Q3 23/24

Jan 17, 2024

Summary

Record Q3 and 9M results reflected stronger value-added sales, realizations and cost efficiencies. Expansion is intended to lift capacity and margins, while management targets net debt-free status within 18 months.

Ladies and gentlemen, good day and welcome to the Q3 FY 2024 earnings conference call of Jai Balaji Industries Limited, hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode. 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-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am. Thank you, Michelle. Good afternoon, everybody, and welcome to Jai Balaji Industries Limited, maiden earnings call to discuss the Q3 and nine-month FY 2024 results. We have on the call Mr. Aditya Jajodia, Chairman and Managing Director, Mr. Raj Kumar Sharma, Chief Financial Officer, Mr. Vijay Bagri, President Finance, and Mr. Ajit Pandya, Company Secretary. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. We now request Mr. Aditya Jajodia to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir. Thank you, Sana. A very good afternoon to all of you. We are pleased to welcome you all to our maiden earnings call. As this is our first interaction, I would like to take a few minutes to discuss the journey of Jai Balaji Industries Limited, followed by the strategic updates and the performance highlights. Our investor presentation has been uploaded on the exchange, and we hope that you have had the opportunity to review it. Jai Balaji Industries Limited has a long history of 24 years, and we have seen many commodity cycles and survived those, some with much difficulty also. Over the years, we have worked hard to achieve a strong operational efficiency and build a large integrated organization very much focused on specialized value-added products. Today, we are one of the largest manufacturers of value-added products specializing in DI pipes and specialized ferroalloys. We have state-of-the-art manufacturing facilities across West Bengal and Chhattisgarh, including a 1.1 million ton fully integrated greenfield steel manufacturing facility. The company is at the forefront of the industry, and we have a very large export base also and are exporting currently to 40-plus countries globally. The company has fully integrated operations and specialized product portfolio focusing on value-added products like ductile iron pipes and specialized ferroalloys. Ductile iron pipes contribute around 50% of our revenues, and we are strategically placed in an industry which is poised for substantial growth. It is expected that the industry will grow at 13%-15% CAGR in the near future. These pipes, essential for water transportation and drainage systems, are witnessing increasing demand due to infrastructure development initiatives such as the Jal Jeevan Mission and Mission AMRUT. Jai Balaji is actively contributing to these projects and currently holds around 10% of market share in the DI pipe industry segment in India. We expect to improve our share to around 15%-20% following our capacity expansion on which we will be talking later. Consequently, we expect the revenue contribution from ductile iron pipes to increase to 45%-50% of our group's revenue, reflecting our strong strategic focus on this growing market segment. We are also one of the largest producers of specialized ferroalloys in India. The company's specialized ferroalloys command a significant premium over the benchmark prices in the market, underlining their high quality and value. Jai Balaji expects revenues from specialized ferroalloys to increase substantially from the current 20%, 25% to 35%. Furthermore, Jai Balaji Limited has also secured its market position by establishing long-term contracts with both Indian and international clients of repute. As the company continues to enhance its capabilities in specialized ferroalloys, it also remains very well poised to capitalize on the increasing demand and retain its premium position in the market. Jai Balaji Industries Limited is strategically executing a very comprehensive cost-cutting strategy aimed at optimizing operational efficiencies. Through meticulous planning, the company is expanding its capacity with a focus on achieving the lowest cost structures and capitalizing on economies of scale. Establishment of a 6 lakh ton iron ore beneficiation will be utilized for beneficiation of iron ore dumps. Additionally, the presence of three railway sidings enhances transportation efficiency, contributing to the overall cost savings. Furthermore, the utilization of captive power and dedicated effort to reduce debts reflect the company's commitment to minimizing energy and interest costs, thereby strengthening our balance sheet. These strategic initiatives underscore Jai Balaji's dedication to operational excellence and financial prudence, positioning the company strategically for success in the competitive markets. We have faced very tough challenges in the last 10 years, which are now resolved with the commitment, hard work, faith, and resilience of the management, business associates, and all its stakeholders. I would like to take this opportunity to thank everyone for the continued support. Jai Balaji 2.0 is emerging as a resilient organization with a strong focus on margin expansion for value-added products, that is DI pipes and specialized ferroalloys, and backed by a very strong balance sheet. The company aims to expand its capacity of DI pipes by 175% to 6.6 lakh