the inventories. So with this new inventory increase or the decline in global inventories in arms and ammunition, which is happening, this is going to change the defense business maybe for next 3 to 5 years globally. I just wanted to know that how we are placed in this changing scenario. Do you see that we have made inroads in many global markets, where when the next 3 to 5 years we'll see that when a restocking will happen, we are ready with a new kind of -- new set of instruments, maybe in rocket or even in, you can say that, targeted drone kind of instruments which are going to see the increasing application. So, I just wanted to see that how the landscape which very clearly has changed globally, how we are going to benefit from that, sir. I was just trying to understand from that perspective.

[Manish Nuwal, executive]

That is what I have shared that with the current geopolitical situation and the capability of our company to...

[Operator]

Sir, sorry to interrupt you, but your audio is not clear.

[Manish Nuwal, executive]

Hello. Am I audible now?

[Operator]

Sir, we can hear you. Rohan, can you mute your line, please?

[Rohan Gupta, analyst]

Sure.

[Manish Nuwal, executive]

So what we have shared that the company has created infrastructure, company has created capabilities, and company has developed a variety of products for different applications. And looking at the background of the recent geopolitical environment, we believe that these will open up plenty of opportunities for our company. And as we receive the orders, we definitely share with our stakeholders. That is what I can comment at this stage.

[Rohan Gupta, analyst]

Sir, just one clarification on CapEx front. You mentioned that initial guidance was roughly for the CapEx was INR 700 crore, you have spent INR 340 crore. So do you increase the CapEx guidance for this year or it is still remain at INR 700, I missed that point.

[Manish Nuwal, executive]

No, we are maintaining that, the guidance of INR 700 crores is still there. And as of now, whatever we have invested is around INR 240 crores to INR 250 crores and in the next 2 quarters, we should be there around INR 400 crores to INR 450 crores.

[Operator]

[Operator Instructions] Next question is from the line of Rushabh Shah from Anubhuti Advisors.

[Rushabh Shah, analyst]

So my first question is on the EBITDA.

[Operator]

Rushabh, sorry, but your audio is not coming clear. Can you please speak through the handset?

[Rushabh Shah, analyst]

Sure. Now it's audible?

[Operator]

Your voice is coming a little distorted.

[Rushabh Shah, analyst]

Okay, okay. So now I'm on the proper handset. So my first question is on the margin profile. So sir, you guided that margin will be now above the originally guided band of 20% to 22%. So what level of margins are we now looking at?

[Manish Nuwal, executive]

So we are expecting that we should cross annualized margin above 22%. So it can be 23%, it can be 24%. As of now, we cannot give one figure and that is what we have been giving guidance, that normal guidance was 20% to 22%. For this financial year, we are revising it upward above 22%. So it can be either 23% or maybe 24%. That depends on the kind of market situation and demand of the products.

[Rushabh Shah, analyst]

Understood. And, sir, on the -- just wanted to understand on the defense front. So are margins on the defense segment higher than overall company average level or they are largely in line at that 20%, 22% band?

[Manish Nuwal, executive]

So we have given a guidance for the business as a whole and not for individual product or individual section.

[Rushabh Shah, analyst]

Okay. And sir, just last one, update on the CapEx side. So sir, earlier, we guided -- we had guided for a INR 750 odd crores of CapEx for the full year. Now we are still seeing around INR 700 crores we'll be doing it for the full year. And currently, I think we have done somewhat around INR 240 odd crores. So largely, this will be concluded in the later part of the year and the resultant growth will be visible in FY '25 levels?

[Manish Nuwal, executive]

We have given guidance of INR 700 crores for this year and we have spent INR 240 crores, INR 250 crores, and the balance amount we'll spend -- we are expected to spend by March '24.

[Rushabh Shah, analyst]

Okay, okay. And sir, any new CapEx announcements, apart from the earlier guided number? I think 4 -- I think we were adding 4 new geographies. So apart from that, anything we are adding new currently?

[Manish Nuwal, executive]

So all the expansions which we are taking place or which is going on is part of this amount. Thank you.

[Operator]

[Operator Instructions] Next question is from the line of Puneet Kabra, an individual investor.

[Unknown Analyst]

Yes. Congratulations, Manish ji, and everyone. I had just a couple of questions. First question I had was can you share any details around the business from private coal mines and what is the outlook for that in the next couple of years given that licenses were handed out in the last 18 months?

[Manish Nuwal, executive]

Can you share all the questions first so that I can answer them properly?

[Unknown Analyst]

Yes, yes. And second was we had announced expansion in Southern India and Northern India for cartridge explosives. So if there is any progress around that? Those are the 2 questions.

