Ladies and gentlemen, good day and welcome to APL Apollo Tubes Limited Q2 FY25 Earnings Conference Call hosted by YES SECURITIES . 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. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch phone. Please note that this conference call is being recorded. I now hand the conference over to Mr. Udit Gajiwala from YES SECURITIES . Thank you, and over to you, sir.
Yeah, thank you. Good evening, everyone. On behalf of YES SECURITIES, we welcome you all to the Q2 FY25 Earnings Conference Call of APL Apollo Tubes. From the management side, we have today Mr. Sanjay Gupta, Chairman and Managing Director, Mr. Deepak Goyal, Director of Operations, Mr. Anubhav Gupta, Chief Strategy Officer, and Mr. Chetan Khandelwal, Chief Financial Officer. I'll now hand over the call to the management for your opening remarks. Thank you, sir.
Thanks, Udit, and thanks to YES SECURITIES for hosting us for our earnings call. Good evening, everyone. I welcome all of you to our Q2 FY25 earnings call. I sympathize with my analyst friends who are covering the building materials sector and are attending this investor call today. What a mind-blowing quarter we had, the Q2. Our Q2 performance reminds me of a famous phrase, "The night is darkest just before the dawn." Why I say this? Because we have been waiting for this time when inflation in the domestic steel prices seems to be over, and the gap between our products and low-grade sponge iron-made steel pipes has narrowed down considerably. Of course, the correction in steel prices brought a drop on our profitability, and our EBITDA spreads collapsed to all-time low.
However, we are not discouraged by this at all, and in fact, we are working harder to pounce upon the opportunity which has opened with the low base raw material costs. The gap between our products and sponge iron pipes is around 5% to 6% today, and we can target additional market of 500,000 tons on a monthly basis. Our products have also become affordable against wooden structures, aluminum profiles, rebars, long steel products, and steel angles and channels, which is further expanding our universe. The existing pricing situation seems to be sustainable, as there is not much room for steel prices to go down given the depressed profitability for the steel mills. And at the same time, steel prices should not rise further because the new steel capacity is coming online quarter-on-quarter basis, which will keep the steel prices under check.
Henceforth, the volume trends in H2 should remain strong, as we are confident of 3.2 million ton sales target for full year of FY25. Confidence also comes from the fact that our channel partners are still sitting on low inventory levels because their secondary sales are equally strong. The reason for all-time low EBITDA spreads in Q2 were number one, inventory loss of INR 2,000 per ton, which even we could not stop because of 7,500 ton steep fall in the steel prices, and that was back to back, so we had to correct the inventory which we were having on our books, and we also offered more discounts of INR 500 per ton to our customers in the falling steel scenario to push sales.
One positive highlight was the operating leverage benefit of INR 100 per ton, as our sales volume expanded on a quarter-on-quarter basis. Now, APL Apollo is ready with 4.3 million ton capacity, which we shall expand to 5 million ton by FY26. The residual CapEx is around INR 3 to 3.5 billion, which will be easily funded from the internal cash flows. Our strategy here is deeper penetration in the market with the new greenfield plants. Two plants are coming in, Siliguri and Gorakhpur. This is to cater to the whole of East India, including the Seven Sister States and some opportunity in Nepal and Bhutan markets as well. We are also adding up a new plant in Bangalore for our light section where we feel that the existing capacities are fully utilized.
From these three plants, we expect an additional market of around 1.5 million tons on an annual basis, and we should be able to ramp up our volumes from these plants over the next two to three years. Our search for innovation continues in the structural steel space with the launch of specialized structures for the solar power industry. One product is pre-coated thicker sheet, which shall replace existing galvanized sheets. And another product we added to our portfolio was to cater to the solar tracker systems. We continue to make inroads in the heavy structural steel tube space as the usage of tubular designs in heavy construction keeps on rising. Our tubular designs are now being used in major infrastructure and real estate projects in the country. For next year, we maintain our sales volume guidance of 4 million tons and 5 million tons by FY27.
The margin shall expand to a normalized level of INR 5,000 per ton over the next two to three quarters, and this margin should remain sustainable throughout FY26 on quarter-on-quarter basis. With this, we are done with our opening remarks, and we are happy to take questions. Thank you.
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is from the line of Rahul Agarwal from IKIGAI Asset Management. Please go ahead.
Yeah. H i, g ood evening. Thank you so much for the opportunity, and happy festive greetings to everybody at APL. Sanjay, the first question was on, you know, steel demand supply. Could you give please share your thoughts on what's really happening with, you know, overall global and India steel demand supply and your outlook on how should the prices actually, you know, behave? A bit more color on that would be helpful, please. That's my first question.
Good evening, Rahul. First of all, Happy Diwali to everyone. Well, the demand of the steel— if you may, if you see the real facts, not very good. But somehow, you see as coming from last two years with the secondary and the primary steel prices, it's the gap, a lot of the huge gap between the primary and the secondary steel price, almost close to INR 12-INR 15/kg. Now it's come down to reduce to INR 3, almost close to INR 2- 3/kg. So yeah, mild steel company has a very big boost. But, back to the, if you see all the other sectors, we are, our growth rate is almost close to 5%-10%. But yeah, for mild steel parts, growth got a lot of chance, and it's given the build-up to the capacity, and we are very focused here on quarter-on-quarter.
Aage se 10% growth, some target but aare ji hum leke jaayenge. Globally, demand toh jagah per se, especially like Middle East, where demand achhi hai. You know, and U.S. side metal demand slowdown hai. Middle East, this month, we are going to do our ever highest production and sales, close to 16,000 tons this month. So, these all the things are good for us.
So, Sanjay ji, mota-moti for the HRC pricing in India, what do you foresee? I mean, because Anubhav also mentioned that.
HRC price, Rahul misunderstood. Today, HRC price is close to INR 46,000 to 47,000 per ton in the market. Yeah, per jagah price correction होने का chance नहीं hai, because of their margins are in pressure also, the steel price are in the pressure. My gut feeling is jagah बढ़ने का भी chance नहीं hai. Yahi per INR 1 upper niche the price should be remain same, because the capacity India में इस साल में almost HR quality 1.5 million ton की capacity आनी thi, like 2 lakh ton per month from Tata Steel, 2 lakh ton per month from NMDC Steel, 4 lakh ton from JSW Steel, and 4 lakh ton from JSPL. अभी 12 lakh ton per month की capacity maybe hardly 2.5-3 lakh ton का capacity चालू हुआ hai. 9 lakh ton का capacity almost अगले चार महीने, 4 to 5 months में चालू होगी.
ये 2 lakh ton Tata Steel, 4 lakh ton JSW, and 2 lakh ton JSPL. तो 8 lakh ton का capacity build-up होगा, और China का pressure बहुत ज्यादा है overall world market पे steel prices में. तो मुझे लगता है India में steel prices यहां पर remain same रहेंगे, but जो secondary market है, वहां से market share is moving towards the primary steel.