tons per annum, ferroalloys by 46% to 1.9 lakh tons per annum, and the company is strategically targeting a utilization rate of up to 90%, emphasizing operational efficiencies. We are also very much focused towards becoming net debt-free in the next 18 months. The CAPEX going forward will be supported by internal accruals. All these efforts would ultimately culminate into margin expansion. JBIL aims for an EBITDA margin in the range of 18%-20%, reflecting a dedication to maintaining healthy profitability amongst its expansion endeavors. JBIL has a clear, significant capacity expansion plan for which around INR 10,000 million is expected to be spent. Out of this, INR 3,858 million has already been incurred through internal accruals and the balance is expected to be spent in the next 18 months through internal accruals only. Capacity of DI pipes is expected to increase from 2.4 lakh tons to 6.6 lakh tons, which has already been enhanced to 3 lakh tons a few days back. This is expected to be in two phases. Specialized ferroalloys capacity is expected to increase to 1.9 lakh tons from 1.3 lakh tons in two phases. 53,000 tons of additional capacity will be commissioned in phase one by FY 2024, and the balance is expected to be commissioned by FY 2025. The company has also planned to revamp its existing blast furnaces, which would lead to increased capacity of 7.5 lakh tons of hot metal from the present capacity of 5 lakh tons. The company has also planned to increase the capacity of Sinter by around 6 lakh tons and also setting up a 50 tonne BFG boiler, details of which can be seen on slide 12 of the investor presentation. Now, coming to the financial performance. We are extremely delighted to share that Jai Balaji has delivered its highest-ever financial performance in Q3 FY 2024 and for the nine months FY 2024. During nine months FY 2024, our revenues are INR 45,682 million. The adjusted EBITDA increased by 106% to INR 6,664 million, and EBITDA margins have increased to 15%. PAT also grew by 756% from INR 709 million in the nine-month period of FY 2023 to INR 6,066 million in the nine-month period of FY 2024. In Q3 FY 2024, the highest-ever adjusted EBITDA for the quarter increased to INR 2,474 million, up by 96% year-over-year. Also, the profit after tax for the quarter increased by a significant 740% to INR 2,346 million. Now, coming to the operational performance. We are very happy to share that we have achieved highest ever nine months sales and production numbers for ductile iron pipes. On the other hand, on quarterly basis, we saw a decline in sales and production numbers of DI pipes and ferroalloys due to technical upgradation of one of the blast furnaces, along with one electric furnace of DI plant and the revamping of the ferroalloy furnaces. The same are now almost complete and commissioning is already on, and we expect the production to increase within the next few days only. Realizations for both DI pipes and ferroalloys increased on both quarterly and nine monthly basis. In Q3 FY 2024, realizations of ferroalloys and DI pipes increased to INR 1,70,000 tons and INR 80,000 tons, up 33% and 18% year-over-year. With this, I would like to conclude my opening remarks and assure that we at Jai Balaji Industries are very confident of creating a resilient organization with a strong growth outlook. We can now open the floor for questions. Thank you so much. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take the first question from the line of Victor Velinkar from Axis Securities. Please go ahead. Yeah. Thank you for the opportunity. Congratulations for the great set of numbers. We have witnessed a great turnaround story, sir, and going ahead, if you can throw some light or explain the change or strategy in place to sustain the profitability, especially if you can comment on any threshold debt level which you want to operate. Also, what gives you confidence of achieving EBITDA margins in the range of 18%-20%? That is the first question. I will address your query. Coming to the part that what is the sustainable debt which we are looking at. See, currently our debt is in the region of only INR 560 crores. As you mentioned in the opening remarks also, the aim and target of the company will be to be net debt-free over the next 18 months. With the current cash flows of around INR 250 crores every quarter, there is going to be jumps in the improvement of EBITDA margin going forward as the CAPEX plan unrolls. But even if you maintain the present margins and the present EBITDA also, with the present CAPEX plans and with the current plans, we will be in a very comfortable position to be net debt-free over the next 18 months. The company does not envisage to raise any term loans of any sort to finance its CAPEX plans, and it will be done entirely through internal accruals. The strategy on debt will be to be net debt-free. Then coming to the second part of your question as to what gives us the confidence and how we will be increasing our EBITDA margins. I will just go back I think a few quarters ago. Just going through the history of the company, around two years ago, our sale of value-added products in the entire revenue market was only 30%. Because of the initiatives we have taken over the last two years, it is now around 50%-55%. Going forward, it is going to be, over the next 18 months, it is going to be 80%-25%. When the revenue share of the value-added products was only 30% two years ago, our