Q1 2027 Kirloskar Ferrous Industries Ltd Earnings Call

August 6, 2026

Speaker #1: Ladies and gentlemen, good day, and welcome to the Kirloskar Ferrous Industries Ltd. Q1 FY27 earnings conference call, hosted by Antik Stockbroker Ltd. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day and welcome to the Kirloskar Ferrous Industries Limited Q1 FY27 earnings conference call hosted by Antique Stock Broking Limited. 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 since you are on your touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Pallab Agarwal from Antique Stock Broking. Thank you. Over to you, sir.

Operator: Ladies and gentlemen, good day and welcome to the Kirloskar Ferrous Industries Limited Q1 FY 2027 earnings conference call hosted by Antique Stock Broking Limited. 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 since you are on your touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Pallav Agarwal from Antique Stock Broking. Thank you. Over to you, sir.

Speaker #1: 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 call is being recorded.

Speaker #1: I now hand the conference over to Mr. Pallav Agarwal from Antik Stockbroking. Thank you, and over to you, sir.

Speaker #2: Yeah, thank you, Sudeep, and good afternoon, everyone. A very warm welcome to the Kirloskar Ferrous Industries Q1 FY27 earnings call. We have the senior management team of the company represented by Mr. R.

Pallab Agarwal: Thank you, Shruti. Good afternoon, everyone. A very warm welcome to the Kirloskar Ferrous Industries' Q1 FY27 earnings call. We have the senior management team of the company represented by Mr. R. V. Gumaste, the Managing Director, and Mr. Aditya Srivastava, the Executive Director of Finance and CFO. I would now like to hand over the call to Mr. Gumaste for his opening remarks. Over to you, sir.

Pallav Agarwal: Thank you, Shruti. Good afternoon, everyone. A very warm welcome to the Kirloskar Ferrous Industries' Q1 FY 2027 earnings call. We have the senior management team of the company represented by Mr. R. V. Gumaste, the Managing Director, and Mr. Aditya Srivastava, the Executive Director of Finance and CFO. I would now like to hand over the call to Mr. Gumaste for his opening remarks. Over to you, sir.

Speaker #2: V. Gumasthir, the Managing Director, and Mr. R. S. Srivatsan, the Executive Director, Finance, and CFO. I would now like to hand over the call to Mr. Gumasthir for his opening remarks.

Speaker #2: Over to you, sir.

Speaker #3: Yeah, thank you, Pallav. Let me, first of all, welcome all the analysts and investors to this call—the Quarter 1 Kirloskar Ferrous Industries call. I would like to start with a few highlights before we begin the question-and-answer session.

R. V. Gumaste: Thank you, Pallab. Let me first of all welcome all the analysts and investors to this call, Q1 Kirloskar Ferrous Industries call. I would like to start with a few highlights before we start with the question and answer. All of you have already seen the results published by the company. Just to bring all the production and sales quantities with respect to pig iron, we produced 165,120 metric tons of pig iron against last year's 157,112 metric tons, an increase of 5%. In case of castings, against last year Q1 36,929 tons, we produced 43,800 tons, an increase of 19%. Whereas the tube total production last year was 56,558 metric tons. Against that, we have come down to 51,968 metric tons, which is a drop of 8%.

Speaker #3: All of you have already seen the results published by the company. And just to bring on the production and sales quantities, with respect to PGRN, we produced 165,120 metric tons of PGRN.

Speaker #3: Against last year's 1,57,112 metric ton, an increase of 5%. And in case of castings, against last year's first quarter, 36,929 ton, we produced 43,800 tons, an increase of 19%.

Speaker #3: Whereas the tube total production last year was 56,558 metric tons, against that we have come down to 51,968 metric tons, which is a drop of 8%.

Speaker #3: Coming to the sales quantities, we sold 1,28,737 metric tons in Quarter 1, external sales, against 1,32,392 tons in the previous Quarter 1. So, it's a drop of 3%, which indicates that internal consumption was higher, because last year's Q1 we had stoppage of GTD planned for a few days.

R. V. Gumaste: Coming to the sales quantities, we sold 128,737 metric tons in Q1, external sales, against 132,392 tons in the quarter. It's a drop of 3%, which indicates that internal consumption was higher because last year's Q1 we had a stoppage of Jejuri plant for a few days. The consumption in this year's Q1 is more than last year's Q1. The casting sales is 41,345 metric tons against 34,941 metric tons, which is an increase of 18% compared to last year's Q1. Our tube sales total 41,512 tons against last year's 48,461 metric tons, which is a drop of almost 14%. During the quarter, we improved sales realization on pig iron, and we could hold the sales realization on castings, whereas the tube product mix, we could not hold on to the sales realization.

R. V. Gumaste: It's a drop of 3%, which indicates that internal consumption was higher because last year's Q1 we had a stoppage of Jejuri plant for a few days. The consumption in this year's Q1 is more than last year's Q1. The casting sales is 41,345 metric tons against 34,941 metric tons, which is an increase of 18% compared to last year's Q1. Our tube sales total 41,512 tons against last year's 48,461 metric tons, which is a drop of almost 14%. During the quarter, we improved sales realization on pig iron, and we could hold the sales realization on castings, whereas the tube product mix, we could not hold on to the sales realization. We had to sell more of line pipes in the absence of high realizing export orders, as well as high realizing the oil and gas tubes. We continue to work on all the projects.

Speaker #3: So, the consumption in this year's first quarter is more than last year's first quarter. And casting sales is 41,345 metric tons, against 34,941 metric tons, which is an increase of 18% compared to last year's first quarter.

Speaker #3: Tube sales totaled 41,512 tons, against last year's 48,461 metric tons, which is a drop of almost 14%. During the quarter, we improved sales realization on PGRN, and we could hold the sales realization on castings, whereas with the tube product mix, we could not hold on to the sales realization.

Speaker #3: We had to sell more of line types in the absence of high-realizing export orders, as well as high-realizing oil and gas tubes.

R. V. Gumaste: We had to sell more of line pipes in the absence of high realizing export orders, as well as high realizing the oil and gas tubes. We continue to work on all the projects. There's no change in our project plans. Currently, we are right through executing all the important projects, completion of solar 35 MW solar plant already in the stage of commissioning, and 12 windmills up to 0.1 MW each. We expect all these will get commissioned in Q2, June to September. Completion of two-part foundry in Solapur with a capacity of 15,000 metric tons per annum for producing the large castings. Expansion of Rajpura in 2 phases. Phase 1 is expanding the present capacity to between 40,000 to 50,000 metric tons per annum.

Speaker #3: We continue to work on all our projects. There's no change in our project plans. Currently, we are right in the middle of executing all important projects. Completion of the 35-megawatt solar plant is already in the stage of commissioning.

R. V. Gumaste: There's no change in our project plans. Currently, we are right through executing all the important projects, completion of solar 35 MW solar plant already in the stage of commissioning, and 12 windmills up to 0.1 MW each. We expect all these will get commissioned in Q2, June to September. Completion of two-part foundry in Solapur with a capacity of 15,000 metric tons per annum for producing the large castings. Expansion of Rajpura in 2 phases. Phase 1 is expanding the present capacity to between 40,000 to 50,000 metric tons per annum. The existing capacity is about 25,000 metric tons per annum, which means about 2,200 metric tons per month, and we have started producing and selling that quantity. The capacity at Rajpura foundry is totally sold out.

Speaker #3: And 12 windmills of 2.1 megawatts each. We expect all these will get commissioned in the second quarter, June to September. Completion of the two-part foundry and solar pool, with a capacity of 15,000 metric tons per annum for producing the large castings.

Speaker #3: Expansion of Rajpura is planned in two phases. Phase one involves expanding the present capacity to between 40,000 to 50,000 metric tons per annum. The existing capacity is about 25,000 metric tons per annum.

R. V. Gumaste: The existing capacity is about 25,000 metric tons per annum, which means about 2,200 metric tons per month, and we have started producing and selling that quantity. The capacity at Rajpura foundry is totally sold out. In the next eight months, we will expand the capacity to 2 times of that, at least go up to 40,000 to 45,000 metric tons per annum. Subsequently in Phase 2, take it to 6,000 tons per month or 70,000 metric tons per annum. With this, we will have a producible capacity of 110,000 metric tons at Koppal, close to 90,000 metric tons in Solapur, and Rajpura with Phase 2 implementation, 70,000 metric tons. We will have a realizable capacity across all the 6 foundries put together. We have a capacity of 270,000 metric tons per annum.

Speaker #3: Which means about 2,200 metric tons per month. We have started producing and selling that quantity. The capacity at the Rajpura foundry is totally sold out.

Speaker #3: So in the next eight months, we will expand the capacity to two times that, at least go up to 40,000 to 45,000 metric tons per annum, and subsequently, in phase two, take it to 6,000 tons per month, or 70,000 metric tons per annum.

R. V. Gumaste: In the next eight months, we will expand the capacity to 2 times of that, at least go up to 40,000 to 45,000 metric tons per annum. Subsequently in Phase 2, take it to 6,000 tons per month or 70,000 metric tons per annum. With this, we will have a producible capacity of 110,000 metric tons at Koppal, close to 90,000 metric tons in Solapur, and Rajpura with Phase 2 implementation, 70,000 metric tons. We will have a realizable capacity across all the 6 foundries put together. We have a capacity of 270,000 metric tons per annum. We are also working for upgradation of Hiriyur pig iron plant to take it to 300 metric tons, and with the capacity to produce pig iron up to 360,000 metric tons, and also bring the efficiency in terms of reduced coke consumption with pulverized coal injection and burden stock.

Speaker #3: With this, we will have a producible capacity of 110,000 at Koppal, close to 90,000 in Solapur, and Rajpura, with phase two implementation, 70,000 metric tons.

Speaker #3: So, we will have a realizable capacity across all the six foundries put together—we will have a capacity of 270,000 metric tons per annum. We are also working on the upgradation of the Helios PGRN plant to take it to 300 metric tons.

R. V. Gumaste: We are also working for upgradation of Hiriyur pig iron plant to take it to 300 metric tons, and with the capacity to produce pig iron up to 360,000 metric tons, and also bring the efficiency in terms of reduced coke consumption with pulverized coal injection and burden stock. All the features what we have integrated in BF blast furnace 1 and 2 at Koppal. We are also progressing well on oxygen plant and enhanced pulverized coal injection in Koppal blast furnace 1 and 2, and we expect by February, March, we complete those projects. We've also taken up the rolling capacity enhancement at Jejuri to go to 25,000 metric tons of rolling against 15,000 metric tons rolling today. The capacity will go to 3 lakh metric tons rolling, out of which 240,000 tons, 240,000 tons will be saleable product, external sales of alloy steel products.

Speaker #3: And with the capacity to produce PGRN up to 360,000 metric tons, we also bring efficiency in terms of reduced coke consumption with pulverized coal injection and, as well, talk about all the features that we have incorporated in MBF Blast Furnace One and Two at Koppal.