Got it, sir. Got it. Thank you so much for answering my questions. I'll get back in with you. Thank you.
Thank you. Our next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah, hi. Good evening, everyone, and thanks for the opportunity. A couple of questions on my end. The first one is that, you know, despite pushing volumes, the general structure segment, we found that the contribution was negative. So, what explains that? Are we pushing volumes at the cost of margins and realization? In that case, you know, it could be counterproductive as we ramp up our capacity. So that is the first question I have. That how do we see this margins shaping up of this critical, I would say, bucket, which is like 45% of your overall sales volume?
So, Amit, the EBITDA per ton spread was negative because of the inventory loss, overall, which the company took, right? If we remove the inventory loss, it was pretty much profitable. And going forward, we don't expect further inventory losses, right? So, the EBITDA per ton in this particular category will recover to the previous level which we have been showing, around INR 2,000- 2,200 a ton.
No, because I was asking what gives the confidence that, you know, these HRC prices will not fall from here? Because, you know, what we have seen, the Chinese stimulus, I mean, the measures and the impact has been fairly, I would say, muted at this point in time. Chinese exports have again swelled to 10 million tons odd. So, you know, and last quarter also we said that now, you know, things are, the worst is behind us possibly. But although we said that Q2 might be a little bit here and there, but, you know, going back in Q3 also, the demand that we saw is like 4%-5% now in Q2. So, what gives us the confidence that, you know, we will go back to this, EBITDA per ton of INR 5,000 in two to three quarters?
Amit, no one will be more happy if steel prices go down further from here. The question is, can steel prices go down again INR 7,500 per ton in single quarter? Answer seems to be no, right? Because see, I mean, company, if you look at our performance for the last 10 years, right, we have seen the cycle of steel volatility. We are in a single quarter, steel prices swing by INR 2,000, INR 3,000 a ton very easily, right? And we don't have inventory losses in every quarter. It is just in Q2 when there was such a sharp decline, right? INR 2,500, INR 2,000, INR 2,000 month- on- month, we saw the correction in the steel prices, which we have not witnessed in the last 10 years.
Even an efficient inventory churning company like Apollo, right, which we always boast of, right. Our inventory churn is like 25 days, 15 times, 18 times in a year. When we are churning inventory so quickly, then INR 2,000, INR 3,000 per ton fall or increase in steel prices in a quarter does not impact our profitability. But if steel prices were to fall off by INR 7,500 a ton in a single quarter, then it does impact our profitability, right? So if in Q3 we expect that steel prices could further go down by the same pace, I mean, at one side we'll be very happy because then I mean we will just eliminate the sponge iron Patra pipe, okay? Because right now the gap is INR 2,000 a ton.
If steel prices, my base raw material goes down by like INR 6,000, INR 7,000 a ton, you can imagine the situation where, I mean, I will be able to sell at such a lower price. Second point, we may not need to lower my selling price, once steel prices go below Patra coil price, okay? Because I have almost 500,000 ton of monthly incremental market, which I will take from sponge iron steel pipes. And even if my base raw material is lower, I may not decrease my selling price, right? So in fact, my margins will go up, okay, in a situation when steel prices crash by INR 7,000 per ton in Q3 or Q4, and sponge iron steel prices are at similar levels.
Sorry, I also add to one point here. Today, the total structural market of India is almost close to 5 million from the primary steel and almost 6 million from the secondary steel. If the price goes down with the secondary steel, nobody can supply the material to market other than Apollo. It will be our segment, our segment. The number two player is just one-tenth from our capacity. So if the market requires 5,000-6,000 per month more material, so Apollo also can give maximum 1 million-1.5 million material per month to market. So then we don't need to crash our price. Then our margins should increase.
Okay. Got it. The second question is on employee expenses. Last quarter, you indicated that maybe they have picked off, but this time we saw again employee expenses increasing. So what is the sustainable rate that we can have of employee expenses that we can see going up?
So Amit, the employee expenses for the Q2 is INR 870 million, right? Out of this, again, INR 70 million is for the notional piece of expense, okay? So INR 800 million per quarter is what like we have peaked, right? And as the sales volume increases, quarter-on-quarter, the per ton cost will keep going down.
But in absolute amount, we can expect that INR 800 million would be, you know, or thereabouts would be a quarterly rate.
Definitely, yes.
Okay. Got it. Thank you so much, and all the best.
Thank you. Our next question is from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.
Thank you for taking my questions. Two, three questions. One is, you know, now assuming that steel prices are down already, challenges are lower inventory, what kind of growth are you seeing right now? Or maybe what is your estimate for, you know, in the current situation, say Q3, Q4, that is first. Second is, as prices were down already, were on a declining trend, the discount of INR 500 per ton that we had said even in the call and in the PPT, when did, when did you actually start giving this discount? And how long do you intend to stretch that? And what was the rationale to, you know, still push volumes in a declining restocking environment or gain share from maybe peers, anything like that?
And third, last question is on the welded sections . You also mentioned presence of, or rather competitive intensity in the heavy structural by JSPL. So what is, how do we counter that? What is our, you know, strategy around that piece? Thanks.
Lokesh, Lokesh, first question will be addressed by Sanjay ji. Rest two, I will take. Sanjay ji, please.
Hi, Lokesh, good evening. Because now we are targeting quarter-on-quarter 10% growth. Like this quarter, we have done INR 7.5 lakh ton near about. Now in Q3, we are targeting INR 8.25 lakh ton. And Q4, we are targeting INR 9 lakh ton. And Q1, we are targeting 10 lakh ton. And Q2, I'm targeting 11 lakh ton. And Q2, up to 12 lakh ton. I think this type of market scenario, we are not going to stop. We are going to quarter-on-quarter 10% growth. Because I have the capacity, I have the market, I have all the things I have. Now, nothing is to, for me, any excuse. For Apollo, now no excuse. We are very confident. Okay, already the secondary market is in the loss. So abhi INR 1, INR 2 loss mein kaam kar rahe hain.
And we are still in the comfort position. So I don't think that we could measure it. शायद फिर वापस steel price increase आ गया. जो किसी हालत में हमको possible नहीं लगता. तो I think now the ball is in our court. Now we are going with the, you know, external support also. So we are almost full horsepower in terms of काम कर रहे हैं. क्योंकि हमको light method वाला मौका नहीं मिलेगा. So we are very hopeful. If we can't do it, so we have to really think where is our structural problem, how can we remove and how can we go ahead. But right now, I can say only one thing I can give you an assurance कि हमारे पास कोई excuse नहीं है perform करने के अलावा. Apollo team को perform करना ही पड़ेगा. We have no excuse. Thank you.
Sir, just one counter to that, sorry. Sir, अभी अगर भाव कम है, rates have fallen right now, if our gap with secondary is narrow, so why not channel that volume which we are forecasting later on? मतलब अभी growth accelerate ज्यादा, मतलब later we don't know, right? अगर steel INR 3, INR 4 ऊपर बढ़ता है, that is an unknown scenario, right? So any thoughts around that? If it growth could be accelerated today rather than maybe Q4 or Q1? Please pardon my ignorance.