EBITDA margins were in the region of 7%-8% only. With enhancement of 30% to 50%-55%, we are 15%. As you go forward towards 18%, it will be moving towards 18%-20%. Along with value-added products, what we also mentioned was that we are also going for cost-cutting measures. With cost-cutting measures, what we mean is that the economies of scale will come into play. New technologies will be put into use, whereby the error cost of raw material, et cetera, also will come down. All the cost-cutting measures will be in place. This particular margin, what we are looking at, we are very confident that we will be able to achieve these margins. Understood, sir. Thanks a lot for that explanation. Next one is if you can throw some light on production sales billing guidance for FY 2024, also on EBITDA PAT guidance. This is Raj Kumar Sharma. Sponge iron in the third quarter, we have produced 61,000 tons as compared to 64,000 in Q3 FY 2023. Pig iron, because one of the blast furnaces was under modernization, the production number in this current quarter was 93,000 as against 125,000. Billet, we had slight increase, 42,000 as against 40,000. TMT, there was a very good performance of 71,000 as against 39,000 in Q3 FY 2023. Ferroalloy, we maintained the same run rate, 27,000 as against 27,000 in Q3 FY 2023. The ductile iron pipe was 49,000 as against 58,000. As far as realizations are concerned, sponge iron, it was INR 29,215 as against INR 32,819. Pig iron was INR 37,511 as against INR 41,252. Billet was INR 51,947 as against INR 44,842. TMT, the realization was INR 46,211 against INR 50,850. Ferroalloy, because we have shifted to specialized grade of ferroalloys, approximately 30% of our ferroalloys is now specialized grade. The realization has jumped from INR 132,000. Now it is INR 176,165. The ductile iron pipe was INR 80,000 against INR 68,000. As far as guidance is concerned for the future, I will hand over to Aditya. Yeah. So what Sharmaji has just told you all was the First one. It was the guidance for the future. The guidance for the future is that as we are ramping up the capacities, we are looking at a capacity of approximately. The guidance for fiscal 2024 will be around 3 lakh tons of the ductile iron pipes. On the number side, we can say that we are expecting to achieve more than 20% of turnover in the last quarter if the additional capacity is being put up in place, and similarly, the bottom line should also increase. On the guidance, we don't want to comment much on the numbers. Thanks. Okay, understood, sir. Thanks a lot. That's it from my side. All the best. Thank you. Participants, to ask questions, you may please press star and one. The next question is from the line of Vikash Singh from PhillipCapital. Please go ahead. Good afternoon, sir. Hello, am I audible? Yes, sir. Please proceed. Sir, my first question pertains to the capacity addition in DI pipes. We are in an eastern region where almost every other player is also increasing capacity significantly. Do we feel that there would be a situation where the competitive intensity could be very high and, in fact, contrary to your expectation of higher margin, we will end up getting a lower margin for a certain period of time? Thank you for this question. It is an excellent question. This is one debate which we always have before we put up any expansion plan. First of all, whether the manufacturers are in Eastern India or in Western India, that is not the important part, because the market is absolutely pan-India. Our company, it is today supplying from Jammu Kashmir to Kerala and from Gujarat to the northeastern states also. The question of being in Eastern India or Western India will not arise because the distribution of orders are pan-India, number one. Now, coming to the more important question is that other players are opening capacities. How will the margins pan out? On that front, I will just explain to you a couple of things. Here we have a low-cost strategy. Number one, amongst the peers, we will be one of the lowest-cost producers, which will ensure sustainable margins. As far as the demand is concerned, the demand for these pipes is very, very huge for us. Over the next 5 to 10 years, 15 years, as of now, as you see it, the demand for these pipes will remain very robust for three, four reasons, which I will explain. Number one, the government is already on a mission to complete the Jal Jeevan Mission program, where they have a program for connecting every household, where the scheme is called Jal Jeevan. Other than this, the AMRUT scheme is also being implemented. Advantage with these pipes is when we compare to the conventional materials of, say, steel pipes or PVC pipes, or if you compare to the cement pipes which you see on the roads, is that, number one, is that these pipes have a long life, number one. Number two, there is no leakage of water, which currently is a very valuable resource in every country, and as you go forward, this will become more and more valuable. Number three, and which will be extremely important again, is that with these pipes, there is no question of contamination or arsenic poisoning. As you go for time, as the nation grows, the demand for these pipes will always keep on increasing. As of now, in the foreseeable future, we are envisaging that the demand will be robust, and the margin should not get squeezed. Rather, it will increase only. Understood, sir. My second question pertains to our near-term