R. V. Gumaste: All the features what we have integrated in BF blast furnace 1 and 2 at Koppal. We are also progressing well on oxygen plant and enhanced pulverized coal injection in Koppal blast furnace 1 and 2, and we expect by February, March, we complete those projects. We've also taken up the rolling capacity enhancement at Jejuri to go to 25,000 metric tons of rolling against 15,000 metric tons rolling today. The capacity will go to 3 lakh metric tons rolling, out of which 240,000 tons, 240,000 tons will be saleable product, external sales of alloy steel products. We are also started the project for premium couplings to be made in Baramati, and we expect to order this project in next few weeks' time.

Speaker #3: We are also progressing well on the oxygen plant and the enhanced pulverized coal injection in the copper blast furnace 192, and we expect by February–March to complete those projects.

Speaker #3: We have also taken up the rolling capacity enhancement at JGV to go to 25,000 metric tons of rolling against 15,000 metric tons of rolling today. So the capacity will go to 300,000 metric tons of rolling, out of which 240,000 tons will be sellable product—external sales of alloy steel products.

Speaker #3: We have also started the project for premium couplings to be made in barometry, and we expect to order this project in the next few weeks' time.

R. V. Gumaste: We are also started the project for premium couplings to be made in Baramati, and we expect to order this project in next few weeks' time. In addition to this, we are also progressing on these three large projects, which is steel plant at Koppal and expander mill to produce large capacity seamless tubes at Baramati, and the utilization and plant and operationalization of iron ore mines at Koppal. All these three projects are at different stages of execution, and some of them, especially the large ones, are in the start of the project. We continue to be focused and continue to focus on the growth so that we double the capacity in castings as well as in steel sales, and tube going up to 350,000 to 400,000 metric tons per annum.

Speaker #3: In addition to this, we are also progressing on the three large projects, which are the steel plant at Koppal and the expander mill to produce large capacity seamless tubes at Baramati.

R. V. Gumaste: In addition to this, we are also progressing on these three large projects, which is steel plant at Koppal and expander mill to produce large capacity seamless tubes at Baramati, and the utilization and plant and operationalization of iron ore mines at Koppal. All these three projects are at different stages of execution, and some of them, especially the large ones, are in the start of the project. We continue to be focused and continue to focus on the growth so that we double the capacity in castings as well as in steel sales, and tube going up to 350,000 to 400,000 metric tons per annum. As all of you know, because of the geopolitical conditions, there has been disturbance, especially in the export of steel tubes as well as power and fuel cost.

Speaker #3: And beneficiation and seller plant and operationalization of iron ore mines at Copper—all these three projects are at different stages of execution. And some of them, especially the large ones, are at the start of the project.

Speaker #3: So, we continue to be focused and continue to focus on the growth so that we can double the capacity in castings as well as in steel sales.

Speaker #3: And keep going up to 350,000 to 400,000 metric tons per annum. As all of you know, because of the geopolitical conditions, there have been disturbances, especially in the export of steel tubes.

R. V. Gumaste: As all of you know, because of the geopolitical conditions, there has been disturbance, especially in the export of steel tubes as well as power and fuel cost. For example, the LPG consumption in Solapur, the cost has got double compared to the efficient purchasing before the war. We hope that the fuel costs will come down or adjust little bit, but we have impact of higher power and fuel cost, especially in Maharashtra, in Solapur, as well as other steel and tube plants in Maharashtra. We have been able to pass on the cost increase to customers in case of castings. In case of alloy steel, still under discussions. We expect that we will pass on that cost increase to customers. In terms of tubes, we are looking forward to close the tenders and get into manufacturing of large volumes.

Speaker #3: As well as power and fuel costs. For example, the LPG consumption in Solapur—the cost has doubled compared to the efficient purchasing before the war.

R. V. Gumaste: For example, the LPG consumption in Solapur, the cost has got double compared to the efficient purchasing before the war. We hope that the fuel costs will come down or adjust little bit, but we have impact of higher power and fuel cost, especially in Maharashtra, in Solapur, as well as other steel and tube plants in Maharashtra. We have been able to pass on the cost increase to customers in case of castings. In case of alloy steel, still under discussions.

Speaker #3: We hope that the fuel costs will come down or adjust a little bit, but we have the impact of higher power and fuel costs, especially in Maharashtra and Solapur, as well as at other steel and tube plants in Maharashtra.

Speaker #3: We have been able to perform the cost increase to customers in the case of castings. In the case of alloy steels, it is still under discussion. We expect that we will pass on that cost increase to customers.

R. V. Gumaste: We expect that we will pass on that cost increase to customers. In terms of tubes, we are looking forward to close the tenders and get into manufacturing of large volumes. We are optimistic that we will catch up with the loss of production and sales in Q1 in the remaining three quarters. With these few words, I would like to open the lines for question answers. Thank you very much.

Speaker #3: In terms of tubes, we are looking forward to closing the tenders and getting into manufacturing of large volumes. We are optimistic that we will catch up with the loss of production and sales in the first quarter in the remaining three quarters.

R. V. Gumaste: We are optimistic that we will catch up with the loss of production and sales in Q1 in the remaining three quarters. With these few words, I would like to open the lines for question answers. Thank you very much.

Speaker #3: With these few words, I would like to open the lines for questions and answers. Thank you very much.

Speaker #1: Thank you very much. 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.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Nirvaan from Unique PMS. Please proceed.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Nirvaan from Unique PMS. Please proceed.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nirmal from Unique PMS.

Speaker #1: Please proceed.

Speaker #2: Yes, sir. So my first question is on the other expenses. We've seen a jump in other expenses by about ₹100 crore year-on-year.

Nirvaan: Yes, sir. My first question is on the other expenses. We've seen a jump in other expenses by about INR 100 crores year on year and about INR 50 crores sequentially. If you can explain what led to this increase.

Nirmam Mehta: Yes, sir. My first question is on the other expenses. We've seen a jump in other expenses by about INR 100 crores year on year and about INR 50 crores sequentially. If you can explain what led to this increase.

Speaker #2: And about 50 crores sequentially. So, if you can explain what led to this increase.

Speaker #3: I think there are two components to that. The increase is ₹58 crores. And out of ₹100 crores, ₹58 crores is in power and fuel.

R. V. Gumaste: I think there are two components to that. The increase is INR 58 crores, out of INR 100 crores, INR 58 crores is in power and fuel. Out of this, I would put it as two parts. Around INR 28 to 29 crores is because of the rate increase. The other INR 28 crores is because of the quantity increase. One important aspect is the castings production and sales in Rajpura have increased, with this, power and fuel consumption comes for that. Also, it's important to note that last year we had a long shutdown of Jhunjhunu plant, this time we are running the normal full month. The difference is, I would say that half of it is around INR 30 crores is because of the rate.

Speaker #3: And out of these, I would put it as two parts: around 28 to 29 crores is because of the rate increase, and the other 28 crores is because of the quantity increase.

Speaker #3: One important aspect is that casting production and sales in Rajpura have increased, and the power and fuel consumption comes from that. Also, it's important to note that last year we had a long shutdown at the Jejuri plant, and this time we are running for the normal full month.

Speaker #3: So the differences, I would say that half of it—around ₹30 crores—is because of the rate. We are quite confident we will pass on this cost to customers in case of castings.

R. V. Gumaste: We are quite confident we will pass on this cost to customers in case of castings and in case of steel with delay, I think we should be able to pass it on to customers. Tube market has to pick up to get that difference in the cost. Other than this fuel rate increase, also there is a change in the regulatory for the power consumption. One important aspect is, we are now not allowed to do the power trading. We used to get about INR 10 crores per annum of benefit by power trading. Whatever is the gap of our green power versus what we could buy from exchange at spot. In the last, compared to this quarter, Q1 versus last year, there has been an impact of change in the regulation. Earlier, we were allowed to use the green power for 17 hours.

Speaker #3: And in the case of steel, with the delay, I think we should be able to pass it on to customers. The tube market has to pick up to cover that difference in cost.

Speaker #3: I think, other than this fuel rate increase, there is also a change in the regulations for power consumption. One important aspect is that we are now not allowed to do power trading.

Speaker #3: We used to get about ₹10 crore per annum of benefit by power trading. Whatever is the gap of our green power versus what we could buy from the exchange, that has stopped.

Speaker #3: And also, compared to the first quarter of this year versus last year, there has also been an impact due to a change in regulation. Earlier, we were allowed to use green power for 17 hours.

R. V. Gumaste: In the last, compared to this quarter, Q1 versus last year, there has been an impact of change in the regulation. Earlier, we were allowed to use the green power for 17 hours. Now it is only allowed for eight hours. There is a small impact coming because of that. These are the few components, we will have to work around this to bring down our power and fuel cost or pass it on to the customers.

Speaker #3: Now, it is only allowed for 8 hours. I think there is a small impact coming because of that. I think these are the few components, and we will have to work around this to bring down our power and fuel costs, or pass it on to the customers.

R. V. Gumaste: Now it is only allowed for eight hours. There is a small impact coming because of that. These are the few components, we will have to work around this to bring down our power and fuel cost or pass it on to the customers.

Speaker #2: Okay, sir. And sir, regarding this regulation change, are we expecting any impact from it? So, we are putting 35 megawatt solar right now, and windmills too.

Nirvaan: Okay, sir. Sir, regarding this regulation change, are we expecting any impact from we are putting 35 MW solar right now and windmills too. Does this regulation change affect any savings from those projects also?

Nirmam Mehta: Okay, sir. Sir, regarding this regulation change, are we expecting any impact from we are putting 35 MW solar right now and windmills too. Does this regulation change affect any savings from those projects also?

Speaker #2: So, does this regulation change affect any savings from those projects also?

Speaker #3: Yeah, yeah. It affects the savings because the efficiency goes down. Only 8 hours we have to do. But I would still say that whatever capacity we have built, we are well within the limits.

R. V. Gumaste: Yeah. It affects the savings because efficiency goes down. Only 8 hours we have to do. I would still say that whatever capacity we have built, we are well within the limits. Say, instead of getting INR 100 crore benefit in a year, we may get INR 80 crore benefit in a year. The deck rate from 3 years may go to 3.6 or 3.7 years. There is a negative impact, we continue to progress because still there is benefit. We are also already examining how quickly we can move on to battery storage systems on megawatt level so that we can continue with our journey of solar and wind power and not really go back on that commitment of green power and also, thereby, the commercial benefits coming.

Speaker #3: So instead of getting ₹100 crore benefit in a year, we may get ₹80 crore benefit in a year. So that payback period from three years may go to 3.6 or 3.7 years.

Speaker #3: There is a negative impact, but we continue to progress because there are still benefits. And we are also already examining how quickly we can move on to battery storage systems at the megawatt level.

Speaker #3: So that we can continue with our journey of solar and wind power and not really go back on that commitment to green power, and also thereby realize the commercial benefits that come with it.

Nirvaan: Okay. Just second

Nirmam Mehta: Okay. Just second—

Speaker #3: But battery storage is still not in a big way, but I'm very sure that we will start, and we will take certain power through battery very shortly.

R. V. Gumaste: Battery storage is still not in big way. I'm very sure that we will start, and we will take certain powers through battery very shortly.