इसमें सबसे Lokesh, इसमें सबसे ज्यादा important thing कि we are going to first time do this type of volume. Now we know about the market nubs. So what type of a we have a full basket. अभी तक हम confused क्या थे कि we don't know कि हमको कहां से volume बढ़ाना है, कहां से क्या काम करना है. But right from September month, we are हम अपना volume कर रहे हैं. So now we हमने अपना nubs पकड़ लिया market का कि हमारा market का nubs कहां पर है. How to increase the volume? कि किस area को किस product में किस area में हमको touch करना है, किस area में किस product में पकड़ने से कोई impact नहीं आता है, किस area में impact आता है. Now we are पूरा mastery और पूरा हमारे पास एक map आ गया है कि हमको कहां से volume निकालना है.
अभी तक we are still confused. हम क्योंकि जब तक volume नहीं करेंगे, market को नहीं reach करेंगे, we can't do anything. Now we read the market. तो problem आएगी तो we are going to face. I am not worried about कि अब हमको मालूम पड़ गया कि like I can say कि हमारा Maharashtra में INR 30,000 के आसपास per month volume होता था. This month we are going to close the volume at INR 45,000 per ton. तो हमने INR 40,000, INR 45,000 हमने close करेंगे इस month, October month में. तो हमको नजर आ गया कि Maharashtra Patra base ज्यादा market है, Tamil Nadu Patra base ज्यादा market है. ये area ज्यादा market coil base है, यहां पर हम price को ज्यादा खरीदखानी करेंगे तो हमको coil कोई growth extra नहीं मिल रही है, इस area में ज्यादा extra growth मिलेगी.
इस size को हम ज्यादा सस्ता करके ज्यादा नहीं बेच सकते, वहां पर growth नहीं है. इस size को हम सस्ता करके बेचेंगे तो हमको growth मिल जाएगी. So we can make the basket of things. Number two, as a margin point of view, मेरे को Dubai plant मेरा पूरा ramp up हो गया है. This month we are going to close to INR 16,000 ton. तो वहां हमारे जितना पुराने stocks भी हमारे वहां पर खत्म हो गए हैं. तो हमारा वहां से भी margins बढ़ जाएगा काफी, जो मेरे को इंडिया structure को help करेगा margin को maintain करने में. So we are very hopeful कि हम quarter-on-quarter 10% का growth and first phase में 4,000-5,000, second phase में 5,000-6,000 के बीच में कहीं ना कहीं जाएंगे.
और अभी तो ऐसा coil का capacity हिंदुस्तान में चालू हो रहा है, अभी चालू भी नहीं हुआ है. अभी 12 लाख ton में से सिर्फ 2.5 लाख ton का capacity आया है. तो या तो steel demand इतनी बढ़ जाए कि सारी capacity absorb हो जाए, तो वो otherwise में वो sense में हमारे लिए वो भी अच्छा है. क्योंकि ऐसा coil जहां भी बिकेगा तो like a product ही बिकेगा ना, pipe बिके या color बिके या कुछ भी बिके. तो मतलब वहां पर demand बढ़ेगी. इस capacity को कहीं जाने के लिए market share तो चाहिए ही.
Sure, sir. Understood. Understood.
And to add to this, our east plants, which we are setting up two plants, Siliguri and Gorakhpur, so that will also give us incremental market of around a million ton a year. And that will also boost our volume, which will contribute to the quarterly run rate which Sanjay ji just highlighted. Now on your second question about the discounting in the Q2 for our customers, see, I mean, in the falling price scenario, the sentiments for the distributors, our channel partners also go to like pretty low levels. And we have to compensate with some additional discounts, right, to push the volumes. And then it would be like, you know, first time in our own history that in a quarter when steel prices crashed by INR 7,500 per ton and our sales volume increased in that quarter versus the previous quarter.
So the momentum what we were seeing, we wanted to continue with that. And we thought, okay, if we bleed further by INR 500 per ton, but that we keep the momentum going with our channel partners, we should go for it. So that was the conscious decision and decisive strategy which we adopted and we went for it. And we knew that once, and we also had clear idea that prices will stabilize in September. Okay, so from October, we shall withdraw certain discounts and there will be no need to continue with the pricing.
So we have already rolled back the discounts on this INR 500 should go through into pre-annual?
That is right.
Into our budget? Okay. Okay.
That is right. And on your third question in competition on the sub-scale steel heavy space, see, our philosophy here is the more the merrier. Because we are the only ones who are promoting the tubular construction in the heavy construction. If more strong players, strong brands come and pitch the same theme to the developers, to the contractors, to the structural engineers, to the architects, to the government, it will only expand the market in a bigger way. So, everyone shall reap the benefits in long term.
Sure. Understood. Thanks, Sanjay ji.
Thank you. Our next question is from the line of Dhananjai Bagrodia from ASK Investments. Please go ahead.
Happy Diwali, sir, and very good numbers in a tough economic environment. Just wanted to understand, roughly we are expecting around INR 170 crore was the inventory loss for this quarter?
It was INR 2,000 per ton. So if you calculate, we shall come around INR 1.5 billion.
2,000 into INR 250 because only one month inventory we keep, right?
Right. So normally the stock is around INR 280,000-INR 300,000 ton. On that, the loss we would have booked around INR 5,000 a ton.
Okay. Loss would have been INR 2,000 a ton?
Yeah.
So, effectively now, what [inaudible] in terms of like.
Sorry to interrupt, Mr. Dhananjai. If you can please repeat your question. Your voice was not audible.
Effectively, for the second half, what EBITDA would we be targeting? Expecting no more losses?
Steel price. So we shall be going from INR 4,000 to INR 5,000 a ton for the second half.
Okay. So that effectively that's INR 5,000. And volume guidance is, would it be increased because our numbers have come higher in the process? And second.
Yes. I mean, if you sum up the guidance which Sanjay ji just gave, right, quarterly volume, I'm sure you will see that the guidance seems to be a bit better.
If you don't keep, it would be about 3.23 million, 3.3 million, right?
That's right. I think the main impact we will see for the FY26, right, because here the six months have already gone. But yes, we should be surpassing the 3.2 million ton guidance if we do second up as we are saying.
Thank you.
Thank you. Our next question is from the line of Kunal Ochiramani from Kitara Capital. Please go ahead.
My question has been answered. Thank you.
Thank you. Our next question is from the line of Anupam Gupta from IIFL Securities. Please go ahead.
On the metapaton number.
Sorry, Mr. Anupam, your voice is not audible.
Hello, can you hear me now?
Yes. If you can switch to your handset and like to answer mode, that would be better, sir.
Yeah. So can you hear me now? Is this better?
Yes, it's much better now. Yeah. Please go ahead.