margin. Can you tell us what percentage of your DI pipe orders are on a fixed price basis? Since the iron ore and coking coal are on an upward trajectory, how does we see the near-term margin in the period of Q4 and one quarter after 2025? I will explain. Around 50% to 35% of the prices are on a fixed price basis. Even when we say fixed price, most of these contracts, they are actually on a WPI index basis. If the prices of the raw materials go up or the coking coal goes up, then automatically the prices will get adjusted. If the prices come down, the prices will get again readjusted on the lower side. By and large, our margins are well secured and covered. Understood, sir. Sir, one more question regarding our CAPEX plan and the debt-free plan. Basically, we have more than INR 500 crores, INR 560 crores of debt and a pending CAPEX of over INR 600 crores. With this kind of increased capacity, you would require the working capital, and there is a lag factor of this adding up. I am just trying to understand when they are giving a guidance of 18 months of debt-free, what kind of assumptions you are making in your estimates, because it seems a little optimistic at this point of time. Just to update you that in the current fiscal, in the 9 months period, we have generated around INR 700 crores of EBITDA, and we are expecting the full year EBITDA to be more than what we have done in the last quarter. Going forward with the CAPEX, which has already been put in place because we have already spent INR 380 odd crores till now, and in the next quarter, around INR 100 crores more will be spent. So these already INR 500 crore of CAPEX will generate additional cash flow and will add more value to the company in the coming quarters. So we are confident in servicing the debt and reaching the net debt, becoming the net debt-free. The second thing, one more important thing is that the term loan which the company has recently got from Tata Capital Financial Services, we have a repayment term of 36 odd months, which has already started, and we have started making the payments also. With the current profitability of the company, we expect to meet the debt in the next 18 months also. However, you can say that we have shown it as accelerated depreciation, but with the profitability coming up in the near future, we will definitely make it debt-free in the next 18 months. I will just add one more thing to add what Mr. Bagri has said. Even if you take a ballpark figure of the EBITDA which we have achieved in the last three quarters, and we do not add the forthcoming any incremental revenue or any incremental EBITDA, which is going to jump, obviously. But even if we take that as a ballpark figure, we have done INR 200 crores on an average for the last three quarters. We will be talking about the forthcoming three quarters. It means INR 1,500 crores. Both top line and bottom will be increasing exponentially. Even if we assume the worst, with INR 1,500 crores, INR 600 crores of CAPEX spending, and with INR 500 crores of debt pending, INR 1,150 crores. So the balance money can easily go into working capital. Hello? Since the participant has left the queue, we will move on to the next question. Before we move on to the next question, a reminder to all the participants that you please press star and 1 to ask questions. The next question is from the line of Radhika from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on good results. Sir, my query was that in terms of DI pipes, your capacities are increasing by almost 3x. So how much of that are you planning to export? The DI pipe presently, we are exporting around 2% of our turnover, and going future, our plan will be achieving the same to around 10% in the next 24 months. 2% to 10% in the next 24 months. That clearly states that the global demand of DI pipes seems to be very strong. Could you give us any insight on what is the total global demand of, or the export market size of DI pipes, and which are the countries where we are exporting primarily, and whether we are also exporting to the Middle East region, and who are the large players in the export market who we are competing with? With regard to present exports, we are only exporting to Middle East countries only. We have just now tapped the African market. We have already participated in a large tender in an African country for which we have already formed a subsidiary in Uganda. With this subsidiary, we are trying to tap the African market, where we see a very good demand in the near future. Because there are certain external funds also which have already tied up with the African nations for betterment of their living with regard to supply of water for transportation. Sir, any insight on what kind of market size would we have in terms of exports for the DI pipes? Madam, the market size is very large. In fact, what is happening today is that because today because of the Jal Jeevan Mission scheme and because of the focus of the government to implement it at the fastest, currently also there is a very large market. But what is happening is that because of the huge demand in the local country itself. So the first priority is that in the interest of the local infrastructure and in the interest of mission building, the first priority for all the manufacturers will be to sell first to the country and then export. The demand is very large. So whatever purchases are coming up, demand local but export will be to 10%. And