Speaker #2: Okay, sir. So my second question was that in the annual report we've disclosed the contingent liability with forest development fee of about ₹350 crore. Can you explain what this is about?

Nirvaan: Okay, sir. Sir, my second question was on the annual report. We've disclosed a contingent liability with Forest Development Fee of about INR 350 crores. Can you explain what is this about?

Nirmam Mehta: Okay, sir. Sir, my second question was on the annual report. We've disclosed a contingent liability with Forest Development Fee of about INR 350 crores. Can you explain what is this about?

Speaker #3: I think, as Mr. Srivatsan is on the line, I would request his help to answer this question.

R. V. Gumaste: I think, as Mr. Srivatsan is on the line, I would request for his help to answer this question.

Speaker #4: Yeah. Good evening. Srivatsan here. The Government of Karnataka had levied Forest Development Fees in 2016. Then we all went to the High Court, and that petition came in favor of us.

R. S. Srivatsan: Good evening. Srivatsan here.

Nirvaan: Yes.

Nirmam Mehta: Yes.

R. S. Srivatsan: Government of Karnataka had levied Forest Development Fees in 2016. We all went to the High Court. That petition came in favor of us. Government has gone to the Supreme Court. Still Supreme Court judgment has not come. That fee is 8%, which we are providing and showing it as a contingent liability.

Speaker #4: The government has gone to the Supreme Court, and still the Supreme Court judgment has not come. The fees are 8%, which we are providing and showing as a contingent liability.

Speaker #2: Are there any timelines on when we can expect the judgment?

Nirvaan: Any timelines on when we expect a judgment or?

Nirmam Mehta: Any timelines on when we expect a judgment or?

Speaker #4: This is the Supreme Court, sir.

R. S. Srivatsan: It is the Supreme Court, sir.

Speaker #2: Okay, so I mean, is the case pending? I mean, has it gone through the—

Nirvaan: Okay. Is the case pending?

Nirmam Mehta: Okay. Is the case pending?

R. S. Srivatsan: It has gone through the hearing, and then we reserve for the order.

Speaker #4: ...hearing, and then we reserve for the order.

Speaker #2: Okay, okay. Yes, yeah. Thank you, that is fine.

Nirvaan: Okay. Yes. Thank you. That's it.

Nirmam Mehta: Okay. Yes. Thank you. That's it.

R. S. Srivatsan: No, it is subject as of now.

Speaker #4: It is as long as of now.

Speaker #2: Understood, sir.

Nirvaan: Understood, sir.

Nirmam Mehta: Understood, sir.

Speaker #4: Thank you. Thank you. Thank you very much.

R. S. Srivatsan: Thank you.

R. V. Gumaste: Thank you. Thank you very much.

Nirmam Mehta: Thank you. Thank you very much.

Speaker #1: Thank you. The next question is from Rupil Modi, an individual investor.

Operator 2: Thank you. The next question is from the line of Vipul Modi from An Individual Investor. Please go ahead.

Operator: Thank you. The next question is from the line of Vipul Modi from An Individual Investor. Please go ahead.

Speaker #4: Yeah. Am I audible? Yes, you are audible. Yeah.

Vipul Modi: Yeah. Am I audible?

[Analyst 1]: Yeah. Am I audible?

R. V. Gumaste: Yeah, you are audible.

Vipul Modi: Yeah. Sir, my question is regarding our casting business and even the other business. See, right now, whatever steps we are taking is more about efficiency in cost and efficiency in production. Apart from the efficiency, are we looking to develop something else? Something else in the sense like beyond castings. Maybe we can go in for sub-assembly or something like setting up assembly lines to integrate internal components like valves, pistons, brackets, seals into the casted housing. We supply a kind of sub-assemblies instead of just the casting. Something like a fully dressed cylinder head or a completed tractor axle housing. This transforms the company from a component foundry to tie up and modular engineering partner. Are we looking to do something like this or something expanding into very large or exotic steel, exotic castings, niche products?

[Analyst 1]: Yeah. Sir, my question is regarding our casting business and even the other business. See, right now, whatever steps we are taking is more about efficiency in cost and efficiency in production. Apart from the efficiency, are we looking to develop something else? Something else in the sense like beyond castings. Maybe we can go in for sub-assembly or something like setting up assembly lines to integrate internal components like valves, pistons, brackets, seals into the casted housing. We supply a kind of sub-assemblies instead of just the casting. Something like a fully dressed cylinder head or a completed tractor axle housing. This transforms the company from a component foundry to tie up and modular engineering partner. Are we looking to do something like this or something expanding into very large or exotic steel, exotic castings, niche products?

Speaker #2: So my question is regarding our casting business and even the other segments. Right now, whatever steps we are taking are more about efficiency in cost and efficiency in production.

Speaker #2: So, apart from the efficiency, are we looking to develop something else in the sense that, beyond castings, maybe we can go in for sub-assembly or something like setting up assembly lines to integrate internal components like valve systems, brackets, seals, into the casted housing?

Speaker #2: So we supply a kind of sub-assembly instead of just the casting—something like a fully dressed cylinder head or a completed tractor axle housing.

Speaker #2: So, this transforms the company from a component foundry to a tier and modular engineering partner. So, are we looking to do something like this, or are we looking to expand into very large or exotic steel, exotic castings, niche products?

Speaker #2: So, it is like in high-margin downstream sectors like aerospace, defense, renewable energy, heavy industrial machinery, or something. And then, even there are different sectors—like a lot of casting, I think it has a lot of scope.

Vipul Modi: It is like in high margin downstream sectors like aerospace, defense, renewable energy, heavy industrial machinery or something. Even there are different sectors. Like a lot of casting, I think it has a lot of scope, and many sectors are still untouched or we are not too much into it. What's the status about 3D core mold printing, rapid prototyping? Are we doing it or is it under process? Can you just light on this?

[Analyst 1]: It is like in high margin downstream sectors like aerospace, defense, renewable energy, heavy industrial machinery or something. Even there are different sectors. Like a lot of casting, I think it has a lot of scope, and many sectors are still untouched or we are not too much into it. What's the status about 3D core mold printing, rapid prototyping? Are we doing it or is it under process? Can you just light on this?

Speaker #2: And many sectors are still untouched. So we are not too much into it. So are we and how was the what's the status about 3D core mold printing, rapid prototyping?

Speaker #2: Are we doing it, or is it in process? So, can you just shed some light on this?

Speaker #4: Yeah, yeah. Thank you very much. I think we are in this direction. Still, the aggregates could be a little far away, but as you know, we have started the machining plants or machine shops in all the three locations.

R. V. Gumaste: Yeah. Thank you very much. I think we are on this direction, though still the aggregates could be little far away. As you know, we have started the machining plants or machine shops in all the three locations, Koppal, Solapur, and Rajpura. From all the three plants, we are already supplying the fully machined components, which are ready for assembly. For example, we are supplying to one of our OEMs, a six-cylinder head, which is fully machined and ready for assembly, with child parts. It's high value-added, and it is a forward integration for us. We are committed to doing that, and more and more orders will be fully machined and ready for assembly, orders coming from our customers. We are expanding the machine shops in all the three locations. We are also looking at different casting components, fully machined.

Speaker #4: We have coupled Solapur and Rajpura. And from all three plants, we are already supplying fully machined components which are ready for assembly. For example, we are supplying to one of our OEMs a six-cylinder head which is fully machined and ready for assembly.

Speaker #4: With side parts, so it's high value-added, and it is a forward integration for us. So, we are committed to doing that, and more and more orders will be fully machined and ready for assembly—orders coming from our customers.

Speaker #4: We are expanding the machine shop in all three locations. We are also looking at different casting components, fully machined, which could be outside the automotive industry.

R. V. Gumaste: They could be away from automotive industry, they could be from earthmoving equipment. We are talking about large casting, fully machined supplies, going beyond the tractor and auto industry, which could be high realizing, low volume, high value-added products. We are also talking about compacted graphite castings, which could also be high value and high-end casting. All our orders year after year are only going north in terms of the pricing is concerned. If you must have also noticed that last year, though the commodity prices went down, our casting realization did not go down, rather we maintained or slightly improved. I would say that though may not be up to the fully assembled parts, but machined and with child parts, we are already doing, I think we will increase that.

Speaker #4: They could be from earth-moving equipment. We are talking about large castings, fully machined, supplies. Going beyond the tractor and auto industry, which could be high, realizing low-volume, high value-added products.

Speaker #4: We are also talking about compacted graphite castings, which could also be high-value and high-end castings. So, all our orders, year after year, are only going north in terms of pricing.

Speaker #4: If you must have also noticed, last year, though the commodity prices went down, our casting realization did not go down. Rather, we maintained or slightly improved it.

Speaker #4: So I would say that, though it may not be up to the fully assembled parts, but machined and with child parts, they are already doing. I think we will increase that.

Speaker #4: Another thing is we have 3D printing, and we have a proto manufacturing facility. And our protos are very close to serial production. Hence, our customers have been able to buy large volumes, like, for example, 50 cylinder blocks through the proto route.

R. V. Gumaste: Another thing is we have 3D printing. We have a proto manufacturing facility. Our protos are very close to serial production. Hence, our customers have been able to buy large volumes, like, for example, 50 cylinder block through the proto route. We are doing well on that. It's also a feeder for our new business coming out of the new components being developed by our customers. Thank you very much.

Speaker #4: So we are doing well on that. It's also a feeder for new components being developed by our customers. Thank you very much.

Speaker #2: So, are we looking at a no-bake resin sand foundry or something like that?

Vipul Modi: Are we looking at a no-bake resin sand foundry or something like that?

[Analyst 1]: Are we looking at a no-bake resin sand foundry or something like that?

R. V. Gumaste: Yeah. We are commissioning shortly. I think by October, we will commission the no-bake or two-part casting foundry. We have created good capacity, like 1,250 metric tons per month. We are confident, the capacities are getting booked faster. We are also working whether we can expand in other locations, one more two-part foundry as the capacity requirement comes up, we will work on that.

Speaker #4: Yeah. Yeah, we are commissioning shortly. So I think by October, we will commission the no-bake or two-part casting foundry. And we have created good capacity—like 1,250 metric tons per month.

Speaker #4: And we are confident the capacities are getting booked faster, and we are also working on whether we can expand in other locations—one more two-part foundry—as the capacity requirement comes up.

Speaker #4: We will work on that.

Speaker #2: Okay. And what would be the maximum size of castings after all these things are done? Like one.

Vipul Modi: Okay. What would be the maximum size of castings after all these things are done?

[Analyst 1]: Okay. What would be the maximum size of castings after all these things are done?

R. V. Gumaste: Around-

R. V. Gumaste: Around—

Vipul Modi: Like.

[Analyst 1]: Like one—

Speaker #4: Three. Three tons. Three tons.

R. V. Gumaste: Three ton.

R. V. Gumaste: —Three ton.

Vipul Modi: Three ton.

R. V. Gumaste: Three ton.

[Analyst 1]: —Three ton.

R. V. Gumaste: Three ton.

Vipul Modi: 3 tons.

[Analyst 1]: 3 tons.

