A very good evening to everyone, and thank you for joining the call. Hi Sanjay Bhai, this is Kunal. Sanjay Bhai and I were in the place with you today for the post-quarterly results for AIA Engineering, so the fourth quarter for the fiscal year 2024-2025. I think the year has been pretty dramatic in terms of a lot of global upheaval. You've got macro events from war to shipping issues to geopolitical issues to the tariff measures that have been put along, and a lot of assumptions that generally we apply when we are doing long-range planning, I think, and inflection. With that, we are happy to take the call. Our business has seen some adjustment in these macro events which are applicable to us, and we'll share commentary on our worldview on it.
I will do a quick summary of numbers, and then I'll have Sanjay Bhai share a business update, and then we can get on to Q&A. Broadly, none of our macro directions conversations change. I think we remain confident about the power of the solution that we have and the disproportionate consequence it has for our customers. There are challenges in terms of the conversion, the whole conversion project that we have, which is going from forged to chrome and the mill liner and all of that. All of these are just learning parts of this whole growth journey where every country is different, every culture has its own way of going about risk or governance or change management, implications on costs, starting costs, all of that.
I think each day there is learning and all feeding into something that we believe are further, deeper modes into the business. With that, let me do a quick summary of the financial plan. We sold 68,741 tons this quarter, and that brought our full year sales to 265,000 tons, which translates to INR 4,200 crore of sales and INR 1,141 crore for the quarter, INR 4,200 crore for the whole year and INR 1,141 crore for this quarter, translating into a TDC of INR 399.52 crore and PBT of INR 363 crore, and profit after tax of INR 285 crore. Taking the profit for the whole year or EBITDA for the whole year at INR 1,492 crore and profit after tax at INR 1,060 crore. Our other income reflecting largely the drawback and the road tax, the small amount that is available that reflects the other operating income.
The non-operating bit has our treasury and some bit of foreign exchange gain coming from the weakening of the Indian rupee. The total other income, including the operating and non-operating bits, being INR 92 crore for the quarter. Our working capital continues in sync. No dramatic changes there. Revenue, the energy is mostly comparable between second and third quarters. As I said, in the third quarter, we did about 66,000 tons and 68,000 tons in the fourth quarter. Generally comparable between the third and the fourth quarter. Our current capacity, just to reaffirm, stands at 460,000 tons. We have announced plans at two locations, one in China and one in Ghana. We are looking at 50,000 tons each. Both these are new locations for us.
We are excited about the strategic intent behind doing it, and we are working in both projects are in different stages in terms of from conceptualization to land acquisition to all types of approval. I think the China plant should be up and about in some form, hopefully in the next 12 months. As we go ahead, because it's our first time, we don't want to put firm date because there are a lot of learnings that are built into that. The Ghana plant in the next 12 months is the next three or four quarters. A lot of that approval work will be done, and then we'll go into execution and then the commissioning. Allow us maybe two more quarters to give a little better sense on what's happening with both projects.
Outside of these two projects, we're looking at about INR 120-INR 130 crore of CapEx, which is largely some amount of renewable power, balance CapEx for work that we've done in plants in India, some amount of maintenance CapEx, and some land. These all can be rolled up as a maintenance CapEx for this year. Around INR 120-INR 130 crore for that. Plus, we will be spending over the next two and a half years on the two plants, one in China and one in Ghana. That apart, one macro development, because Sanjay talked about our businesses around the anti-dumping bits. More specifically about the anti-dumping bits in the U.S. and the larger duty tariffs that have been applied by the U.S. on many products across the world.
Our lawyers have advised us to be a little muted about what's happening, how it's going, because some of these are subjugated in some jurisdictions that are defending our positions. A lot of what we see here is actually being used as transcripts, as inputs. Which is where all we're seeing right now is that so far U.S., there is a dumping duty now applicable at 9.6%, including CVD, including CVD. There's an ADD and a CVD, both put together at 9% plus. There is a tariff, our product falls under the Section 232 tariff. There is a duty that's under that. As we speak, our business continues, our customers are paying that duty like a lot of U.S. companies are for a lot of products. I know there will be lots of questions. We have very few answers.