the demand potential is not only from African countries and Middle East. The demand potential is also from the replacement markets in Europe and America itself also. In fact, I'm not taking names, but one of the largest DI pipe manufacturers in the country, we are currently exporting 50% of the production on a consistent basis. And their production currently it is three times our production. I think that will answer the question. Yes, sir. Sir, Europe, I understand, please correct me if I'm wrong. Europe has an anti-dumping duty on import of DI pipes. So would we be able, if you are targeting Europe market, our pipes would be competitive with respect to the manufacturers that are there in Europe? Madam, I will explain that also. Our primary market will be, since DI pipe is a voluminous product, our first targets will be the countries which are nearer to India, which is the Middle East countries, where there is a shortage of water and where all this infrastructure work has been recently rolled out. Secondly, the target market will be the African countries, where again, there is a huge shortage of infrastructure and the funds were short, but now funds are pouring in from the multilateral agencies. The third market will be Europe. Since there is anti-dumping duty, but Europe is also now imposing a carbon tax, and our company will be very well poised to enhance this particular tax in a manner that this tax will work to our favor. Because most of our pipes which we will be producing, our ESG footprint and our carbon footprint will be one of the lowest in the industry, and we are very confident that these particular duties, they may work in our favor on the contrary. As far as the anti-dumping duty is concerned, anti-dumping duty is definitely there. But instead of that, there has to be approval processes, and the anti-dumping which are approved, all these exports are, in effect with duty, they are just arrival from India. Already one of the largest manufacturers of pipe in the country, they are already exporting to Europe, as you will see from the data. Yes, sir. You said that the domestic demand is pretty strong, and I understand that AMRUT and Jal Jeevan are the two key factors driving the demand. But other than that, there is also increasing demand from pipe irrigation. Any sense in terms of what kind of demand we are expecting from this pipe irrigation, in terms of volumes, could you give us any numbers on this? Madam, see, the projections are very large. In fact, projections are so large that when we are saying that the market will grow by 15% CAGR, in the past 10 years, we have seen that the market has grown by more than 20% on an average. Actually, the demand has grown. What we have taken in our projections is that the demand will grow by 13%-15%, but the past trend has shown that it has been 18%-20% also in some years. In irrigation also, madam, what is happening is that so far in irrigation in India, when we are doing villages, what we see is that irrigation, which is normally the canals which are there, which is open to the sky. Most of the irrigation, it is in the canals, and there is a huge evaporation loss also. As the country progresses, as the demand for water increases, as the demand for other things increase, actually, the water is also a very valuable resource. There are already schemes in the government pipeline which will be implemented very soon. Maybe after next year, will be implemented, as far as I know. We are looking forward to a particular situation where there will be a scheme where all these irrigation canals will also be replaced by pipe water. Land and water, both have been used up. Are we expecting any kind of scheme to be launched by government for this pipe irrigation system as well? Yes, madam, absolutely. We are looking at that also. Okay. Sir, last question. You mentioned in your opening remarks that Radhika, ma'am, I'm sorry to interrupt, ma'am. With a question, kindly rejoin the queue for follow-up questions, please. Sure. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. We will take the next question from Vikash Singh from PhillipCapital, as his line had got disconnected earlier. Please go ahead. Thank you for the repeat opportunity. Sir, I just wanted to understand that tax benefits which is available to us. So till what profits we do not have to give any taxes? Carried forward loss approximately INR 1,700 crores, out of which the current year's profit will go, and probably 18 months from here, we are tax-free. Understood, sir. That is all from my side, and thank you for re-answering my question. Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Manav Gogia from Yes Securities Limited. Please go ahead. My first question comes on the cost savings side. The iron ore beneficiation plant of 6 lakh tons. How much of savings could we see out over there on a total basis, you could let me know. Also, the railway siding track you mentioned on the logistics front. Can you just give me a brief explanation on what sort of potential incremental savings you get from the railway siding track compared to using the road transport? If you talk about the railway sidings, we have three railway sidings. Two are at the plant locations, inside the plant, particularly, and one is in the iron ore belt of Odisha, from where the iron ore is loaded. Now, you have to be aware that to make one ton of steel, more than three tons of raw material is required, and iron ore constitutes