Yeah. Okay. Okay. So the question was on the EBITDA number which you have put in the PPT of INR 5,000 for FY27 targeted. But just doing the math from your current number and assuming there are no inventory losses and you have this INR 500 discount rolled back, plus there will be operating leverage which will come through, ideally you should be INR 5,000 per ton in the next two quarters itself, in Q4 itself, in fact, assuming there are no further this thing. So are you assuming adverse mix incrementally because let's say you'll push out more of general structures given that the competition there is much lesser? Or how are you looking at that number specifically?
Anupam, if you heard Sanjay ji, right, he said in first phase our target is INR 4,000- 5,000 a ton EBITDA, and in second phase INR 5,000- 6,000 per ton EBITDA, right? I mean, right now the EBITDA per ton has been so low for the last two three quarters, right? If we mention INR 6,000 per ton on presentation, we just thought let's be a bit conservative in highlighting the number. But yes, you are right that the business has the ability to produce INR 6,000 per ton EBITDA which Sanjay ji also highlighted.
Understood. Okay. And the second question is on the utilization of the Raipur facility at this point of time. Last quarter you mentioned it was close about 60%. What is the number for Q2?
Yeah.
Thank you. Our next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good evening, sir. I hope my line is clear. So just to answer to Anupam's last question, see, in Raipur, there has been expansion in the capacity as well, right? So earlier it was 61%, but now on the expanded capacity it is 53%.
Thank you, sir. Pallav sir, you can please go ahead with your question.
Yeah. Good evening. So I have a question on the new plant at Bangalore. I think on the last call we had mentioned that there was a plan, the location was supposed to be in Ahmedabad. So has there been any change in our strategy in terms of geography?
So Pallav, we did decide to go for Ahmedabad initially, right? And then we evaluated the raw material availability, right, the market dynamics, and existing plants which are already feeding the Gujarat market, right? So we thought that existing plants can keep on feeding. And in fact, there is a need for a plant in the southern market. So we changed that strategy. Anyways, we did not invest any money on land acquisition, et cetera. So it was withdrawable, and we did withdraw that. Sanjay ji, you want to add?
Yeah. Pallav, the main thing is that see now with the very hard work that we have done now, we've stabilized the APL and Raipur capacities. This plant's main market is Gujarat. Right now, in the south region, now we have a shortage of structural equipment due to the Patra market. So मेरे को लगा कि अब फिर हम Ahmedabad में एक plant अभी लगा लेंगे, तो फिर हम Raipur में वापस struggle करेंगे. It's better that we jump up material shortage है, उस area में काम करें. Second phase is the bit we are going to from INR 5 million to 10 million ton target.
Then we are in second phase में हम सब plants पर working करेंगे, कहां-कहां हमारी capacity हमको short पड़ रही है, कहां-कहां हमको लगाना है. We dropped the Ahmedabad plant. Right now, we don't want to disturb Raipur facilities because Raipur facilities हमारी बहुत बड़ी backbone हो गई is the company की. So हम उससे कोई भी market लेना नहीं चाहते हैं.
So also, sir, you know, so the reason for us turning into net cash today again is because of the lower EBITDA this quarter, or again there's some inability to build up the working capital?
So Pallav, here there are two reasons. Of course, the profitability was low, so operating cash flow was very, very low compared to the earlier quarters. And secondly, we also went ahead with the INR 4 billion of capex in the first half. So as you know, the capacities have increased from 3.6 million ton to 4.3 million ton. So some residual capex also we had to incur, which we did. So that's why there is a slight buildup in the debt. But as the operating cash flows will normalize in the second half, it shall come down sharply.
So we still probably have a target of being net cash by the end of FY25. Is that a possibility?
Definitely, yes.
So I was just asking, so given the difference in between domestic and import prices, now if so did we import any HRC in the last quarter? Because the INR 6,000-INR 7,000 of decline in prices seems to be on a point-to-point basis. Because on average, the prices are probably low about INR 3,000- 3,500 as per what stock prices we track. So was there any imports of HRC that happened either in Q1 or Q2?
Pallav, just one second.
Pallav, the import price earlier, like in India, there are two types of imports. One is Japanese, Korean, and Vietnam material, जो duty-free होते हैं. And one is Chinese material, जिस पर 8.25% duty होती है. So the Japanese and Korean materials, the first $600 के आसपास चल रहा था the starting of the quarter. And now last May, $500 तक उसने touched here. Now this material is stabilized down to $520-$525 per ton. So if you see the $80 decrease into $84, almost close to ₹7,000 per ton. And India में ₹7,500 ton का decline हुआ है. So both are very current. Indian market is going with the international market.
Okay, sir. Okay, sir. Thank you so much.
Thank you. Our next question is from the line of Devvrat Mohta from Capital Group. Please go ahead.
Hi Sanjay ji. Thank you for taking my question. My question really was, अगर आपका ये mix shift होता है towards taking away more market share from Patra, does that become adverse for margins going forward? And really, when you say margins are INR 4,000-5 ,000 in first phase and INR 5,000- 6,000 in second phase, really, I mean, what time period are we talking about, phase one, phase two?
Yeah. Yeah. Devvrat ji, you have 100% you can take the right point. कि मैं जो बार-बार margin पर ज्यादा बात नहीं कर पा रहा हूं. कि अगर मैं Patra में committed sector में मेरा volume बढ़ रहा है, तो वहां से margin ज्यादा बढ़ेगा नहीं मेरा. तो amount, absolute amount है, हमारा EBITDA, ROC, सब हमारा EBITDA margin सब बहुत बढ़ जाएगा. But maybe Patra में EBITDA हमारा टूट जाए. तो तभी मैं INR 4,000, INR 5,000, INR 6,000 से ऊपर अभी बात नहीं कर रहा हूं. क्योंकि जो मेरे को यहां से growth बहुत अच्छी नजर आ रही है sector से. और बाकी हमारे जो valued products हैं, उसमें growth enormous है.
Like अगर मैं Q3 में 9,000,000 ton करता हूं, तो अगर मैं 9,000,000 ton पर INR 6 किलो या INR 500 किलो EBITDA सोच के INR 500 किलो का EBITDA सोच के काम करूंगा, तो again मैं उसी चक्कर में फंस जाऊंगा. तो my target is कि मेरा overall EBITDA कैसे बढ़ता है. उसमें absolute EBITDA कैसे बढ़ता है. Maybe अगर मेरा, अगर मैं जो नीचे वाले products में भी INR 2,000, INR 3,000 का EBITDA बच रहा है, why should I go lose the market? कि मेरा personal EBITDA कम हो जाएगा. इसलिए मैं EBITDA पर अभी ज्यादा bullish होकर बात नहीं कर रहा हूं. कि एक quarter हम EBITDA पर काम कर लें, इस quarter में volume पहले produce कर लें. क्योंकि हमारे खर्चों पर बहुत फर्क पड़ेगा इससे.