We can't crystallize into what's happening because there is a lot of policy shift in regards to the U.S. As I understand, India is in active bilateral conversation, and we are hoping that we get back to business as usual or a duty structure that allows long-term contracts. We will not be able to speak more than this. As we speak, our business continues, the customers are paying the extra duty cost. There is, we don't currently have a material change in our U.S. exposure as far as sales are concerned. Of course, there is routine plus and minus that happens. This week is going forward, but as it stands right now, it looks okay, and there is no decision for us to say what will be the impact in three or four quarters.
I would like, with everything else, please allow for the duty, the tariff structure to stabilize once the 90-day ISS goes, the bilateral duty pass comes into place. Maybe a quarter or two allow us the liberty to deal with it in best possible means. As far as the duty protection structures, the rest of the world is concerned, you've seen the protectionist measures broadly are coming in our favor. It may come in at a certain level, but a lot of these countries realize that the nature of a dumping duty is when a company tries to sell below a fair price at that time. Our margins do not suggest we are engaging in that kind of offensive behavior. Obviously, there is a local manufacturer, and it says they will do what they need to protect their business.
We have to do what we have to do. In Brazil, we have seen that what used to be 12% plus anti-dumping has been terminated. One of the rare cases in Brazil where a duty got terminated, that is a strong indication of our fighting practices, right? One may optically present it whichever way one wishes to, in terms of our competition. The reality is, we are putting up, we are not giving up an inch. We are making sure fair and accurate presentation is done for our situation. We are here for the long haul. Maybe things change for a year or two or three. Even if it means an inch, we are putting in all our efforts. Some of that success that we are proud of is that the dumping duty rightfully got terminated because there was not a fair case for it.
The CBD portion, which is at 6%+ , is in the process of being revisited. We will have the outcome of that soon. We would like to assure everyone on this call that as far as AIA Engineering and with margins that are already publicly available, dumping is a far way away as far as our pricing practices are concerned, right? There are a lot of other geopolitical and other considerations which we are learning to navigate as we move forward, becoming sharper as far as navigating that condition is concerned. With that, I will ask Sanjay Bhai to share his bit, and we will go on to Q&A.
Thanks, Kunal. Good evening to all of you. As Kunal explained quite a bit, I am happy to say that as we had MCCP said that we should definitely do around 250,000 tons of sales this year. We have done about 255,000 tons, as clearly indicated and guided over Q3 calls. A little more heartening and gratifying fact is that while there is a top-line degrowth of about 14% as compared to last year, the cross-free city growth is only about 6.5%, which means our margins have not only remained intact, but rather they have a little bit improved, and they are remaining quite robust. As I reported, a bit of about 34%-35%. If you knock off the other income, treasury income part, we are still at about 28%. That is very gratifying.
Another aspect I want to highlight is that this is indeed a year where we have actually put ourselves into a very different strategic mindset. The long-term philosophy and the long-term opportunity remains absolutely intact in terms of one, one and a half million ton opportunity. What we have done is we have revisited the drawing book, and now we are at a stage where we have already started implementing our new strategy of spreading our wings and also simultaneously from India working on all those opportunities which are there in Latin America and Africa and CIS in a lot of other parts of the world with a very clear shift on branding efficiencies or the kind of solutions which we believe nobody else in the world is capable of offering. As Kunal said, these are the years of these are the times of extreme volatility.
We are implementing as we speak apart from the new locations where we have started our work, quite a few other opportunities, contracts, projects on which we are working. We should be in a position to come back with a more firm indication about how the current year will look like. At this point in time, we believe that we do not want to give any guidance about the volume growth for at least this year with a clear indication that our endeavor is to definitely achieve a reasonable level of growth. I think it is a bit early for us to give you or quantify the same with any clarity at this point in time.