[Manish Nuwal, executive]

All right. So like we have said that we have a plan to expand our global footprints and increasing the presence within our country. Based on that, last year, we have announced that we have acquired a company, Rajasthan Explosives And Chemicals, and that has been done to expand footprints in the northern part of the country. And we have already applied for licenses. We have acquired land and applied for licenses. And we are going to start the construction of the project very soon in the western part of India. Similarly, we have almost started identifying the land in the southern part of India and acquisition will start soon. So based on these kind of planning, we expect that the plant in western part of India should be over by December '24, and in southern part of India should be over by mid of 2025. And if you look at the private coal mines, the licenses has been allotted to plenty of private coal mines and the kind of nature or the value-added services which they ask for. So our company is well poised to cash on, on those kind of demands. And we are quite bullish on demand from those sectors. Similarly, like I said that demand from Coal India will also grow up significantly, because the kind of investments they have done, in last 3 to 4 years for building up the infrastructure, should help them to increase their coal production and OB removal. And that is going to help our company significantly. Thank you.

[Operator]

Next question is from the line of [ Pratik from Arla Investments ].

[Unknown Analyst]

Yes. Manish ji, congratulations for a great set of numbers. In this volatile times, you and your team have handled everything quite well. It is visible from our margin expansion. I have a couple of questions. So like we stated about Pinaka rockets, we were also into development of some drone-related technology. Can you throw some highlight on that [Foreign Language] that product, how much it is developed now? Also my second question is, as you have been mentioning in the past 3 con calls also that mining sector is growing very well. So on your interactions with your customers, both Coal India and non-Coal India, what is the sentiment that you're getting about the longevity of the growth in mining sector. These were my questions.

[Manish Nuwal, executive]

So like we have said that we have started developing products based on unarmed vehicle, and we have successfully developed those products. And based on that, we have received an order of supplying some of -- some quantity of numbers from army and we are going to start deliveries in a couple of months. So we are also developing plenty of UAV-based advanced solution for armed forces. So that is an ongoing process and we are keep investing in building those capabilities. So that is going to help our company in the coming years significantly. And apart from this, the -- another question, which you have asked on coal production. So like if you see, the coal production run rate, it is growing around 9% to 10% and the OB removal is growing at around 17%, as far as Coal India is concerned. So that is helping us to supply more quantities to Coal India. And if you look at the order size, which we have received a couple of weeks back, so that's a significant order which we have received of that magnitude for the first time. And we are quite bullish on enhancing our presence within Coal India also. Thank you.

[Operator]

Next question is from the line of Manish Mahawar from Antique Stock Broking.

[Manish Mahawar, analyst]

Manish ji just regarding this Pinaka actually, what could be the opportunity size or potential size of order or maybe requirement can come?

[Manish Nuwal, executive]

Any other question, Manish?

[Manish Mahawar, analyst]

That is first. Second thing is in terms of Coal India order book, right, which we got this time, INR 1,800 crore. Last time, I think it was INR 1,470 crores I believe. So what was the volume off take higher here versus the last order. That was the second question. Last -- third question was on EBITDA margin guidance, what you're given 22%-plus going forward, next 2 or 3 years view. Earlier, our margin guidance used to be 20% to 22%. So should we take it as a 22% to maybe 24% over the next to 3 years view? That's all, these 3 questions I have.

[Manish Nuwal, executive]

As far as EBITDA guidance in terms of this year, we have...

[Operator]

Sir, sorry to interrupt you. Manish, can you mute your line from your side, please?

[Manish Nuwal, executive]

As far as EBITDA margins are concerned, for this year, we have revised our guidance from 20%, 22% to EBITDA margin of 22% plus. As far as margin guidance for the coming years is concerned, we will definitely issue at -- after end of this financial year. But definitely, margin should improve based on increased sales from different sections. That is one. Second as far as the size of Pinaka order is concerned, so till RSPs are finalized and orders being received, we cannot comment on that.

[Manish Mahawar, analyst]

Okay. But what is the opportunity size, maybe a tentative number, anything Manish ji, on this Pinaka one?

[Manish Nuwal, executive]

Like Manish, you have your own resources to get all this information from army. Better you do that. Because [Indiscernible] a bit more on that side.

[Manish Mahawar, analyst]

Understood. No issue, no issue. And this Coal India order, what we've received, INR 1,800-odd crores, right, versus last 2 years back, what we received order. So what was the overall volume increase in the last order to this order?

[Manish Nuwal, executive]

Volume, the Coal India has given an order with an increased volume of around 50%. So -- but the conversion may not be up to 50%, that depends on their overall planning, whether they buy from a private sector or whether they want to reduce the volume of their another public sector on a nomination basis, but we are quite positive on this.

[Manish Mahawar, analyst]

Okay. Sir, around average usage 50% is broadly right assuming that they assumed the lower realization versus the last order in this.

[Manish Nuwal, executive]

You can do your own calculations, but as far as our guidance is concerned, we have received orders which is a significant quantity increase. And as far as margins are concerned, we are pretty much comfortable and based on our overall dynamics, we are rising our EBITDA guidance upward.

[Operator]

Thank you. And I'll hand the conference over to the management for closing comments.

[Aanchal Kewlani, executive]

This is all from our side. Thank you so much everyone for participating and may you have a very fantastic Diwali ahead. Thank you.

[Operator]

Thank you very much. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.