Likely मैं बताता हूं, हमारा जो मैं अभी देख रहा था आज के Board meeting में ही अपना, हमारा almost fixed खर्चा है INR 2,000 per ton के आसपास है. और हमने INR 750,000 ton किया है. ये खर्चा मेरा कुछ तो reduce भी कर रहे हैं, कुछ हम इसको और ठीक करेंगे और volume बढ़ाएंगे. तो maybe it's come down to INR 1,000 per ton. तो आज INR 1,000 से मेरा खर्चा कम हो जाता, तो मेरे लिए एक बहुत बड़ा booster है. मेरी problem क्या है, Devvrat ji, I am sitting with a cash flow of INR 4.5 million ton और I am producing INR 3 million ton. तो मैं कुछ भी assessment नहीं कर पा रहा था.
But right now from September onwards मेरा assessment होना शुरू हो गया कि कहां पर मेरे खर्चे ज्यादा हैं, कहां पर मेरा market share कम है, कहां पर मेरा market share, अगर मैं 80% market पर already बैठा हुआ हूं, तो I can't increase my market share. तो I don't want to lose the premium there. जहां पर मेरा market share 40% है, 50% है या Patra का market share ज्यादा है, तो I can lose उस market में I can lose my margin and I can capture the market share. तो right now हमको कुछ strategy अब लग गई है. But एक quarter हमको काम करने से जो मेरे को लगता है कि हमको और भी हमारी strategy bullish होती जाएगी.
Got it. तो आप basically बोल रहे हैं आप लोग का focus is on absolute EBITDA rather than EBITDA per ton. So how should we think about EBITDA going forward? Absolute EBITDA going forward, अगर आपका volume आप जो बोल रहे हैं उसके हिसाब से ramp up होता है, तो आपका क्या sense है EBITDA कहां जाना चाहिए INR 25,000, INR 26,000?
मैं तो हमेशा bullish आदमी होता हूं, but जो भी है, मतलब मैं मान के चलता हूं कि इस quarter में हम INR 4,000 से तो ऊपर रहना चाहिए हमको, INR 5,000 से नीचे रहना चाहिए, और maybe अगले quarter में INR 5,000 को भी touch कर देना चाहिए हमको.
Got it. ठीक है. Thank you.
Right now we can say कि मेरे language में INR 43,000, INR 44,000 ton इस quarter में, INR 47,000, INR 48,000. मैं quarter-on-quarter फिर हमारा margin भी increase होता जाएगा, जैसे-जैसे volume बढ़ेगा.
समझ गया. ठीक है. Thank you.
Thank you. Our next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Hi, I'm here and thanks a lot for the opportunity. There's two confusions here. One is you said that you have discontinued the discount which was given, which was around INR 500 a ton, which has been done in October starting. Is that correct?
So, Sneha, this was on the overall portfolio, right? But if you go in the market, you may still see that we have discounts on the products which are directly competing with sponge iron steel pipes. Okay? But overall portfolio, the discount which came out to be INR 500 because of de-stocking, because of sales post, that we have rolled over. But on our general products, the discounts continued in the month of October.
And that is not the reason of your EBITDA per ton for this particular quarter? Or how do we see EBITDA per ton impact because of that?
50,000 per ton.
Sorry, how much?
INR 50 to 100 per ton. That's all.
Understood. Secondly, one of the impacts that I wanted to understand is last quarter you had mentioned the gap between Patra and your primary steel prices were about INR 2,000- 3,000, which this particular quarter you said is INR 5,000-INR 6,000. Plus, there was a INR 500 discount which you gave it on the overall basis. Despite these gaps increasing, what is the confidence that you have on 10% Q1Q growth is what I wanted to understand.
Sneha, one correction. I said 5% gap. I didn't say INR 5,000 per ton gap. I said INR 5,000. So INR 5,000 on 5%. 5% on INR 52,000 per ton selling price, absolute comes out to be INR 2,500 a ton, INR 3,000 a ton.
Oh, okay. My bad. Understood. Understood. Next thing I wanted to understand is how quickly can you actually ramp up your capacity once you achieve 5 million ton sort of a number in terms of capacity? Because earlier, what I understand is you were trying to ramp up your Raipur capacity itself. Later you decided to get into various other markets. So I think that particular area would help in understanding.
Sinha, हमारी जितनी भी committed base capacity थी या जो भी capacity to leave with the Patra market थी, सब हमारी capacity fully utilized चल रही है इस time. We have some capacity left on the bigger sectors and the bigger dia pipes. और एक हमारी line Hyderabad में just install हो रही है. तो और एक Dubai में. हमको INR 4,500,000 ton पहुंचने के लिए बस इसी तीन जगह INR 5,500 ton per month की capacity balance रह गई हमारी utilize हो गई. बाकी we have utilized all the capacities. और I think कि अब इस पर भी हम strategically काम कर रहे हैं. तो ये INR 4,500,000 ton तो हमको हमारा roadmap बहुत clear नजर आ रहा है.
After that INR 4,500,000 ton, we have a plant in Siliguri for INR 2,000,000 ton. वो market अभी हमारी बहुत weak है. 1,000,000 ton market for Gorakhpur and INR 2,000,000 ton market for Bangalore, the south light structural market. तो यहां पर INR 5,00,000 ton से हम लगता है कि हम बहुत जल्दी quarter-on-quarter बहुत तेज सफर तय करेंगे.
Understood, sir. Thanks. Thanks a lot for the opportunity and all the very best things. And a Happy Diwali to all of you.
Same to you. Thank you.
Thank you. Our next question is from the line of Aditya Welekar from Axis Securities. Please go ahead.
Yeah. Thanks for the opportunity. Anubhav, just a few points which I've missed, so you said 53% capacity utilization on Raipur plant on expanded capacity, so what is that expanded capacity now, and residual CapEx guidance for 25 and for 26?
Right. So last quarter, the rated capacity was 1,000,000 ton. Now it is 1,200,000 ton. Okay? So there has been an addition by 110,000 ton to be declined in the capacity. And if you calculate the volume, it was kind of unchanged on a Q2 basis.
Okay, and on CapEx guidance for 25 and 26?
CapEx, we have around INR 3.0-INR 3.5 billion of residual CapEx, which we shall spend over the next six to seven months. We shall reach INR 5.0 million ton capacity.
Understood. And one question on this value-added product share means it is 55% and that percentage is almost flat year-over-year. So what is the function of that value-added product share in our EBITDA per ton increase? Means do we see any case where we can have the flexibility to increase the value-added product share and reduce our general product share? Because in this quarter, we have incurred losses on EBITDA per ton basis on general product. So in that scenario, is that market developed? Or is there a sufficient market for pushing volumes for value-added products?
Aditya, please understand that the EBITDA loss in general category is not because of our pricing, but because of INR 2,000 per ton inventory loss which we booked for the whole company. Right? So if I remove inventory loss, it was pretty much profitable product. Right? And there is no strategy to lower the volume from general products because the opportunity which has come in front of us with the decline in the sponge iron steel pipes, we have almost INR 500,000 ton of new incremental monthly market, right, which we can target and very, very aggressively. We have the capacities, right? We have the distribution network, right? It's one of the most fast-moving products. So here, the inventory churns are even higher, right? In this segment, inventory churn touches almost 20 times in a year. Right?