On the CPEC side, Kunal has already explained the progress on both the locations is reasonably good, and we expect China to be on ground and start getting at least the first phase operational by the end of this fiscal. That is our target as we speak. Over the next few quarters, we should be able to share some good further developments with you. With this, I request the moderator to open the house for the Q&A.
Thank you very much. We will now begin the question and answer phase. Anyone who wishes to ask a question may press star and one on the touchscreen telephone. If you wish to remove yourself from present view, you may press star and two. Participants, I request that you use hands up for asking a question. Ladies and gentlemen, please wait for a moment while the questions are assembled. The first question is from the line of Bhoomika from DAM Capital. Please go ahead.
Yeah, good evening, Sanjay Bhai. Good evening, Kunal . My first question is on the US anti-dumping duty, which is being levied. The total duty is 9.16%. Is there anything apart from that in terms of base duties or anything else?
Yeah, so there is an overall duty that Trump has applied, right? There is a baseline duty. There is a section. There are several things going on. There is a duty on aluminum and steel, which is a different chapter. So there is a base duty that is there under the universal charity.
Absolutely. Yeah, yeah. Okay. Post this tariff, post this duty which came up and the tariffs which came up, one is can you outline, call out what was the FY 2025 sales to the US geography in million tons? How are we seeing? I know you said that there hasn't been any drop in the volume so far, but if you can just get the FY 2025 volume numbers for US geography.
Right. Bhoomika , there is, like I said, there is a lot more curiosity besides the investment fraternities about this information. U.S. is an important market, but it is less than, I would say, 8% of the total volume, broadly I'm saying. Okay? The materiality is there or not there, right? Whichever way you look at it. For now, the nature of the product is such that there is capability, there is extended capacity, that everything is linked to it, right? I mean, except for one or two other countries where you're seeing a different buying behavior, in U.S. is a little different from that standpoint. Like I said, today the business continues.
If it continued today, we have visibility for a quarter or two ahead because everyone in the U.S., forget a buyer of high-chrome grinding media or liners or other products, even someone importing grains has a transition of what's going to happen. That is what I said, that rather than taking an unfashioned what's happening, just let's just ride out these two quarters and we'll get exact clarity on what it is. It will be a little bit more imaginative and speculative on left or right and trying to unpack it into smaller numbers. As long as business continues, we should be okay for now, right? As we just said, our endeavor is to ensure our teams, everyone, we ensured that, I mean, there is nothing materially lost in the U.S. We still continue with more or less the same volumes. Bhoomika ? Moderator?
Bhoomika line is going dropped there. Staying moved to the next. The next question is from the line of [Feraz]. from [audio distortion] . Please go ahead.
Yeah, hi there. Thanks for the opportunity. Sir, some updates. Last quarter, you had mentioned that we are working on a couple of large mines and possibly if they can convert, there could be a 30,000-40,000 Mexican addition. Any update on that front, sir?
We are working on several mines and our endeavor continues.
Okay. Since last quarter, he had mentioned that on the revised base of FY 2025, we could again start looking at 25,000-30,000 metric ton addition per annum. Now in the opening remarks, he mentioned that he would not like to give any volume outlook for FY 2026. Is it just a U.S. uncertainty or do you still see the momentum of conversion from forged to grinding media not recovering that fast?
I would not want to pinpoint any particular reason, but one, let me assure you one thing that we are not going back on that target. That is point number one. What we thought is that as we speak as compared to last quarter, again, so many things have happened in this world and things continue to happen. You agree with me? Correct?
Yeah, correct.
While we are working on several fronts and our endeavor is to ensure that our medium to long-term growth strategies remain intact and we become a predominant player in this industry, we felt that let us wait for a quarter or two and see how few things are unfolding before giving a specific growth target. I'm very clear I'm not going back on what I said last quarter.