R. V. Gumaste: 3 tons.

Speaker #2: Okay. Okay. And are we supplying to any mining, crushing, or mineral processing industry?

Vipul Modi: Okay. Are we supplying to any mining, crushing, and mineral processing industry?

[Analyst 1]: Okay. Are we supplying to any mining, crushing, and mineral processing industry?

Speaker #4: Not mining. We are not into any mining or wear-resistant parts. We are not entered yet. But as we go to a two-part foundry or the no-bake castings, we will get more flexibility.

R. V. Gumaste: We are not into any mining or wear-resistant castings, we have not entered. As we go to two-part foundry or the no-bake casting, we will get more flexibility. We don't have to stick to only one box item. I think it opens up to other business sectors as well. I take your point. I think there will be more opportunities beyond our current tractors.

Speaker #4: We don't have to stick to only one box size. I think it opens us up to other business sectors as well. I take your point.

Speaker #4: I think there will be more opportunities beyond our own tractors.

Speaker #2: I think even renewable energy, wind turbine hubs, and all those stuff.

Vipul Modi: I think even renewable energy, wind turbine hubs and all those stuff.

[Analyst 1]: I think even renewable energy, wind turbine hubs and all those stuff.

Speaker #4: No, I think as you know, foundries are a very vast business. We're talking about 12 to 15 million tons of castings from India.

R. V. Gumaste: No, I think, as you know, foundry is a very vast business, and it's like we are talking about 12 to 15 million tons of castings from India, like China is at 45, 50 million tons. We can't do everything. We are selectively looking at what are our strengths, where are the opportunities, and I can say that we are not the one to miss any opportunities, but at the same time, we can't do everything. We will work-

Speaker #4: Like China is 45 to 50 million tons. We can't do everything. We are selectively looking at what are our strengths, where are the opportunities, and I can say that we are not the one to miss any opportunities, but at the same time, we can't do everything.

Speaker #4: We will work to connect to our business. Yes. Thank you very much.

Vipul Modi: Okay

[Analyst 1]: Okay.

R. V. Gumaste: connect to our business. Yes.

R. V. Gumaste: —connect to our business. Yes.

Vipul Modi: Yeah.

[Analyst 1]: Yeah. Thank you. Thank you very much, sir.

Speaker #2: Thank you very much. Thank you very much, sir.

R. V. Gumaste: Thank you.

Vipul Modi: Thank you very much, sir.

Speaker #4: Thank you.

R. V. Gumaste: Thank you.

Speaker #2: Thank you.

Vipul Modi: Thank you.

[Analyst 1]: Thank you.

Speaker #1: Thank you. Before we take the next question, we would like to remind participants that you may press star one to ask a question.

Operator 2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is on the line of Saket Kapoor from Kapoor & Company. Please proceed. This is Saket Kapoor.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is on the line of Saket Kapoor from Kapoor & Company. Please proceed. This is Saket Kapoor.

Speaker #1: The next question is from the line of Sakit Kapoor from Kapoor & Company. Please proceed. This is Sakit Kapoor.

Saket Kapoor: Yeah. Namaskar, sir. Hope I'm audible.

[Analyst 2]: Yeah. Namaskar, sir. Hope I'm audible.

Speaker #2: Yeah, yeah. Namaskar. Namaskar, sir. Hope I am audible.

Speaker #4: Yeah, audible.

R. V. Gumaste: Yeah, audible.

Speaker #2: Yeah. Thank you, sir, firstly, for the opportunity. Just in continuation to the facts just shared by you, sir—so taking into account the one-off factor, how should our EBITDA margin be shaping up for the ensuing part of the financial year?

Saket Kapoor: Yeah. Thank you, sir, firstly, for the opportunity. Just a continuation to the facts that's being shared by you, sir. Taking into account the one-off factors, how should our EBITDA margin be shaping up for the ensuing part of the financial year? I think so, with the ramping up of our machining shop capacity, how will that result in higher EBITDA per kg on the casting business? If you could just show, give us some more color on how things are going to shape up going ahead, depending upon the current business environment and the deliverables from the customers.

[Analyst 2]: Yeah. Thank you, sir, firstly, for the opportunity. Just a continuation to the facts that's being shared by you, sir. Taking into account the one-off factors, how should our EBITDA margin be shaping up for the ensuing part of the financial year? I think so, with the ramping up of our machining shop capacity, how will that result in higher EBITDA per kg on the casting business? If you could just show, give us some more color on how things are going to shape up going ahead, depending upon the current business environment and the deliverables from the customers.

Speaker #2: And I think, with the ramping up of our machining shop capacity, how will that result in higher EBITDA per kg in the casting business?

Speaker #2: If you could just give us some more color on how things are going to shape up going ahead, depending upon the current business environment and the order and the deliverables from the customers.

Speaker #4: Yeah. First of all, I would like to touch upon that currently, for quarter one, we are at 12 to 13 percent EBITDA. It's very important to look at the developments in the last one or two quarters.

R. V. Gumaste: Yeah. First of all, I would like to touch upon that currently for Q1, we are at 12% to 13% EBITDA. It's very important, things which are the developments in the last 1 or 2 quarters. One is the continuously falling commodity prices have taken a break, we have some improvement in the commodity prices. For example, the pig iron prices have gone up, steel price increases also have been announced by many manufacturers. I feel that the commodity prices going southward is reversed. Also there is a lot of input cost pressures on the commodity. I would expect the prices not to go down, but improve. Second important point is that, compared to last year, we have got some better scenario for pig iron. Second point. Third point is that international prices for pig iron have picked up.

Speaker #4: One is the continuously following commodity prices. You have taken a break and we have seen some improvement in the commodity prices. For example, the pig iron prices have gone up, and steel price increases also have been announced by many manufacturers.

Speaker #4: So, I feel that the trend of commodity prices going southward has reversed. Also, there is a lot of input cost pressure on all the commodities.

Speaker #4: So, I would expect the prices not to go down, but to improve. The second important point is that compared to last year, we have a better scenario for Pig iron.

Speaker #4: Second point. Third point is that international prices of Pig Iron have picked up. As we speak, we are also exporting 30,000 metric tons of Pig Iron.

R. V. Gumaste: As we are talking, we are also exporting 30,000 metric ton of pig iron, and the prices realization is likely better than domestic prices. Many of the pig iron manufacturers are selling, exporting the pig iron, and we are getting support for the domestic pig iron prices. At the same time, also there is some break to the dumping of coke into India, which was taking the other connected commodity prices low. I expect that we get a support there, and this should stabilize the pig iron business. Demand for castings, I think, over the many months now, and especially now, it has been very strong from all the sectors, tractors, automobile, as well as the automotive equipment, stationary engines. Every sector is improving. I would say that this will give us the support to get the price corrections done because of the commodity price increase, other price increases.

Speaker #4: And the price realization is likely better than domestic prices. So, many of the Pegarium manufacturers are exporting the Pegarium, and we are getting support for the domestic Pegarium prices.

Speaker #4: At the same time, there is also some break in the dumping of coke into India, which was taking the other connected commodity prices lower.

Speaker #4: I expect that we get support there, and this should stabilize the Pig Iron business. Demand for castings, I think, over the many months now—and especially now—has been very strong.

Speaker #4: From all the sectors—tractors, automobile, as well as automotive equipment and stationary engines—every sector is improving. I would say that this will give us the support to get the price corrections done because of the commodity price increase and other price increases.

Speaker #4: I expect realization improvement to come substantially in the casting business, as well as some increase in the steel business. I would also say that as casting business realizations and pricing improve, we should be able to ramp up volumes and realize higher sales.

R. V. Gumaste: I expect realization improvement substantially coming in the casting business, as well as some increase coming in the steel business. I would say that as casting business realizations and the pricing improves, we should also be able to ramp up the volumes and realize higher sales. And also this quarter, especially Q1, was the end of commodity prices going down, and we have to increase the prices. We are still in the process of concluding price increases and cost increase pass-ons. I expect that we will get these benefits in Q2 and Q3 and thereafter. So I would say that I am optimistic, and we should look for improved performance in the coming quarters.

Speaker #4: So, over the coming period and also this quarter, especially Q1, there was the end of commodity prices going down, and we had to increase the prices.

Speaker #4: We are still in the process of concluding price increases and passing on cost increases. I expect that we will get these benefits in Q2 and Q3, and thereafter.

Speaker #4: So, I would say that I'm optimistic, and we should look for improved performance in the coming quarters.

Speaker #2: Okay. Sir, our EBITDA margin trajectory has been in this 12 to 12.25 levels only. So, with the type of improvement that we are seeing, and also I think, about the cost pressures being mentioned by you, how are the EBITDA margin percentages going to trend going ahead?

Saket Kapoor: Okay. Sir, our EBITDA margin trajectory has been in this 12 to 12.25 levels only. With the type of improvement that we are seeing and also I think about the cost that has been mentioned by you, how are the EBITDA margin percentage going to trend going ahead?

[Analyst 2]: Okay. Sir, our EBITDA margin trajectory has been in this 12 to 12.25 levels only. With the type of improvement that we are seeing and also I think about the cost that has been mentioned by you, how are the EBITDA margin percentage going to trend going ahead?

Speaker #4: No, I think what I would like to say here is that our steel and tube EBITDA margins have been in the range of 14 to 17 percent, in that bracket.

R. V. Gumaste: No, I think what I would like to say here, that our steel and tube EBITDA margins have been in the range of 14 to 17%, in that bracket. Whereas our pig iron business been substantially high. Last four years, we suffered at the pig iron business. Our EBITDA margin, overall company level, got pulled down because of the pig iron prices. I expect now that we have some support on the pig iron, so it should support us for improving the overall company level EBITDA, as well as pig iron EBITDA improvement, which supports for the casting and steel tube as well. Overall company level should improve. As I have told many times, I think I am a firm believer that 15% EBITDA ±1% is a right level to operate on castings.

Speaker #4: Whereas our Pegarium business being substantially high, last four years, we suffered at the Pegarium business. Our EBITDA margin overall company level got pulled down because of the Pegarium prices.

Speaker #4: I expect now that we have some support on the Pegarium. So it should support us for improving the overall company level EBITDA as well as Pegarium EBITDA improvement, which supports for the casting and steel tube as well.

Speaker #4: Overall company level should improve. But as I have told many times, I think I'm a firm believer that 15 percent EBITDA, plus or minus 1 percent, is the right level to operate on castings. Castings could go up now because of the demand and because of the capacity constraints.

R. V. Gumaste: Castings could go up now because of the demand and because of the capacity constraints. We can look for better pricing and better EBITDA margins in casting. Whereas we are into wait-and-watch situation on the tubes because of the dump from China continuing as well as a subdued demand condition as on today. Let's see how the tube picks up. I don't think it will go that long period, but it's a short period right now. We can't push too much of line pipes into market. The oil and gas should take its share, and projects should take its share, then it gets balanced, and we get the overall value from the tube business.

Speaker #4: We can look for better pricing and better EBITDA margins in casting. Whereas, we are in a wait-and-watch situation on the tubes because of the situation from China continuing, as well as the subdued demand conditions as of today.