the major bulk of the movement. The current situation is that for the last many years, the railway is the cheapest mode of transport, and even in the forthcoming years, this is going to be the cheapest mode of transport in India. But unfortunately, there is a huge shortage of trucks into which many of the steel companies have to move the material by rail also and by road also, which is much costlier. Due to the virtue of the railway sidings, what happens is that our raw material movement of iron ore, it is being done entirely by railways, which is the cheapest mode. Not only does it reduce the cost when you compare the cost of the peers, it also eases the movement of the traffic. This is one part. Also, what happens is that when the traffic is moved from road, there is a lot of pollution et cetera also. When you move by the railways, the pollution is practically nil. These advantages are always there. When you talk about the iron ore beneficiation, how it helps is that India has a huge deposit of low grades of iron ore, which are currently being exported, and the usage is not being done in the country. What we aim is we will take advantage of these low grades of ore, utilize them internally inside the country itself by beneficiation. There is of course advantage to the blast furnaces and to the other units also. Okay. Thank you so much, sir. Could you provide me some numbers on the same as you could on any incremental savings that you see from this plant, especially on an approximate basis if you have modeled it out? Railway sidings we always consider as a very integral part of the, I would say, entire plant. If you have to evaluate the advantage, it will be around INR 400-INR 500 per ton on per ton of movement of the iron ore. This translates in how much? Annually It is roughly INR 200-INR 300 per ton. Right. Yes. So approximately the advantage will be INR 400-INR 500 per ton for iron ore movement. In terms of beneficiation also, the cost will reduce by around INR 400-INR 500 per ton for iron ore. So overall, we talk, it is around INR 1,000 per ton of advantage, including the sidings and beneficiation. Okay. That was quite helpful. My other question is, if you could just throw some light on who your top three or top five clients are in this DI pipes and the ferroalloy segment, and what percentage of the total revenues could these clients contribute to? If Tata doesn't buy the major customers directly, they are the Haryana state government. It is Maharashtra, that is MJP, and also Jammu and Kashmir. These are the major states. In the private sector, it is Megha Engineering, NCC, Kalpataru, JMC Projects. So these are the major customers in the private space and the government space, as far as the DI pipe industry is concerned. As far as the ferro industry is concerned in India, all the large players who make these products, they are the buyers, as well as internationally. These are the countries spanning from Japan to America, across the globe, wherever these producers are there. So we are known to contrast with many of them. Okay, sure. Thank you so much. I will join back in the queue for more. Thank you. To ask questions, participants, you may please press Star and One. The next question is from the line of Aman Jain from Arihant Capital. Please go ahead. Yes. Just wanted to understand the EBITDA per ton that we are doing for TMT, DI pipes, and ferroalloys. If you could give the breakup of what is our supply to distributors and what is our supply to the structures that we do directly. Just to update you that with regard to distributor sales, presently, a part of TMT bars is only supplied to distributors. Our major segment in ferroalloys as well as DIP are either intermediates or governments or directly in projects which are detailed on an EPC basis by the contractors. Now with regard to your per ton EBITDA, just to say that on the metallic front, say TMT bars or intermediates, the EBITDA is much lower, is approximately 6%-7% only. Whereas we are having a higher EBITDA in ferroalloys as well as in DIP, which ranges somewhere between 17%-18% as of now. If you could give the EBITDA per ton that we do. The breakup of per ton of EBITDA, if required, we will send you separately. You take up the requirement, which will share you the EBITDA per ton also. Okay. My next question is, I saw that the ferroalloys production and sales has been flat as compared to the year-on-year, the last quarter. I just wanted to understand if there is no demand or we have reached the maximum capacity utilization. No, our MD has already given in the opening remarks that two of our furnaces were there under maintenance in the last quarter. You will see a much better improved performance in the next quarter only. There is no question of demand. We have large orders in hand. Due to the maintenance, the supply could not happen in the last quarter, and it will be taken care of from the next quarter. Okay. And sir, my last question is, what are the capacity expansion plans for FY 2026, especially for the ferroalloys and DI pipes? And what will be the capacity utilization at that time? The ferroalloy capacity at present is 130,000. It will increase by around 50,000 in the next 12 months only. We expect the utilization to be around 75% on a year basis, on a full year basis in 2025. With regard to DI pipe, already we have enhanced the capacity by 60,000 tons a few days ago. We are expecting it to increase to 360,000 by 