So on EBITDA per ton basis, you may see it being diluted, but on ROC basis, this is like super, super attractive, right? And we are not going to leave any stone unturned to grab the market from sponge steel pipes which got opened up over the last three, four months. Because it is not ROC diluted, it is highly, highly ROC attractive.
Understood, Anubhav. Thanks a lot.
Thanks.
Thank you. Our next question is from the line of Bhavin Pande from Athena Investments. Please go ahead.
Hey. Am I audible?
Yes, Kavish, please go ahead.
Yeah. Sure. So I just wanted to draw your attention to slide 23 on the opportunity in solars. If you could just quantify the size of the opportunity, and secondly, you could touch upon if products in this particular offering are fungible and could be used across segments.
So see, I mean, the products are not fungible, right? The target, if you look at the opportunity, right, in the area of residential rooftop, right, there our light structures will be used, right? Now for ground-mounted, one is still. So there our Alu-Zinc sheet and thicker color coating sheet will get used, right? And for tracker, again, we have specialized tubes which can only be used in solar trackers, right? So these capacities are not fungible. So we have introduced the products specifically for each area.
Okay. And Anubhav, what would be the mix of exports and domestic revenue?
So if you look at our Dubai sales, right, that is our international sales.
Okay. Okay. Got it.
Thank you. Our next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead.
I just wanted to ask one question. Out of the then expenses which are booked per ton, so which was about INR 4,400 in the Q1, a little over INR 4,000 in the Q2, how much conceptually is likely to be fixed cost, and how much is kind of variable linked to the output? In other words, as we ramp up the sales, what kind of operating leverage I can expect to see on a roughly INR 1 million ton, sorry, INR 1 extra kind of ton per quarter ramp-up that we are talking about? Just to get a bit more clarity on that.
Bharatbhai, see, in fixed cost, our primary is employee cost, right, which right now is INR 1,050 a ton. Okay? I'm excluding these.
Because we have an HRC is about INR 1,100 a ton, INR 1,000- 1,100. I'm talking about expenses.
Bharatbhai, your voice is cracking.
I'm saying the manpower cost is about INR 1,000- 1,100 per ton in each of these two quarters. That I've seen. I'm saying the other expense, which was about INR 4,400 a ton in the Q1 and roughly INR 4,000 in the Q2. So what kind of operating leverage one can hope to see? In other words, how much nominally is the fixed element of the cost broadly? I mean, it did not be very precise. And how much is likely to be the variable part?
Bharatbhai, like I was saying, see, I mean, in fixed cost, there are three main components, right? One is employee cost, salary. Second is the R&M expenses. And third is the branding expenses. Now in the variable cost, which are number one, power; number two, consumables; number three, steel wastage; and number four, the freight cost, right? And if you look at the operating leverage, which we can get, right, from the employee cost, from the R&M expenses and the seasonal expenses, almost INR 500- 600 per ton operating leverage we can get if we keep on producing INR 300,000 ton of steel pipes every month.
Okay. And on the variable part also, we have a program to save the cost in each of the areas. So roughly, what kind of improvement over in the next one and two years we expect to see on the variable part of the cost?
Variable, the power cost has some potential to go down because we are investing in renewable energy, right? So that helps us reduce the cost. And secondly, on freight cost also, every day we keep on improving the efficiencies from the plant dispatched to the end market so that we can optimize the freight cost. And after opening or commencement of Siliguri and Gorakhpur plants, definitely the freight cost to eastern markets will come down. Everything you want to ask.
Yeah. Bharatbhai, one thing is very clear. Right now, we are sitting with the expenses of close to INR 4,500,000 ton. हमारा INR 4,500,000 ton के लिए जो भी expenses होना है, हम उसके ऊपर बैठे हुए हैं। और जैसे-जैसे हमारा ये volume बढ़ता जाएगा, like ये सब power है, power को भी हम दो parts से पकड़ते हैं। One part is when we run the mills, तो हमारा cost आता है। एक part है जब mill चलाए या नहीं चलाए, हमको minimum ये बिजली देना ही पड़ता है। तो like किसी plant में हमने 4,000 kVA का connection दे रखा है, but वहां पर run हो रहा है 3,000 kVA। But all the charges we have to pay for 4,000 kVA।
So if you see कि total हमारा INR 2,000 जो fixed cost आता है, INR 2,000 per ton के आसपास आता है, उसमें जिसका हमारा main power है, power है, fixed power जो हमको लगना ही लगना है, थोड़ा सा interest cost है, फिर ये branding expenditure है, S&D expenditure है, marketing expenditure है। तो उसमें हमारा बहुत अगर हम इतना volume achieve करते हैं, तो हमारा बहुत major reduction आएगा। Number two, जो हमारा freight factor जो है, इस समय हमारा almost close to last quarter INR 1,900 के आसपास आया है, including export। अगर हम local market को देख के करें, तो हमारा almost INR 1,600 ton आया है। उसमें क्या होता है, अभी हमको कोई भी plant को full करने के लिए, अगर किसी एक market में demand ज्यादा है, तो हमको like Hosur से Pune माल भेजना होता, तो हम भेज देते थे कि चलो वहां का market को full करो।
But अगर Hosur का माल Hosur में बिक रहा है, तो we are not required to send the material with the to Pune market। तो ऐसा अब जैसे-जैसे plants हमारे full हो रहे हैं, तो हमारे उस type का unnecessary freight factor भी कम होता जाएगा जब local में उसका माल बिकता जाएगा। तो like Raipur का माल है, अभी हमको Raipur को full करने के लिए हम we have to send to Pune, we have to send to Bangalore also, ये plant को full करो। अब जैसे-जैसे वहां local Raipur का जो market है, हमारा eastern India का और MP का और Gujarat का, वो market में जैसे-जैसे demand ramp-up हो रहा है हमारा, तो हमारा freight cost as हम Bangalore माल भेजते हैं, तो हमारा freight है INR 4,000 ton। हम अगर Ahmedabad माल भेजते हैं, तो हमारा freight है INR 2,500 ton from Raipur
। तो वो cost हमारा कम हो जाता है। तो अब हम इस process में आए हैं कि costing के ऊपर काम कर रहे हैं। सब कुछ हमारा volume से linked है और हम unfortunately पिछले एक दो डेढ़ साल से हम volume end पर फंसे पड़े थे। हम चाह के भी volume नहीं कर पा रहे थे। Right now, जैसे-जैसे volume करते जाएंगे, तो हमको कुछ गलतियां नजर आएंगी, तो उसको हम remove करेंगे। अब कुछ अच्छाई होगी, तो उसको और अच्छा करेंगे। अब हम उस process में आए हैं। तो I think Q3 and Q4 काफी कुछ company का future के बारे में कहेगा।
Thank you very much, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. Our next question is from the line of Sailesh Raja from B&K Securities. Please go ahead.