R. V. Gumaste: We can look for better pricing and better EBITDA margins in casting. Whereas we are into wait-and-watch situation on the tubes because of the dump from China continuing as well as a subdued demand condition as on today. Let's see how the tube picks up. I don't think it will go that long period, but it's a short period right now. We can't push too much of line pipes into market. The oil and gas should take its share, and projects should take its share, then it gets balanced, and we get the overall value from the tube business.

Speaker #4: But let's see how the tube picks up. I don't think it will go bad for a long period, but it's a short period right now. We can't push too much of line pipes into the market.

Speaker #4: So the island gas should take its share, and the project should take its share. Then it gets balanced, and we get the overall value from the tube business.

Saket Kapoor: Sir, going ahead, there should be then improvement in our EBITDA percentage also, or even on a sequential, which is because of the factors just alluded by you, especially for the pig iron. That understanding is correct?

Speaker #2: So sir, going ahead, there should then be improvement in our EBITDA percentage also, even on a sequential basis, because of the factors just alluded to by you, especially for the Pig Iron.

[Analyst 2]: Sir, going ahead, there should be then improvement in our EBITDA percentage also, or even on a sequential, which is because of the factors just alluded by you, especially for the pig iron. That understanding is correct?

Speaker #2: That understanding is correct?

Speaker #4: Yeah, absolutely. Yeah. But in case of the in case of casting, we have to we have to get the customer correction. In case of tube, it is a market dynamics and nothing to do with there's no understandings in the market for price escalation.

R. V. Gumaste: Absolutely. Yeah.

Saket Kapoor: Okay.

[Analyst 2]: Okay.

R. V. Gumaste: In case of casting-

R. V. Gumaste: In case of casting—

Saket Kapoor: Yes, please

[Analyst 2]: Yes, please.

R. V. Gumaste: We have to get the customer correction. In case of tube, it is a market dynamics and there is no understandings in the market for price escalation. We have to really get the increase from the market for the tubes.

R. V. Gumaste: —we have to get the customer correction. In case of tube, it is a market dynamics and there is no understandings in the market for price escalation. We have to really get the increase from the market for the tubes.

Speaker #4: So we really have to get the increase from the market for the tubes.

Speaker #2: Sir, tubes—I think tubes realization were flattish or somewhat higher if we take the year-on-year comparison. However, quarter-on-quarter, the realization did move up.

Saket Kapoor: Sir, tubes, I think tube realizations were flattish or somewhat higher if we take the year-on-year comparison. However, quarter on quarter, the realization did move up. Can you please explain to us, definitely the volumes were on the lower side, but the realizations were up. What kind of volumes are we expecting? I think we had a large order also in execution from an oil major. Where are we, and what should be the trajectory for the tube segment in terms of the volume that we are going to execute for the remaining part of the year?

[Analyst 2]: Sir, tubes, I think tube realizations were flattish or somewhat higher if we take the year-on-year comparison. However, quarter on quarter, the realization did move up. Can you please explain to us, definitely the volumes were on the lower side, but the realizations were up. What kind of volumes are we expecting? I think we had a large order also in execution from an oil major. Where are we, and what should be the trajectory for the tube segment in terms of the volume that we are going to execute for the remaining part of the year?

Speaker #2: So, can you please explain to us—definitely the volumes were on the lower side, but the realizations were up. So, what kind of volumes are we expecting?

Speaker #2: And I think we had a large order also in execution from an oil major. Where are we, and what should be the trajectory for the tube segment in terms of the volumes that we are going to execute for the remaining part of the year?

Speaker #4: No, I would right now only say that in the remaining three quarters, we are looking forward to a recovery of the volumes and a recovery of the margins coming in the remaining three quarters.

R. V. Gumaste: No, I would right now only say that in the remaining three quarters, we are looking forward to recovery of the volumes and recovery of the margins coming in the remaining three quarters, and we should not read only with Q1. I would not get into, I'm not prepared how much really it will make an impact on EBITDA.

Speaker #4: And we should not trade only with Q1. I would not get into—I am not prepared for how much really it will make an impact on EBITDA.

Speaker #2: Okay. And if I could just add one thing only—yeah, sir. Thank you, sir. For the Pig Iron part, sir, you mentioned that we have exited the downtrend, which is very much evident. On a Q1, Q2 basis also, from a base of ₹39,000 per metric ton, it is now closer to ₹42,400.

Saket Kapoor: Okay. If I could just add one thing.

[Analyst 2]: Okay. If I could just add one thing.

R. V. Gumaste: Thank you.

Saket Kapoor: Yeah. Thank you, sir.

[Analyst 2]: Yeah. Thank you, sir.

R. V. Gumaste: Yeah, please.

Saket Kapoor: For the pig iron part, sir, you mentioned that we have exited the downtrend and which is very much evident that on a Q1, Q basis also from a base of 39,000 per metric ton, it is now closer to 42,400. What are the current realization, and how much of this realization is being eaten up by the higher iron prices?

[Analyst 2]: For the pig iron part, sir, you mentioned that we have exited the downtrend and which is very much evident that on a Q1, Q basis also from a base of 39,000 per metric ton, it is now closer to 42,400. What are the current realization, and how much of this realization is being eaten up by the higher iron prices?

Speaker #2: So, what are the current realizations, and how much of this realization is being eaten up by the higher RM prices?

Speaker #4: Yeah, I think you've got it on point.

R. V. Gumaste: Yeah. I think you have got on point.

[Unknown Speaker]: Point.

Speaker #3: Sorry.

Speaker #4: You know, one is the dollar exchange rate. The other is coal prices, which are also impacting the cost front. But we still have a slight delta improvement on realization, in spite of the cost increase.

Saket Kapoor: Sorry.

R. V. Gumaste: One is the dollar exchange rate, other is the coal prices are also impacting on the cost front. We still have a slight delta improvement on realization in spite of the cost increase. I will just keep it there. I think you understand. Thank you very much.

Speaker #4: I will just keep it there. I think you understand. Thank you very much.

Speaker #3: Thank you.

Operator 2: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Juvesh Kanakia from Antique Stock Broking Limited. Please proceed.

Operator: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Juvesh Kanakia from Antique Stock Broking Limited. Please proceed.

Speaker #1: Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

Speaker #1: The next question is from the line of Dhruvesh Kanakya from Antic Stock Brokerage Limited. Please proceed.

Speaker #5: Good afternoon, sir. Thank you for this opportunity. Would you be able to give us some guidance on what kind of volumes we can expect in the remaining nine months?

Juvesh Kanakia: Good afternoon, sir. Thank you for this opportunity. Would you be able to give us some guidance on what kind of volumes we can expect in the remaining nine months? For pig iron, castings, steel, and tubes.

Dhruvesh Kanakia: Good afternoon, sir. Thank you for this opportunity. Would you be able to give us some guidance on what kind of volumes we can expect in the remaining nine months? For pig iron, castings, steel, and tubes.

Speaker #5: For Pegarium castings, steel, and tubes.

Speaker #4: See, I have visibility on Pegarium. I think there is quite a good opportunity still for us to go very close to 700,000 metric tons for this year.

R. V. Gumaste: See, I have visibility on pig iron. I think quite good opportunity still for us to go very close to 7 lakh metric ton for this year. Could be slightly less, but we can think of this progress coming in this year. Done well. We expect to take it into remaining three years. As you see, Q1, our volumes compared to last year on castings is up 19%. I think we should be able to achieve more than 15% growth, something like gross sales of 162,000 going to maybe 188,000, something like that, which amounts to about very close to anywhere 17%, 18%, 20% growth on castings. Demand is big. We have also added capacity across Solapur as well as Rajpura. Rajpura, we have already reached the full capacity. The increase has to come from Solapur.

Speaker #4: Could be slightly less, but we can think of this progress coming in this year. Done well, and we expect to take it into the remaining three years.

Speaker #4: And as you see, in quarter one, our volumes compared to last year on castings are up 19 percent. I think we should be able to achieve more than 15 percent growth—something like gross sales of ₹162,000 going to maybe ₹188,000, something like that—which amounts to about very close to anywhere between 17, 18, or 20 percent growth on castings.

Speaker #4: So, since our demand is big, we have also added capacity across Solapur as well as Rajpura. We have already reached full capacity. The increase has to come from Solapur.

Speaker #4: And coming to steel, I have talked about we will be running full and we expect growth to come in steel. I think we will be able to do external sales of at least 1 lakh to 110,000 metric ton, which also amounts to more than 20 percent growth.

R. V. Gumaste: Coming to steel, I have talked about we will be running full, and we expect growth to come in steel. I think we will be able to do external sales of at least 1 lakh to 110,000 metric tons, which also amounts to more than 20% growth. We did about 84,000 tons. Tube is the one I think we will still achieve. We are looking at at least volumetric growth of 10% coming in tube compared to last year. I think overall, this will ensure that the volumetric growth of at least 15% coming overall with all the products. With the price supporting, I think it should support us decent growth in terms of top line also in coming three quarters.

Speaker #4: We did about 84,000 tons. Tube is the one. I think we will still achieve—we are looking at at least volumetric growth of 10 percent coming in tube compared to last year.

Speaker #4: I think overall this will ensure that the volumetric growth of at least 15 percent comes overall with all the products. With the price support, I think it should give us decent growth in terms of the top line also in the coming three quarters.

Speaker #1: As the current participant's line is disconnected, we'll move on to the next question. The next question is from the line of Manish Goel from Thinkwise Wealth Managers.

Operator 2: For the current participant's line's been disconnected. We'll move on to the next question. The next question is from the line of Manish Goel from Thinkwise Wealth Managers. Please go ahead.

Operator: For the current participant's line's been disconnected. We'll move on to the next question. The next question is from the line of Manish Goel from Thinkwise Wealth Managers. Please go ahead.

Speaker #1: Please go ahead.

Manish Goel: Thank you very much, sir. Sir, yesterday at AGM, sir, we displayed our aspiration of achieving INR 14,000 crore revenue in medium term with 3 lakh tons of casting products, 3 lakh tons of casting sales, and 4 lakh tons of tube sales. Sir, roughly by which year do you think we should be able to reach that? Annual report also mentions that we would need a seventh foundry considering high demand for casting. What is it pertaining to? Third question, sir, on the two-part foundry. This 15,000 tons capacity is for phase one, or maybe if you can give more perspective as to what we are looking in terms of phase one capacity and phase two capacity, and what is our visibility on the volumes in terms of our sales for engines, for gensets, or 5A, any other products, and will it be completely machined?

Manish Goyal: Thank you very much, sir. Sir, yesterday at AGM, sir, we displayed our aspiration of achieving INR 14,000 crore revenue in medium term with 3 lakh tons of casting products, 3 lakh tons of casting sales, and 4 lakh tons of tube sales. Sir, roughly by which year do you think we should be able to reach that? Annual report also mentions that we would need a seventh foundry considering high demand for casting. What is it pertaining to? Third question, sir, on the two-part foundry.

Speaker #2: Thank you very much, sir. Sir, yesterday at the AGM, we displayed our aspiration of achieving ₹14,000 crore gross revenue in the medium term, with 3 lakh tons of casting production, 3 lakh tons of casting sales, and 4 lakh tons of tube sales.