2024. In the next 12 months, the first phase of expansion of around 200,000 will be in place. For the first full year of 2025, 2026, we are expecting around 90% utilization with the capacity of around 600,000 tons. Okay, sure. Thank you. Thank you. A request to all the participants to kindly limit the questions to two per participant. Should you have a follow-up question, please rejoin the queue. Participants, you may please press Star and One to ask questions. The next question is from the line of Deepak Kotak from Sapphire Capital. Please go ahead. Hello. Am I audible, sir? Yes, sir. Oh, okay. Yeah. Thank you very much, sir, for the opportunity, and many congratulations for the great set of numbers. First, a clarification, you mentioned somewhere, I mean, this fourth quarter, you are looking at 20% growth in revenue on a year-over-year basis. Is that right? On a quarter-on-quarter basis. On a quarter-on-quarter. I mean, fourth quarter versus third quarter, right? Yeah. Okay. Understood. I mean, both the expansion that you have been speaking about in the DI pipes and as well as in ferroalloys, which is expected to get commissioned fully by FY 2025. What can be our maximum revenue potential? I mean, at about 90% or 95% optimum capacity utilization? We are expecting a full year revenue in FY 2025 to around INR 9,500-INR 10,000 crores. INR 9,500-INR 10,000 crores. Okay. On current prices basis. Yeah, absolutely. Assuming the stable realization. Yeah. When you say that we are looking at EBITDA margin in the range of 18%-20%, that is on the basis that we will reach the optimum capacity utilization of your expanded capacity? It will increase on Q on Q basis. You will see the numbers on Q on Q basis as and when the Actually, we are, whatever capacity expansion is being done, is done on modular basis. So with every passing quarter, there will be some percentage hike which we are forcing, keeping it to the current price scenario. Correct. So quarter I am just assured that this range, we might look at achieve, I mean, by FY 2025 itself, right? FY26. FY 2026. Okay. FY 2026, this is the range that we might be looking at. Yeah. Okay. And the last query is on your order book. I mean, do you maintain any kind of order book? If as such, how much would that be right now? We are maintaining order book for DIP as well as for ferroalloys. The DIP order book presently will be somewhere in the region of INR 1,800 crores-INR 2,000 crores. For ferroalloy, it is around INR 400 crores. It's about INR 400 crores. Yes. Fair enough. Okay. I think that's it from my side. All the very best to you. Thank you so much. Thank you. The next question is on the line of Rajesh Vora from Jainmay Venture Advisors. Please go ahead. Good afternoon, gentlemen. Congratulations on very strong set of numbers. I would want to know what are the key factors that have dramatically changed profitability in the fourth quarter and the nine months of the year vis-à-vis a year ago. The obvious ones are obviously capacity utilization, the premium mix, value added product, and net selling price and the raw material. Could you give us in these four factors, what are the exact drivers of this change, and what are these, and is all of this four going to sustain over the next year or 2? What are your thoughts on that? It will be very useful. The realization in ductile had increased approximately INR 10,000 per ton. The amount of value added specialized ferroalloys that we are producing, that percentage has gone up because of addition of the new submerged arc furnaces. What happened is that we have, apart from selling from, we used to sell it through dealers to export market. Now we have started catering directly to them, and export percentages have gone up for ferroalloys where the realization is very high. These have contributed. Apart from that, the blast furnace is coming up, which is going to reduce the cost of hot metal. Sinter capacity has been increased, which has reduced the cost of iron ore. There were other synchronizations which have been done, which have contributed to the numbers. Would you have any idea about, I mean, it is very tough, but current prices of all your products, are we at what stage of commodity cycle are we in? What is your interest estimate? Nobody knows how they will behave. But broadly, how do you see them behaving over the next couple of years or at least next one year? What you will see from our numbers, that more of ductile and ferroalloy capacity. Our production has shifted from sponge, pig, billet, TMT, and more towards ductile iron pipe and ferroalloys. So we are not much affected by the commodity prices. If you will also see the prices for sponge, pig, and TMT has come down by INR 1,000-INR 2,000 if we compare by Q3 of 2023. The prices have softened. But you will also see that the ferroalloy prices, it has jumped from INR 1,40,000 to INR 1,70,000. It is because at this, what I am telling is INR 1,70,000 is blended realization of normal ferroalloys and specialized ferroalloys. This percentage of increase of specialized ferroalloys has resulted in increase of per ton sale rate from 140 to 170. Similarly, because of demand of ductile in India, it has increased from INR 70,000 to INR 80,000, somewhere INR 80,000. What has happened, the commodity prices have come down, but value-added products in which we are moving and expanding also, that has gone up. Interesting. Very useful. The ₹9,500-₹10,000 crore revenue you