Thanks for the opportunity. How is the current CapEx trend seen in the government infra projects like metro, railway stations, airports, then water infrastructure projects like steel water tanks, which you were reflecting two or three quarters back? So today, what is our total volume from these sectors and what is the total overall contribution coming from government infra projects?
Sailesh, around 25% of our sales come from the infrastructure projects, right? I mean, last few months have been pretty slow, right, because of elections and new government formation and delayed budgets and then monsoons, right? Now, in the month of October, we have seen the pickup, right? But we have been working on these projects for the last one and a half years in terms of the approvals and our particular design, right? So we are seeing we have started to see a good traction from October onwards, and this momentum should continue throughout FY25 and FY26.
Is it back to pre-election period?
Not yet. Not yet. Because now North India again will see construction slowdown because of the pollution, elevated pollution levels, right? So we believe that January-February mark, I mean, last quarter, we shall see the pre-election levels' momentum.
Okay. Yeah. Thank you.
Thank you. Our next question is from the line of Vikash Singh from PhillipCapital. Please go ahead.
Hi, sir. Thank you for the opportunity. Just wanted to understand one thing, that the competition is also getting into the segments which previously were dominated by you only, basically you are the only player. At the same time, you are actually selling more of our low-grade products. In this context, and given a lot of HRC capacity coming, competition would also get some benefits of the bulk buying. How do we expect that our blended EBITDA would still be growing to INR 5,000- 6,000 level, given our value added would also come under pressure?
Good evening, Vikas. Vikas, what competition are we? We don't bother. Because we have our own branding, we have our own distribution network, we have our own expertise on the costing part. Number three, market is also expanding. थोड़ा बहुत तो देखो, कंपटीशन किसी भी बिजनेस में थोड़ा बहुत आता रहता है। But we don't think there is any serious competition in our segment. ठीक है, कोई API में आ रहा है, कोई DI में आ रहा है, कोई Galvalume में आ रहा है। But हमको अपने पार्टनर, we are creator. हम अपना मार्केट खुद क्रिएट करते हैं, and we are doing a lot of small, small, small, small things. जिसको आप, you can see in the volume of the market, we can't describe on the phone.
थोड़ा बहुत हमारा competition अगर market से जाएगा, तो नया भी innovation हमारा खत्म थोड़ी हो जाता है। हमारा innovation आगे बढ़ता रहता है। थोड़ा बहुत अभी, right now, November में हमारा 1,000 square का line चालू हो जाएगा Raipur में। वो एक 70, 1 लाख ton का capacity का, वो हमारा अपने आप में एक नया innovation आ जाएगा। अब हमने जो pre-color का line लगाया था, वो धीरे-धीरे ramp-up हो गया, उसका market develop हो गया है। तो वो हमारा ये अपना ये valuation बढ़ाएगा। तो अगर हम 2 लाख, 3 लाख ton साल का अपना valuation बढ़ाते हैं, 4 लाख ton बढ़ाते हैं, तो maybe 50,000 ton, 1 लाख ton, 20,000 ton, उसमें competition नहीं आएगा, तो we don't bother.
Like, ab hum ye pre-galvanized pipe mein hai, hum naya ZAM pipe lane ki taiyari mein hain, jo hamara March tak launch ho jayega. To bole, ye to duniya ka dastur hai, log neeche se thoda upar aane ki koshish karenge, hum aur upar jane ki koshish karenge. So, I am not worried.
Understood, sir. Sir, just one small clarification. I know the range low point has been said too much. But we had a similar situation in Q3 of FY23 when the export duty led to almost INR 10,000 price correction. Even then, we have managed the EBITDA per ton reduction of only INR 700, while this time was almost INR 2,400. So are we sitting on some extra inventory HR coil stocks this time, or I'm reading the situation differently?
So that time, I don't remember, but I think that time we compromised with the volume.
इसमें वॉल्यूम का फायदा हुआ हमारा?
aapka us samay 602 KT tha versus previous quarter 422 KT, to volume was also good actually.
Toh main bhi sir, ye hamara right now sir nahi yaad hai ki wo stand kyun aisa hua hoga. Ya to us samay Patra market hamara accha hoga ya hamare paas kuch India -Middle East export order kuch accha hoga. Without seeing the facts, I don't want to comment anything.
Understood, sir. I'll take it offline from our view now. Yeah. That's all from my side. Thank you and Happy Diwali.
Thank you.
Thank you. Next is a follow-up question from the line of Bharat Shah from ASK Investment Managers. Please go ahead.
Sorry Sanjay ji, mera phone drop off ho gaya.
Kya yaar, Bharat bhai, ekdum aapka phone beech mein nikal gaya tha.
Achha, haan, aap keh rahe the ki kareeb-kareeb INR 2,000 per ton jitna fixed cost ka, matlab 450-550 lakh, 450-550 million ton ki capacity pe hum cost structure hai, lekin operate hum lower kar rahe hain. Aur INR 2,000 per ton mota-mota fixed cost ka, jahaan there is an effective scope for saving, plus part of the variable cost like power, there is some level of semi variability of that. Aap jo keh rahe the, tab mera call drop ho gaya.
हां, yes, yes, sir. तो मैं कह रहा हूं कि भरत भाई, क्या है ना कि हमारा total जो fixed cost है, हम business करें नहीं करें, हमारा almost INR 45 crore per month के आसपास fixed cost है, जिसको हम reduce करके INR 40 crore लाने पर लगे हुए हैं कि हम उसे किसी तरह INR 40 crore के आसपास ले आएं। और हमारा जिसका last ये 15 लाख ton के आसपास हमारा ये volume था, तो 45, 6 करूंगा ना, 6, 6, 6, divide by 45, 75, हां, वही 2000 के आसपास आ गया। तो भरत भाई, अगर हम इसको, ये हम इसको 40 पर ले आते हैं, और इधर हम volume अपना बढ़ा के, हम 1 million ton का जो हमारा quarter का target बना रहे हैं कि हम 1 million ton पर पहुंचते हैं, एक दो quarter के अंदर में, तो हमारा ये जो cost है, ये 3 लाख ton, INR 1,200 per ton के आसपास आ जाएगा। ये cost जो हमारे margin को improve करने में हमको support करेगा।
मतलब करीब INR 700-INR 800 पर टन बेसिस पे सेविंग्स हो जाएगी।
Yes, because we are currently sitting with higher expenses, we are doing less volume, Bharat Bhai.
Samajh gaya. Aur variable cost mein bhi hamari savings ka program hai, due to.
Bharat Bhai, variable cost mein kya hota hai, do jagah hamari saving zyada hoti hai. Ek to freight factor pe, freight factor like humne Hosur plant chal raha hai, Hosur plant 45,000 ton par month ka range. Ab wahan par local market mein hamara 35,000 or 38,000 ton material bik raha hai. To ab poora mein demand hamare paas zyada hai. To ya Ahmedabad mein demand zyada hai, ya Hyderabad mein demand zyada hai. To we ship the material from Hosur to ye Hyderabad aur Pune aur ye Ahmedabad, whatever, jahan par hamare paas demand zyada hai. Ahmedabad to nahi bhejte, Hyderabad end Pune maal shift kar dete hain.