Speaker #2: So, sir, roughly by which year do you think we should be able to reach that? And the annual report also mentions that we would need a seventh foundry, considering the high demand for casting.

Speaker #2: So, what is it pertaining to? Third question, sir, on the two-part foundry: this 15,000 tons capacity, is it for phase one? Or maybe you can give more perspective as to what we are looking at in terms of phase one capacity and phase two capacity.

Manish Goyal: This 15,000 tons capacity is for phase one, or maybe if you can give more perspective as to what we are looking in terms of phase one capacity and phase two capacity, and what is our visibility on the volumes in terms of our sales for engines, for gensets, or 5A, any other products, and will it be completely machined? Thank you so much.

Speaker #2: And what is our visibility on the volumes in terms of our sales for engines, for gensets, off-highway, and any other products? And will it be completely machined?

Speaker #2: Yeah. Thank you so much.

Manish Goel: Thank you so much.

Speaker #4: Yeah. First of all, let me cover that two-part foundry in Solapur. Phase one and phase two, we have clubbed together to make it 15,000 metric tons per annum.

R. V. Gumaste: First of all, let me cover that two-part foundry in Solapur. Phase one, phase two, we have clubbed together to make it to 15,000 metric ton per annum. There will be no more on that. Generally, these castings are high priced, and we expect that even though 15,000, it brings a good revenue and good contribution from that. Including this sixth foundry, our total realizable installed capacity is to make 70,000 metric ton, which I think we will realize it in this financial year plus two more years to go to 2 lakh 70. If we bring one more foundry, I expect that in three years, we will be able to reach, three to four years, we will be able to reach to 3 lakh metric ton per annum in case of castings.

Speaker #4: There will be no more on that. So generally, these castings are high-priced, and we expect that even though it is 15,000, it brings good revenue and good contribution from that.

Speaker #4: Including this sixth foundry, our total realizable installed capacity is 270,000 metric tons, which I think we will realize in this financial year plus two more years.

Speaker #4: And to go to 2 lakh 70. And if we bring one more foundry, I expect that in three years, we will be able to reach three to four years, we'll be able to reach to 3 lakh metric ton per annum in case of castings.

Speaker #4: Just keep in mind that we are also expanding the machining along with the castings. And we are also expanding the large castings along with the normal castings.

R. V. Gumaste: Just keep in mind that we are also expanding the machining along with the casting, and we are also expanding the large castings along with the normal castings. Coming to the pig iron, we will be upgrading all the blast furnaces. We will produce 9 lakh metric ton per annum of liquid metal. Maybe slightly more, but not less. It could go to even 1 million ton, possibly, if we are able to operate at high efficiency, which will ensure that in spite of one furnace going to steel, we will still have half million ton of pig iron for sales. We won't go very substantially down. Half million metric ton, we will continue to sell. With respect to tube, I have clarity with respect to 350,000 metric ton per annum, which should happen on completion of expander mill.

Speaker #4: Coming to the Pegarium, we will be upgrading all the blast surfaces. We will produce 900,000 metric tons per annum of liquid metal—maybe slightly more, but not less.

Speaker #4: It could go to even 1 million tons possibly, if we are able to operate at high efficiency. This will ensure that, in spite of one furnace going to steel, we will still have half a million tons of Pig Iron for sales.

Speaker #4: We don't go very substantially down. Half a million metric tons we will continue to sell. With respect to tube, I have clarity with respect to 350,000 metric tons per annum.

Speaker #4: What should happen upon completion of the expander mill? The expander mill will take two years to build, and I expect that even the tube to go to 350,000 will take three to four years.

R. V. Gumaste: Expander mill will take 2 years to build, I expect that even the tube to go to 350,000 will take 3 to 4 years. All these three areas, we will take 3 to 4 years. There are steel going to 240,000 metric tons external sales we can achieve along with steelmaking or steel commissioning in Koppal, which is 2 years down the line.

Speaker #4: So, all these three areas will take three to four years. Whereas, for steel, going to 240,000 metric tons external sale, we can achieve along with the steelmaking or steel commissioning in a couple, which is two years down the line.

Speaker #2: Okay, okay. And on these large castings, sir, what is the visibility in the near term? Like in phase one, how much capacity will come up and by when can we actually start the sales? And have we booked our capacities?

Manish Goel: Okay. On this large casting, sir, what is the visibility in near term? In phase I, how much capacity will come up, by when we can actually start the sales, have we booked our capacities, and what kind of realization can we see?

Manish Goyal: Okay. On this large casting, sir, what is the visibility in near term? In phase I, how much capacity will come up, by when we can actually start the sales, have we booked our capacities, and what kind of realization can we see?

Speaker #2: And what kind of realization can we see?

Speaker #4: See, one of the customers wants the full capacity. And we have already started working on how to build one more large casting foundry. So, I would say that I am looking at within one year.

R. V. Gumaste: See, one of the customer wants the full capacity. We have already started working how to build one more large casting foundry. I would say that I am looking at within 1 year, out of the 1,250, at least we should be able to go to 500 to 600 tons per month down the line in 1 year to 1 and a half years. 1 more year after that, we should be able to utilize the capacity fully.

Speaker #4: Out of the 1,250, at least we should be able to go to 500 to 600 tons per month down the line, in one year to one and a half years.

Speaker #4: So, and one more year after that, we should be able to utilize the capacity fully.

Speaker #2: Okay. Okay. And sir, what about our status in terms of moving one MBF to steel making? Where are we in that phase?

Manish Goel: Okay. Sir, what about our status in terms of moving from MBX to steelmaking? Where are we in that phase, sir?

Manish Goyal: Okay. Sir, what about our status in terms of moving from MBX to steelmaking? Where are we in that phase, sir?

Speaker #4: Yeah, I think we are almost getting ready with respect to—we have all the government clearances in place. And we have made the preliminary working, everything ready, such as reports, such as timelines, technology partners. We have to press the button.

R. V. Gumaste: Yeah. I think we are almost getting ready with respect to, we have all the government clearances in place, and we have made the preliminary working and everything ready, project report, project timeline, technology partners. We have to press the button, and we have to clear the land because it happens to be within the present factory premises. I think within next two, three months, we go to the next stage and make it ready to get commissioned within two years.

Speaker #4: And we have to clear the land because it happens to be within the present factory premises. So I think within the next two to three months, we go to the next stage and make it ready to get commissioned within two years.

Speaker #2: And sir, last question on tubes. Sir, we have a total order of 23,000 tons as per the annual report, both from ONGC and probably Oil India, and that also includes couplings.

Manish Goel: Sir, last question on tubes. Sir, we totally have 23,000 tons order as per annual report, both from ONGC and probably Oil India, and that also includes coupling. Sir, where is the delay in terms of execution, and can we expect the execution to happen in probably next couple of quarters?

Manish Goyal: Sir, last question on tubes. Sir, we totally have 23,000 tons order as per annual report, both from ONGC and probably Oil India, and that also includes coupling. Sir, where is the delay in terms of execution, and can we expect the execution to happen in probably next couple of quarters?

Speaker #2: So, sir, where is the delay in terms of execution, and can we expect the execution to happen in the next couple of quarters?

Speaker #4: I think that order should be completely completed in the next two quarters.

R. V. Gumaste: I think that order should be completely completed in next two quarters.

Speaker #2: Okay. Okay. Okay. Thank you so much. And sir, congratulations. Very, very informative and educative annual report, sir. A lot of hard work done by you and your team, sir.

Manish Goel: Okay. Thank you so much. Sir, congratulations. Very informative and educative annual report, sir. A lot of hard work done by you and your team, sir. Thank you so much.

Manish Goyal: Okay. Thank you so much. Sir, congratulations. Very informative and educative annual report, sir. A lot of hard work done by you and your team, sir. Thank you so much.

Speaker #2: Thank you so much.

Speaker #4: Thank you very much. Thank you.

R. V. Gumaste: Thank you very much. Thank you.

Speaker #1: Thank you. The next question is from the line of Sahil Sanghvi from Monarch Network Capital. Please go ahead.

Operator 2: Thank you. The next question is from the line of Sahil Sanghi from Motilal Network Capital. Please go ahead.

Operator: Thank you. The next question is from the line of Sahil Sanghi from Motilal Network Capital. Please go ahead.

Speaker #3: Yeah. Hi, sir. Thank you for the opportunity. Sir, my first question is: What is the current cooking pool cost, and would we be seeing a further increase in the cooking pool cost next quarter, or have we fully priced in the high cost?

Sahil Sanghi: Yeah. Hi, sir.

Sahil Sanghvi: Yeah. Hi, sir.

R. V. Gumaste: Hi, Sahil.

Sahil Sanghi: Thank you for the opportunity. Sir, my first question is, what is the current coking coal cost in our P&L? The reason I ask this, sir, is that would we be seeing further increase in the coking coal cost next quarter, or have we fully priced in the high cost?

Sahil Sanghvi: Thank you for the opportunity. Sir, my first question is, what is the current coking coal cost in our P&L? The reason I ask this, sir, is that would we be seeing further increase in the coking coal cost next quarter, or have we fully priced in the high cost?

Speaker #4: I think yes, I have mentioned to you earlier, we generally carry three months' coal stock. And I think June, July, and August would be the period where we are going to have this high-cost coal.

R. V. Gumaste: I think, as I have mentioned you earlier, we generally carry three months coal stock. I think June, July, August would be the period where we are going to have this high cost coal.

Sahil Sanghi: Right, sir.

Sahil Sanghvi: Right, sir.

Speaker #4: June, July, August would be higher than April, May, April, May, June. And after that, we have to see. The coal prices have slightly come down.

R. V. Gumaste: June, July, August would be higher than April, May, June. After that, we have to see. The coal prices have slightly come down, and whether it can come down, whether we can blend. I think there are a few possibilities with the available coal and coal supplies coming forward. Definitely, I think the peak will get mitigated to some extent.

Speaker #4: And whether it can come down, whether we can blend. I think there are a few possibilities with the available coal and coal supplies coming forward.

Speaker #4: But definitely, I think the peak will get mitigated to some extent.

Speaker #3: Sure, sir. That's helpful, sir. Sir, my second question is: Our pig iron price realization that I am seeing, is it a blend of the foundry and steel grade?

Sahil Sanghi: Sure, sir. That's helpful, sir. Sir, my second question is, our pig iron prices, the realization that I am seeing, is it a blend of the foundry and steel grade? Because you said we are still expecting some price hike. Or is it largely foundry grade?

Sahil Sanghvi: Sure, sir. That's helpful, sir. Sir, my second question is, our pig iron prices, the realization that I am seeing, is it a blend of the foundry and steel grade? Because you said we are still expecting some price hike. Or is it largely foundry grade?

Speaker #3: Or because you said we are still expecting some price hike. So, or is it largely foundry grade?

Speaker #4: No, I think, see, today if you see, Sahil, we are almost—we plan today, this month, 58,000 tons of pig iron sales. I'm talking including the internal sales.