Okay.
I should not need any other inference.
Okay. Sir, last question on our mill liner business, sir. Just wanted to know how in FY 2025 that business fared and the outlook for the next one to two years and any changes such as in terms of renting of that business.
No, I think it has been doing very well. A lot of focus, a lot of investment is going in that business, and we remain very bullish on that.
Okay.
As you know, we have already made some further expansion in that particular business and investment in that facility. We are working very hard on approaching this business on multiple fronts. As we speak, we have also increased our stake in that Australian company to 59%.
Correct. Sir, when you said business started contributing in double digits to our total annual volume, is it possible to share any volume broad ballpark outlook for that result?
Share specific volumes, but of course, it is double digits. Of course.
Okay. That business is currently outgrowing the grinding media business in terms of volume growth?
Oh, no, no. Listen, grinding media still becomes a predominant volume driver. It starts to outgrow the grinding media in terms of I imagine that.
Yeah.
It is growing. Let me make it growing.
Yeah. Okay. Okay, sir. Thanks.
Thank you. A reminder to all participants in the text file and one to ask questions. The next question is from the line of [audio distortion ] from SBI Mutual Fund. Please go ahead.
Thanks, ladies and gentlemen. Could you outline the thought process of investments in China and Ghana because this is a pivoting from a strategy of being in India in a single location?
The idea was that we have seen the last three years, we've made a, we've furthered our solutions in terms of the ability of our consequences. We've been handstrung by a few things. One of the things has been phased, right? There's a large implication on the transit time. For example, when you're going to South America, it's almost an 80-day, 90-day transit time. On top of that, with the whole Red Sea thing that went on for the last two years, in between the China-U.S. container thing, there is a little bit of the same anxiety that sometimes customers express, saying, you know, the freight going on from 1X to 3X, containers are unavailable at times, or the shipping time that it takes. What if there is a global event and where supply does not come in? These are just conversations.
These are not showstoppers, but these were regularly coming up to us. There are, we've taken a, we're trying to do things to see how can we fasten or fasten our acceptance with the customers, right? We are making small beds. We are not going with a whole monolithic plant. We are going to do it in a modular fashion. We are going to do with a small capacity, see how that goes. These are attempts to see. For our plant in China, for example, our transit times are half to everywhere in the world than what it is from India. These are, and most of our customers are mining customers where China already has a shipping corridor set up, right?
There are resistant shipping corridors to stay from at a cost that is generally half than what we see from India and half the shipping time. That was one of the considerations to say, what else can we do to show that our fortunes are not linked to this one variable that has been with recall after COVID? These two years of freight issues post-COVID, then we saw about a year that things normalized again when what happened with the Red Sea issue, the freight volatility came in. This is one of our attempts to say, making a small bet to see whether it changes the whole approach and the game to say, now I've got the capacity, it can deliver and offer a better supply chain visibility, predictability, cost from a shipping standpoint, etc. I think it is only from that standpoint.
India continues to be the location. This is for our ability to break into a customer, give them the comfort, we'll see what happens from there, correct? The idea is that I've got the supernormal solutions which can bring all these benefits to the customer. It's taking a little more time. Could this be weighing on the customer's mind? Would this help facilitate a faster, quicker conversion? This is our attempt in that direction. We are not betting the house for it. That is the context.
I'm sorry to half your, excuse me, when I look through this investment decision, it is in a country which has little or probably no respect to IPA.
I don't think there is a debate on this beyond this. This is our strategy. This is what we are moving forward with, taking a small bet. I think it will be not good use of everyone's time to now discuss a personal view. I would love to take this offline, and I'm very happy to share, and we can go through this one-on-one after that.
Fine. The second thing is, if you could just help us understand how are these realizations different for grinding media and mill liner? If you could give us a little ballpark in terms of indication, that would be helpful.