Ab agar hamara Hosur mein hi maal bik jata hai local market mein, to local market mein mera average freight aata hai 600-700 ton ke aaspaas aata hai. Aur jab main bahar jaake maal bechta hoon, to mera cost aata hai INR 1,617 ton ke aaspaas. To INR 1,000 ton extra material to mera sidha-sidha save ho jata hai. To jaise-jaise market expand kar rahi hai, to mera maal local bikne lag gaya hai. To mera freight cost neeche jana chahiye.
Got it. Thank you.
नंबर, नंबर, जिसका पावर में ये फर्क पड़ेगा। Like हम ट्यूबिंग पर पाइप बना रहे हैं। अब एक ट्यूबिंग की capacity 200 टन per, 200 टन per day बनाने की है। तो उसका एक ट्यूब मिल छोड़ के बाकी सारी capacity run कर रही होती है, चाहे crane है, चाहे water motor pumps है, सब कुछ उसमें ज्यादा impact नहीं आएगा। हमारे से 40 unit per ton के आसपास अभी खर्चा आता है ट्यूब मिल पर। अगर हमारी ट्यूब मिल full capacity पर चलेंगी, तो unit per ton cost आ जाएगी हमारी 35, 34 unit per ton। तो 5-6 unit भी हमारे लिए INR 8 unit cost से INR 7, तो INR 40-INR 50 turn हो जाता है। उसी तरह जब ये middle पर pressure होगा, तो हमारी yield cost, yield factor भी थोड़ा सा slightly नीचे आ जाएगा। नहीं कोई इन सब चीजों में छोटा-छोटा improvement आएगा, INR 50 टन का, INR 100 टन का, INR 30 टन का, ये बाकी खर्चों में भी। तो मतलब इधर कोई fixed cost नहीं आता है, but इधर भी हमारा एक INR 200-INR 300 टन से cost कम हो जाएगा।
Overall store cost कम हो जाएगा। जो mills कम रुक रही है, तो उससे ये breakdown कम हो जाते हैं। जब अगर plant में pressure नहीं है माल रखने का, माल बनाने का, तो क्या होता है? प्लांट में इधर-उधर स्टोरेज करना पड़ता है। उसकी हैंडलिंग हमारी बहुत बढ़ जाती है। हैंडलिंग बढ़ने से हमारी वेस्टेज बढ़ जाती है। बहुत सारे फैक्टर्स होते हैं, भरत भाई। अल्टीमेट में तो फुल कैपेसिटी पे चलने का ही आता है। और हम फुल कैपेसिटी लगा चुके हैं, अनफॉर्चूनेटली। तो अब हमको उसको किसी भी तरह से हमको पूरा करना है, हम उस पर लगे हुए हैं।
Sanjay ji, will it be fair to say, we finally are at a point where all that we needed and all that we have desired in market conditions is what we have got today. In other words, on the value added component, realization steadily should improve. On the raw material side, we now have stable conditions and favorable one where we can at a lower end expand the volumes. On the fixed asset, fixed cost side, we will have operating leverage benefit to save and to gain.
And on the variable, our efficiency and cost saving programs will result in some reduction. And all of that combine with opportunity in the global arena, where overall I would say that there should not be any reason now going ahead for APL Apollo not to be right at the top and shining. Otherwise, it will require lot of introspection within us to why with all the all the favorable factors, I would say there is now no scope for any analytics. It is only the numbers.
Bharat Bhai, main agar aapke poore call pe, to maine aapke sheet mein call pe khul ke kaha hai ki everything is in our favor. Agar hum is time pe koi bhi hum excuse hamare paas nahi hai, agar hum nahi kar paate, to this is a very point for us. We have to rethink about the whole the system and whole the structure ki kyun hum nahi kar paaye. Hamare paas koi excuse nahi hai aaj ki date mein. To be frank, matlab main woh, main woh shakhs hoon, Bharat Bhai, nahi kar paaunga, bolunga nahi ho pa raha mere se. Main excuse nahi loonga, galat excuse main nahi loonga. Main today, right now, I can say boldly and loudly ki I have no excuse to deliver the number.
Number deliver karne ke alawa mere paas koi excuse nahi hai is time. Mera poora system bhi yeh baat jaanta hai. We are working full hard. Aap kahin se bhi check kar lo, overnight kaam kar rahe hain is time is cheez ko proof karne ke liye. Agar nahi hota hai, kyun nahi hua hai, kaise nahi hua hai, we come with the reason. Main ki hum failure hain ya hamare structure mein koi bahut bade badlaav ki zaroorat hai. Today, I can say boldly and loudly, again main bol raha hoon, hamare paas koi reason nahi hai perform karne ke alawa ki humko quarter-on-quarter hamko performance apna good nahi, very good karna hi padega.
No, no, I do know that and I do understand. Sanjay ji, Shubh Diwali to you and the entire APL Apollo team, including the three other members on the call. Shubh Diwali wishes to all of you.
Thank you, Bharat Bhai, and same to you. And all the Misters, Happy Diwali.
Thank you. Next question is from the line of Onkar Ghugardare from Shree Investments. Please go ahead.
You mention that because of the price differential in the sponge steel market, you are, you will be able to garner the additional market. So what exactly, what exact steps are you taking in order to garner that market, which has been vacated?
Which market are you talking about? Which market are you talking about?
The sponge steel market, just now you mention. So you said that you will be capturing volumes from that market, right? Because of the price differential.
करेक्ट।
So what exact steps are you taking in order to garner that market share?
I mean, it has become a pull market, right? If we have the product, right, and if we are able to service our distributors well, the sales will go up automatically, right? Because the end user, whether the fabricator or contractor or a house owner, if he is getting HR coil quality steel pipe at the same price and maybe at a price gap of 5%, so, so he is gonna ask for APL Apollo steel pipe, right? And my product has just to be available at my distributor counter, so that he can service his retailers, his fabricators efficiently, and the sales will go up on their own.
Okay, just a small question is that, how has been the month of October so far, as we are already at the end of October?
We are right on target.
So whatever you mention right now, that you will be gaining momentum in each of the segments, and I mean the revenue, the volume, and EBITDA, everything, do you think you are on target?
I am not about the EBITDA right now. I am right now, I am now about the volume, because monthly bhi khatam hua, EBITDA to nahi mere ko maloom pad sakta abhi. But volume par, we are right on target. Agar mere ko koi bhi doubt nazar aa raha hota, to main nahi bolta.
Okay, so you are right on the track for the whatever you have rated so far. Okay, all. Thank you.
Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.
Thanks, YES Bank for hosting us, and thanks to all the participants, and I wish everyone Happy Diwali on behalf of APL Apollo. Thank you so much.
On behalf of YES SECURITIES, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.