R. V. Gumaste: No, I think, see, today, if you see, Sahil, we plan today this month 58,000 tons of pig iron sales. I'm talking including the internal sales. You can remove 10,000. This kind of volume is a combination of steel grade, or we call it basic grade, and also foundry grade. All grades are mixed. Foundry grade is, I think, around 20,000, 25,000, not more than that.

Speaker #4: You can remove 10,000. So this kind of volume is the combination of steel grade, or you call it basic grade, and also foundry grade.

Speaker #4: All grades are mixed. Foundry grade is, I think, around 20,000 to 25,000, not more than that.

Speaker #3: Sure, sir. Sure. Sir, tell me—I mean, you have been explaining all the KPX programs that you will be taking up. I think there is a lot to do.

Sahil Sanghi: Sure, sir. Sir, thirdly, you have been explaining all the CapEx programs that you will be taking up. I think there is a lot to do. Would our CapEx spend in absolute number be around INR 600 to 700 crore per annum? Would you be spending higher?

Sahil Sanghvi: Sure, sir. Sir, thirdly, you have been explaining all the CapEx programs that you will be taking up. I think there is a lot to do. Would our CapEx spend in absolute number be around INR 600 to 700 crore per annum? Would you be spending higher?

Speaker #3: Would our capex spend in absolute numbers be around ₹600 crore or ₹700 crore per annum? Would you be spending higher?

Speaker #4: I would say what really controls it is also some cautionary positions being taken because of the geopolitical scenario, like war happening or some tariff announcements.

R. V. Gumaste: I would say, for that really controls is also some cautionary positions being taken because of the geopolitical scenarios, like war happening or some tariffs announcement. I think even that is becoming a new norm. I think there's no point in waiting for anything. I think, first of all, this year, I feel that we should be in the range of INR 600 to 700 crore of CapEx. Should be able to pick up higher levels because when we trigger the large CapEx programs, they don't wait. They pick up. For example, we take up upgrade of Hiriyur foundry, sorry, Hiriyur plant. We do it in nine months, and it takes away whatever INR 130 to 140 crore. Similarly, I would say that steel project expanded mill, they are all around 20, 22 months program. When we start, I think this spend will catch up.

Speaker #4: I think even that is becoming a new norm. I think there's no point in waiting for anything. I think, first of all, this year I feel that we should be in the range of ₹600–700 crore of CapEx.

Speaker #4: But we should be able to pick up higher levels because when we trigger the large CAPEX programs, they don't wait, they pick up. For example, we take up the upgrade of the Hiriyur foundry—sorry, Hiriyur pig iron plant.

Speaker #4: We do it in nine months, and it takes away whatever, 130–140 crores. Similarly, I would say that the steel project expander mill, they are all around 20–22 months' program.

Speaker #4: So, when we start, I think the spend will catch up. I think next year and the year after, CAPEX would be higher than this year.

R. V. Gumaste: I think next year, next-to-next year's CapExes will be higher than this year. Another thing, also keep in mind that we are not going to have aggressive spend on green power because now there are so many regulatory things. We can't expand anymore unless we put substantial investment into battery. Battery is an evolving technology. I don't think we will put 500 MW of battery. We'll start with 50, 60, 70, something like that. The spend on green power will slow down and other projects will pick up. Every year, I think we will raise the CapEx to higher level to cover all these projects. In short, there are about INR three and a half crores of projects to be done in next four years.

Speaker #4: Another thing—also keep in mind that we are not going to have aggressive spend on green power, because now there are so many regulatory things.

Speaker #4: We can't expand anymore unless we put substantial investment into batteries. Battery is an evolving technology. I don't think we will put 500 megawatts of battery.

Speaker #4: So, we'll start with 50, 60, 70, something like that. So, the spend on green power will slow down, and the other projects will pick up.

Speaker #4: So, every year, I think we will raise the KPX to a higher level to cover all these projects. In short, there are about ₹3.5 crore worth of projects to be done in the next four years.

Speaker #3: Sorry, sir. How much? You said 3,000?

Sahil Sanghi: Sorry, sir, how much you said?

Sahil Sanghvi: Sorry, sir, how much you said?

R. V. Gumaste: Around INR 3,000 to three and a half thousand crores in next four years.

Speaker #4: Around ₹3,000 to ₹3,500 crores in the next four years.

Speaker #3: Got it, sir. Sir, lastly, about the tube market and the scenario right now—we see a lot of volatility with respect to pricing, with respect to the product mix, and all.

Sahil Sanghi: Got it, sir. Sir, lastly, about the tube market and the scenario right now, we see a lot of volatility with respect to the pricing, with respect to the product mix and all. If you can give us some more details about how is the market, what are the demand scenarios, and how is the prospects, and where is the limitation over here when it comes to going higher on growth or selling more of the high margin products? If you can explain that, sir. Little bit more understanding on the markets for tubes.

Sahil Sanghvi: Got it, sir. Sir, lastly, about the tube market and the scenario right now, we see a lot of volatility with respect to the pricing, with respect to the product mix and all. If you can give us some more details about how is the market, what are the demand scenarios, and how is the prospects, and where is the limitation over here when it comes to going higher on growth or selling more of the high margin products? If you can explain that, sir. Little bit more understanding on the markets for tubes.

Speaker #3: And, I mean, if you can give us some more details about how the market is, what are the demand scenarios, and what are the prospects?

Speaker #3: And where is the limitation here when it comes to achieving higher growth or selling more of the high-margin products? If you could explain that, sir, to help us better understand the markets for tubes.

Speaker #4: No, I think, as you know, the auto market is doing very well, and the tractor market is doing very well. Related to that, whether it's the bearing industry, etc., they are also doing very well.

R. V. Gumaste: I think, as you know, the auto market is doing very well and the tractor market is doing very well. Related to that, with the bearing industry, et cetera, they are doing very well. They are not, in case of tubes or in case of alloy steel, they are not very high yielding markets. Whereas oil and gas into turmoil. We are still hopeful that with high fuel prices as well as reconstruction requirements in the Middle East, it has to trigger, there is no second thought about it. There are new applications evolving, high pressure storage systems, transportation systems. We are working at that. Right now I can say that oil and gas related activity is subdued, because of which the volumes are less. Export volumes somehow got affected, and they are not doing well.

Speaker #4: But they are not, in the case of tubes or in the case of alloy steel, they are not doing high-yielding markets. Whereas oil and gas, into turmoil.

Speaker #4: But we are still hopeful that, with high fuel prices as well as reconstruction requirements in the Middle East, it has to trigger. There is no second thought about it.

Speaker #4: Also, there are huge new applications evolving—high-pressure storage systems, transportation systems. We are working on that. But right now, I can say that oil and gas-related activities are subdued, export volumes have somehow got affected, and they are not doing well.

R. V. Gumaste: We are working at that. Right now I can say that oil and gas related activity is subdued, because of which the volumes are less. Export volumes somehow got affected, and they are not doing well. I think if the scenario becomes a new norm, I expect things to move and orders to flow in, and we should be able to increase the high value oil and gas related tubings going in the coming quarters, including premium couplings which give better pricing, all that.

Speaker #4: I think if this scenario becomes the new norm, I expect things to move and orders to flow in, and we should be able to increase the high-value oil and gas-related tubings going into the coming quarters.

R. V. Gumaste: I think if the scenario becomes a new norm, I expect things to move and orders to flow in, and we should be able to increase the high value oil and gas related tubings going in the coming quarters, including premium couplings which give better pricing, all that.

Speaker #4: Including premium couplings, which we priced better and all that.

Sahil Sanghi: Is there any-

Sahil Sanghvi: Is there any—

Speaker #3: Sir, I agree with you that the steel tube market is volatile. Is there a replacement of seamless tubes with welded happening? Because that is what I'm hearing from a couple of welded tube players—that they have been able to pick up the demand.

R. V. Gumaste: I agree with you that the steel tube market is volatile.

Sahil Sanghi: Is there a replacement of seamless tubes with welded happening? Because that is what I am hearing from couple of welded tube players that they have been able to pick up the demand. Are you seeing the same thing, sir?

Sahil Sanghvi: Is there a replacement of seamless tubes with welded happening? Because that is what I am hearing from couple of welded tube players that they have been able to pick up the demand. Are you seeing the same thing, sir?

Speaker #3: Are you seeing the same thing, sir?

Speaker #4: This volatility has nothing to do with that. Some applications do change, but this volatility has nothing to do with that.

R. V. Gumaste: This volatility is nothing to do with that.

Sahil Sanghi: Okay.

Sahil Sanghvi: Okay.

R. V. Gumaste: Some applications do change. This volatility is nothing to do with that.

Speaker #3: Sure, sir. Sure, sure. Sure, sir. Thank you for answering my question, sir. All the best.

Sahil Sanghi: Sure, sir. Thank you for answering my question, sir. All the best.

Sahil Sanghvi: Sure, sir. Thank you for answering my question, sir. All the best.

Speaker #4: Thank you. Thank you, Faiz.

R. V. Gumaste: Thank you. Thank you, Sahil.

Speaker #2: Thank you. The next question is from the line of Anurag Patel from Quest Investment Managers. Please go ahead.

Operator 2: Thank you. The next question is from the line of Anurag Patil from Quest Investment Managers. Please go ahead.

Operator: Thank you. The next question is from the line of Anurag Patil from Quest Investment Managers. Please go ahead.

Speaker #3: Thank you for the opportunity. Sir, I just need a clarification on your power cost. Earlier, we were expecting around ₹40 to ₹45 crore of cost savings due to solar.

Anurag Patil: Thank you for the opportunity. Sir, I just need a clarification on the power cost. Earlier we were expecting around INR 40 to 45 crore of cost savings due to solar, and now the costs have elevated due to the gas pricing and also due to this power trading regulation that which have changed. Net on annual basis, how do you see the overall power cost? Still there will be absolute basis there will be increase or it will be neutralized more or less?

Speaker #3: And now, the costs have increased due to gas pricing and also due to this power trading regulation, which has changed. So, net-net, on an annual basis, how do you see the overall power cost?

Speaker #3: Still, there will be absolute basis—there will be an increase or it will be neutralized more or less?

Speaker #4: See, what I would say is that what we have done—70 megawatt solar—I still expect that this will give us ₹70 to ₹80 crore benefit in terms of power cost.

R. V. Gumaste: See, what I would say is what we have done, 70 MW solar. I still expect that this should give us INR 70 to 80 crore benefit in terms of power cost. 35 similarly, but slightly less, but I still expect INR 30 crore kind of benefit coming. Windmill generates more, it generates much higher. It is equivalent to 55 MW. I expect both of these put together, we should get again INR 70 to 80 crore benefit. These are, I think, realisable projections, and we need to commission and get into regular operations. Also, it is very important to keep in mind that there are some seasonal effects both in solar and wind. Wind is predominantly during June, July, August, September. Solar is low in June, July, August, September, because you should not expect that wind low season, we will not get the benefit.

Speaker #4: And 35 similarly. But slightly less, but I still expect 30 crore kind of benefit coming. And windmill generates more. Let's say they generate much higher.

Speaker #4: It is equivalent to 55 megawatts. So, I expect both of these put together, we should get, again, a 70 to 80 crore benefit. These, I think, are realizable projections.