Realization for, when we look at it is, we've got grinding media as one category of product and non-grinding media as another category, right? Mid-liners are part of the non-grinding media category. We've got vertical mill parts, we do quarry parts, we do castings for cement mills, right? There is about 12 weeks-13 weeks of products that we do under the non-grinding media. That overall is about 30% of the volume, broadly I'm saying. 25% by volume comes over there. The cost of making these parts is also very different. If you ask me about the margin, my both categories are comparable. If you ask me about my realization, my non-grinding media could be from INR 100, INR 1,300, INR 140, it can go right up to INR 230-INR 250.
Okay.
The retail average now keeps changing depending on what I have done more, what has required machines, what is the 25% chrome, what is the 11%, 12% chrome. There are all those variables that come in, where do I need much heavier patterns versus smaller, easier patterns, right? There is a whole cost investment that goes into the costing and the pricing part of it. Some parts take up to four months from the receipt of the order, or design itself takes a month, or pattern making takes another kind of month and a half to, then there is production, sample casting, post-production, there is a month-long machining exercise, almost a five, six months start to finish. The pricing then is commensurate with that.
All that cost that gets applied, accrued for that product, and hence from a margin standpoint, largely may not be very different, but from a cost and hence the selling price, there is a little bit, there is a level of where it's not comparable. These products are strictly not comparable, but I would say between INR 140-INR 150 it goes right up to INR 250. I'm saying realization per kilo.
Great. Just last question about a year back or so, we had green shoots from getting into the South America territory, especially Chile. That is an area considering the production of copper that country has, and we were significantly underindexed. If you could give us some color on where we are because that is a geography which can give us significant volume data.
That could be a material game changer for us, and it will sound repetitive to say that, but we are very hopeful that we get a breakthrough soon, we just have to wait for it, right? It will be a long chase and effort. We've gone through quite a bit of macro events in between. We hope that we are building on that momentum, and I'm hoping next two quarters there is some breakthrough that we would be able to share. We have been in that quarter away and not crossed the line at least three times in the last maybe one and a half years. With that caveat, I'm hoping that we have something good to share soon.
Sir, just one more question I had because I remember we were speaking about there are certain customers which had to do inventory correction due to internal challenges. Could you just give us an update on, I mean, what percentage of volume would have been lost because of that, and where are we in that?
We lost about 8,000-10,000 with two customers, two or three customers last year, over 12 months. On a rolling basis, that volume should come back. I think the one which was a larger customer, I think in another max one quarter will get back to original consumption patterns. I think that's one quarter away. The other two, I mean, we either are in the process. I think let's say now in a quarter's time, I think that volume on a rolling 12-month basis, we are hopeful will reset about 8,000 tons-10,000 tons.
Okay. Is it fair to say that the drop in the volume that we have seen is none of the cases where we have lost a customer, it is mainly to do with idiosyncrasies of the customers and their inventory issues, etc.?
That was one part of it. We did lose volume. I think we did lose volume to the competition, I think, but one large customer that went back, that went to the competition. I think other than that, nothing has changed in that. That was a rare event over the last 20 years that we've been competing, maybe five handful of events where customer is, that's where it is. Some part of that is linked to the duty structures and the uncertainty and all of that. We are hopeful that we can correct that. Hopefully, we can correct that event also.
Okay. Thank you so much for taking my question.
We can speak offline for the whole once more on the logic about the China-Ghana, yeah?
Thank you.
Thank you. A reminder to all participants, you may press star and one to ask questions. Participants may press star and one to ask questions.
Copy, I think this is done. We can wind this up.
Okay. Is there no further questions from the participants? I now hand the account over to the management for closing comments. Over to you, sir.
Thank you. Thanks everyone for staying on the call and hearing us. As usual, Sanjay and I continue to remain available for any questions offline. Thank you. Thank you very much. Have a good evening.
Thank you. On behalf of AIA Engineering Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the line. Thank you.