mentioned, that was only for ductile pipes for the whole company? Company as a whole. Company as a whole. Of which, ductile and ferroalloy, which is your main value-added product, as you mentioned, they would contribute how much of Around 80%. Around 80%? Around 80%. Around 80%. Okay. Thank you so much, and all the very best. One more thing I'd like to add over here is that the entire aim over the last two, three years and going forward, it is to entirely de-commoditize their business. The company started as a small joint venture. Original name was Jai Balaji Sponge Limited, 24 years ago. We started like that. But journey from a small iron producer, from a pure iron producer, from a commodity producer, the entire focus has been now entirely de-commoditize the steel business and to go into value-added products. That's the major theme of Jai Balaji today. Sure. Thank you so much. I appreciate. Thank you. The next question is from the line of Shubham Bapurao Turak from CCAPL. Please go ahead. Yeah. Thank you for the opportunity. I hope you can hear me. Yes. First question from my side. I just wanted to know what is current exports as a percentage of revenue for us, and is there any margin differentials for domestic sales versus exports? As we mentioned earlier also, previously, exports were made through the traders. In the past couple of years, the exports have increased substantially. However, the exports for ferroalloys is the major driving factor for us. Presently, out of the entire ferroalloys capacity, we are exporting more than 40%. By this year end, we are trying to achieve 50%, because presently all the orders are executed in export category only. On the overall side, export is not very large if you compare with the turnover. In the past nine months, we have achieved a turnover of around INR 2,600 odd crores, wherein export contribution is roughly around 10%. Got it. Thank you for that. Sir, what will be your raw materials with respect to current product mix? If you can comment on the costing situation currently for those raw materials, and what will be the behavior in the coming near term future? I think with regard to this query, even if you directly send us the requirement, we will send you a separate sheet with the detailed working. Sure, I will do that. The raw materials are coke, coking coal, iron ore, and chrome. Got it. Thank you. That is it from my end. Thank you. Anyone who wishes to ask questions may please press star and one now. The next question is from the line of Radhika from B&K Securities. Please go ahead. Sir, hi. Thank you for the follow-up. What I was asking previously was that, you mentioned in the opening remarks that we are one of the lowest cost producers. If you are referring to because of the backward integration that we have in terms of own power. What I understand is all the other players also, including the largest player that you were referring to, they also have a little bit backward integration. What makes us say that we are the lowest cost producer? Is it only the railway siding or any other benefit also we are having that other players are not? I will explain, madam. See, as far as I am aware, other than one player in this industry, none of the players have a private railway siding in Odisha, which is the iron ore loading point. Number 1. Number 2, the other players also do not have their own railway sidings inside the plant complex itself, so logistics costs are higher. Number 2, even if other players have their coke ovens, I am not aware of, most of the players do not have the coke oven at the same location. I would not like to name. Most of the players have coke ovens at different locations. Again, the cost increase, spillage increases, handling increases, fines and by-products are increased. In terms of cost efficiency, this is why we say because of the logistics support and because of we having our entire facilities in the same complex itself. This makes our particular unit unique. As you referred to pipe manufacturing, all the facilities are in the same complex itself. Otherwise, they are distributed over 2, 3 areas in different geographies. If we see, given that if we are having low cost benefit, then on the sale of pipes or other products, I am mainly talking about pipes because that is where our main product is. With respect to realization pattern, would we normally sell in line with the rates that the other players are offering or how would we determine our realization? Madam, the realization will be determined absolutely by the market forces, and we will be selling at the same market places. Just because our cost is lower, we will not be passing the benefit to the customers. The cost is lower for the benefit of the company and for the stakeholders. This is our advantage. Understood. Thank you, sir, and all the best. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for their closing comments. Over to you, sir. Thank you, everyone, for joining the call today. I trust that we have addressed all your inquiries to your satisfaction. In case you have any other remaining unanswered questions, please do not hesitate to contact our investor relationship agency, Go India Advisors. They will be more than happy to assist you on this matter. Thank you once again, please. Thank you, members of the management. Thank you. Thank you, sir. Ladies and gentlemen, on behalf of Go India Advisors, I conclude this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.