Speaker #4: And we need to commission and get into regular operations. Also, it's very important to keep in mind that there are some seasonal effects, both in solar and wind.

Speaker #4: Wind is predominantly during June, July, August, September. And solar is low in June, July, August, September. Because you should not expect that wind low season we will not get benefit.

Speaker #4: We get 70% of the wind benefit during these four months. So we are catching up with commissioning, but we are also not catching up with something.

R. V. Gumaste: We get wind 70% benefit during these 4 months. We are catching up with commissioning, we are also not catching up with something. What gets commissioned in September has to wait for the next season, still that 30% or 40%, we will get it. I would say that whatever we have done investment, it is safe and instead of getting higher, we are getting slightly lower, but it is still a substantial uptake. Now, having come up to this, what do we do in terms of our vision to bring at least the power cost to a level like 5% to 6% company level? One is we have done very well with respect to waste heat recovery power in Koppal, and we are completely self-sufficient. We don't have power cost there. Fuel costs have doubled. We expect that it will taper down.

Speaker #4: What gets commissioned in September has to wait for the next season. But still, that 30 or 40 percent, we will get it. So I would say that whatever we have done investment, it is safe higher, we are getting slightly lower.

Speaker #4: But it is still a substantial thing. Now, having come up to this, what do we do in terms of our vision to bring at least the power cost to a level like 5–6% at the company level?

Speaker #4: One is, we have done very well with respect to waste heat recovery power in copper, and we are completely self-sufficient. We don't have power cost there.

Speaker #4: But fuel costs have doubled. We expect that it will taper down. And also, we are working on alternative fuels to cut down the price increase impact.

R. V. Gumaste: Also we are working at alternative fuels to cut down the price increase impact. Once again, because of this change scenario, we have some job to do on our strategy, our planning, and certain project execution to mitigate the cost. I think I will have more clarity in coming months. We'll have to look and see what way we will move. Also it's very important to see what way the battery storage system takes the effect, because government and all the agencies are looking for this area developments to come in the coming years. We have some work to do once again on the power and fuel area of our, basically the Maharashtra business. In Karnataka, we are well covered with the waste heat recovery power.

Speaker #4: But once again, because of this changing scenario, we have some work to do on our strategy, our planning, and certain project execution to mitigate the cost.

Speaker #4: I think I will have more clarity in the coming months. We will have to look and see which way we will move. And also, it's very important to see which way the battery storage system takes effect.

Speaker #4: Because government and all the agencies are looking for these area developments to come in the coming years, we have some work to do once again on the power and fuel area of our, basically, the Maharashtra business.

Speaker #4: In Karnataka, we are well covered with the waste heat recovery power.

Speaker #3: Okay. And sir, this change in the power trading regulations, is there any workaround possible in the future or is there no other way?

Anurag Patil: Okay. Sir, this change in the power trading regulations, is there any workaround possible in the future, or there is no other way?

Speaker #4: No, I think that trading window they have closed. They are asking for many. I think all that will become possible if we have battery storage.

R. V. Gumaste: No. I think that trading window, they have closed. They are asking for many. I think all that will become possible if we have battery storage.

Speaker #3: Okay, okay. That's it from my side, sir.

Anurag Patil: Okay.

R. V. Gumaste: Till that time.

R. V. Gumaste: Till that time—

Anurag Patil: That's it from my side, sir.

Speaker #4: Yes. Thank you very much.

R. V. Gumaste: Yes. Thank you very much.

R. V. Gumaste: Yes.

Anurag Patil: Thank you very much.

Speaker #2: Thank you. The next question is from the line of Pratik Kothari from Unique PMS. Please go ahead.

Operator 2: Thank you. The next question is from the line of Pratik Kothari from Unique PMS. Please go ahead.

Operator: Thank you. The next question is from the line of Pratik Kothari from Unique PMS. Please go ahead.

Speaker #5: Hi, good afternoon, sir. So, coming back to tubes and our intent—even in the annual report, you mentioned we want to bring up the share of oil and gas and other high-margin segments. So, keeping the external demand aside, what else are we doing, or can we do internally, to kind of bridge this gap?

Pratik Kothari: Hi. Good afternoon, sir. One, coming back on tubes and our intent, even in the annual report, we have mentioned we want to bring the share up of oil and gas and the other high margin. Keeping the external demand aside, what else are we doing or can we do internally to kind of bridge this gap?

Speaker #4: Can you repeat?

R. V. Gumaste: Can you repeat?

Speaker #5: Yeah. My question was, in the annual report also, we have mentioned that we want to bring the share of oil and gas in the tube segment higher.

Pratik Kothari: Yeah. My question was, in the annual report also, we have mentioned that we want to bring the share of oil and gas in the tube segment higher.

R. V. Gumaste: Okay.

Speaker #5: Which are all higher margin. So, keeping the external factors aside, internally, what all can we do?

Pratik Kothari: Which are all high margin. Keeping the external thing aside, internally, what all can we do?

Speaker #4: So I think one of the things that we are working on, I think it's very important. It's all what we are doing internal. One is to increase our capacity for processing the oil and gas tubes at a higher level.

R. V. Gumaste: I think one of the things what we are working, I think it's very important, it's all what we are doing internally. One is increase our capacity for processing the oil and gas tubes at the higher level. Because we get small window, like 3, 4 months to execute large projects. We have already done a lot of work on that. Second thing, we are building our capacity to manufacture and supply the premium couplings, high value, and we keep the value in-house. Third one is we increase the portfolio offerings. We are offering only up to 10 inches, and it covers only around 60% of the market, what we are able to address. If we go up to 18 inches, we will be able to address the market another 40%.

Speaker #4: Because we get a small window—like three or four months—to execute large projects, we have already done a lot of work on that. Second thing, we are building our capacity to manufacture and supply the premium couplings.

Speaker #4: High value, and we keep the value in-house. The third one is to increase the portfolio offerings. We are offering only up to 10 inches, and it covers only around 60 percent of the market that we are able to address.

Speaker #4: And if we go up to 18 inches, we will be able to address another 40 percent of the market. So, I think these are the things that we are doing internally to ensure that we service the wider market and also create capacities.

R. V. Gumaste: If we go up to 18 inches, we will be able to address the market another 40%. I think these are the things what we are doing internally, to ensure that we service the wider market and also create capacities. I'm sure the market demand will come back, and we will be well prepared to take care of and address the market demands.

R. V. Gumaste: I think these are the things what we are doing internally, to ensure that we service the wider market and also create capacities. I'm sure the market demand will come back, and we will be well prepared to take care of and address the market demands.

Speaker #4: And I'm sure the market demand will come back, and we will be well prepared to take care of and address the market demands.

Speaker #5: And the timeline, sir, for all of this would be what—the next 12 months?

Pratik Kothari: Time range, sir, for all of this will be what? In next 12 months?

Speaker #4: I think we are looking at within next 12 months, except the expander mill going up to 18 inch will happen. Going up to 18 inch will take two years from now.

R. V. Gumaste: I think, we are looking at within next 12 months, except the expander mill going up to 18 inch will happen. Going up to 18 inch will take 2 years from now. I think everything will be in place.

Speaker #4: I think everything will be in place.

Speaker #5: Got it. Okay. Sir, second, on steel. One, if you can comment on the profitability for this quarter in the steel segment. And two, in copper, we had, I mean, plans to expand there, but we have not started work.

Pratik Kothari: Correct. Okay. Sir, second on steel. One, if you can comment on the profitability for this quarter in the steel segment. Two, in Koppal, we had plans to expand there, but we have not started work. Have we taken the decision to start there?

Speaker #5: So, have we taken the decision to start there?

Speaker #4: I think we have taken the decision to go ahead. We will go ahead. We are ready to go ahead, and we'll take two years to implement the project.

R. V. Gumaste: I think we have taken the decision to go ahead. We will go ahead. We are ready to go ahead. It will take two years to implement the project. Coming to Jejuri. Jejuri, one very important aspect is power and fuel cost. We want for that 35 MW to be in place and 12 windmills to be in place. We have done well on improving the yield and reducing the other cost of manufacturing. We have done well. Coming to how to roll more rolling capacity and expansion, because once Koppal comes, Koppal will supply the blooms to Baramati, hence we need to increase the external sales. For that, we are enhancing the rolling mill capacity to 25,000 per month, annually 300,000 tons.

Speaker #4: Coming to Jejuri—Jejuri, one very, very important aspect is power and fuel cost. And we want for that 35 megawatts to be in place, and 12 windmills to be in place.

Speaker #4: And we have done well on improving the yield and reducing the other costs of manufacturing. We have done well. Coming to how to roll more, rolling capacity, and expansion.

Speaker #4: Because once copper comes, copper will supply the blooms to Baramati. And hence, we need to increase the external sales for that. We are enhancing the rolling mill capacity to 35,000 per month, annually 3 lakh tons.

Speaker #4: So that we start that activity now itself and put it in place within, say, about 18 months' time so that we are well ahead—ready for buying the blooms, rolling it, and selling to our valuable customers.

R. V. Gumaste: That we start that activity now itself and put in place within next, say about 18 months, that we are well ahead ready for buying the blooms, rolling it, and selling to our valuable customers. In short, we are saying that we want to establish quarter billion tons of external alloy steel sales and at the expanded tube capacity of 3.5 lakh to 400,000 tons per annum.

Speaker #4: So in short, we are saying that we want to establish quarter billion ton of external alloy steel sales. And at the expanded tube capacity of 3 and a half lakh to 4 lakh ton per annum.

Pratik Kothari: No, great. Thank you. All the best, excellent annual report this time, sir. Thank you.

Speaker #5: No, great. Thank you. All the best. And excellent annual report this time, sir. Thank you.

Speaker #4: Thank you, Pratik. Thank you very much.

R. V. Gumaste: Thank you, Pratik. Thank you very much.

Speaker #2: Thank you. Ladies and gentlemen, that was the last question. I will now hand the floor over to the management for their closing remarks.

Operator 2: Thank you. Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing remarks.

Operator: Thank you. Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing remarks.

Speaker #4: First of all, I would like to thank all the participants for their very interesting and intelligent questions. I find that all our analysts and investors are well-informed about our company, plans, and programs.

R. V. Gumaste: Yeah. First of all, I would like to thank all the participants. Very interesting and very intelligent questions. I find all our analysts and investors are well informed about our company and plans and programs, and that gives me happiness. Thank you so much for joining, and look forward to see you in next quarter. All the best to everyone. This is a volatile situation from the market point of view and also from the business point of view. We'll continue to do our best to mitigate these volatilities. Thank you very much.

Speaker #4: And that gives me happiness. Thank you so much for joining, and I look forward to seeing you next quarter. All the best to everyone. This is a volatile situation from the market point of view.

Speaker #4: And also from a business point of view, we will continue to do our best to mitigate these volatilities. Thank you very much.

Speaker #2: Thank you very much. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Operator 2: Thank you very much. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Operator: Thank you very much. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

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Q1 2027 Kirloskar Ferrous Industries Ltd Earnings Call

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