APL Apollo Tubes Limited (533758) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q2 FY '22 Earnings Conference Call of APL Apollo Tubes Limited, hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal from InCred Equities. Thank you, and over to you, sir.

Thank you, Margaret, and good evening, ladies and gentlemen. We welcome you all to the second quarter earnings conference call of APL Apollo Tubes. We have with us the senior management of the company, led by Mr. Sanjay Gupta, Chairman and Managing Director; Mr. Deepak Goyal, Chief Financial Officer; Mr. Arun Agarwal, Chief Operating Officer; and Anubhav Gupta, Chief Strategy Officer of APL Apollo. We thank the management for giving us this opportunity to host the call. I now hand over to the management for the initial remarks, post which, we'll get into Q&A. Over to you, sir.

Thanks, Rahul. This is Anubhav Gupta. It's a real pleasure to be here and discuss our Q2 performance with everyone. We welcome everyone of you, and thanks for stopping by. Before we discuss our Q1 performance, I'd like to talk about a few updates, which took place in the last quarter. So one is we received 6 patent designs for our new innovative products. So our total patented design portfolio stand at 16 today. This is in line with our strategy to create new markets for our structural steel tube products into building material applications, And these various products has helped us to grow at a CAGR of 20% in the last 10 years. So our efforts to innovate and come out with new products continue. Number 2 is the government hospitals in Delhi, there, the work has started and we are glad to share that our products are being used to create the superstructure of those hospitals. It's a first-of-its-kind building in India where the hospitals shall be ready in 6 months. And this was possible because the superstructure is on 100% tubes. And this is very good for our product category, which caters to the heavy structural side of it. So we are confident that once these towers are ready in the next 6 to 7 months, it is going to open a very, very large market for our heavy structural tubes. Number 3 is we appointed Tiger Shroff as our second brand ambassador, specifically for the heavy structural tubes and we have branded this product as Apollo Column. Very soon, we will go on air and our target is to cater to all the architects, structural consultant, contractors where we want to push this product. Number four, we have started work on our consumer-facing app, which we are targeting to launch next quarter. Currently, we are in the process of enrollment of 50,000 fabricators. And at the same time, we are working on the various design, which would be used in any household into multiple segments, so this will help us reach near to the customer as our brand equity endeavors. Number five, very interesting update I'd like to share is that one of our distributors in Dehradun has opened a 10,000 square foot -- 10,000 square foot furniture store, which -- where the furniture is 100% made of steel tubes. Since he's our distributor, so he is using APL Apollo Tubes. And again, this demonstrates that our products are being used for the typical building material furniture applications. So as this business starts to gain momentum, we will move much closer to the consumer. Again, this will help us enhance our brand equity in a significant way. So coming to the second quarter performance, it was an important quarter as the economic recovery started after the corona wave 2 and things started to return to normalcy. Coming to the -- our sales volume, which was 427,000 tonnes for the quarter, it was down 11% Y-o-Y, mainly because of delayed recovery in the -- after the lockdown was lifted and some unseasonal rains, which impacted some of the sales volume. The raw material costs were up significantly. If you look at Y-o-Y, they were up by almost 24,000 tonnes, 24,000 per tonne. But at the same time, our net selling realization was also up by INR 26,000 per tonne. So on a Y-o-Y basis, we reported EBITDA per tonne of 5,200, which was best ever after Q1's INR 6,800 per tonne. And the factors which resulted into improvement in EBITDA are, of course: Number one, our continuous improving sales in the value-added products. In the Q2, our value-added product mix was 62% versus 53% in Q2 of FY '21. Thirdly, our working capital cycle continues to remain within 10 days of limit. So it has helped us generate very strong operating cash flows. And our net debt is further down to INR 113 crores from INR 160 crores in March 21. Overall, we generated operating cash flow of INR 261 crores, which was almost 60% of the EBITDA. And this helped us fund our CapEx of INR 216 crores. So the net FCF was INR 31 crores, which helped us reduce the debt. One milestone what we hit was the ROE and ROCE, our return profile for the group surpassed 30%. We believe this is a very strong demonstration of our inherited strong business model, that our business has capability of generating much higher returns. Historically, we have been around 20% to 25% because we were expanding to big capacities. But now that our utilization levels are going up, our working capital has reduced. Our margins are going up. So we are going above 30% ROE, ROCE. And we target to sustain these ROCEs in the longer term. Lastly, the TriCoat merger is on track. Hopefully, the process should be done within the Q1 of next calendar year. So with that, we will have a simplified group structure with the largest success into the company in India and the fifth largest globally. With this, Rahul, we can open the floor for Q&A.

[Operator Instructions] The first question is from the line of Dhruv Jain from AMBIT Capital.

Congrats on a good set of numbers. Sir, I had a question with respect to the volumes -- So we've seen that the volumes have declined on a Y-o-Y basis. So just wanted to understand -- is it because of the high HRC prices that the channel is not stocking up? Or is it -- has it got something to do with the mix? Just wanted your thoughts on that.

So Dhruv, as I understand that you are comparing this quarter's volume of 427,000 tonnes, versus 480,000, 485,000, what we have achieved in the past. So when we were doing 485,000 tonnes, the commoditized segment, which we call general structures, that was contributing around 225,000 tonnes into that, right? And if you look at Q2 volume, that was 161,000 tonnes. So there has been a shortfall of 50,000 to 60,000 tonnes into the commoditized category. And that's where we have a loss of volume. If you look at our value-added portfolio, where the 100% focus of the company today. There, the volumes haven't declined, right? And this is obviously because when the primary steel prices go up. So there is some shift in the industry which takes place towards the more secondary side, right? So we are not too much worried about it because anyway, that segment, if you see our 5-year business plan, that segment is not going to contribute much today -- in the future. Today, it is like 35%, 36%. In future, we expect it to go down to 20%, 25%. But that being said, whenever now that the prices have stabilized, right, and the gap between secondary and primary also should narrow down because ultimately, there would be some cyclicality towards it. So they will regain those volumes. But at the same time, our focus towards -- our focus towards value-added products is continuing. And that's where we are getting our earnings from.

And I had a question with respect to the Raipur facility. If you could just give an update with respect to when do you expect it to commence operations?

Hi Dhruv, Sanjay Gupta this side. We are almost on track in the Raipur project. I think in the month of December or January, there is a little bit of portion going to start. And up to March, we can go up to 25% production. As per our -- we have a total plan of 1.5 million tonnes. And after in the Q1, we expect the -- our capacity to be almost close to 50%. And Q2 first half, we fulfilled our -- all the project for 1.5 million tonnes. But no doubt, to ramp up the market, we take at least 2 years to fulfill the whole capacity. Our capacity is done by first half of the next year.

The next question is from the line of Urvil Bhatt from IIFL.

Just wanted to understand, I mean, how has the demand been. So we did 427 KT last quarter. So if you can give some color on how October month has been and how is the outlook looking for 3Q and 4Q?

The demand is right now on track. We can forecast -- we can cross almost our business plan -- as per our business plan of full year is 1.8 million tonnes. We are very close to or maybe we crossed this quantity, which we have been making 0.5 million tonnes for every quarter of our business plans. So I don't think [indiscernible]. We can achieve these targets.

Okay. That's good to hear. And also curious, I mean, like what happened in the last quarter. I mean, as we ramp volume towards 500 KT per quarter, would we see the fall in the share of value added or will it be continued above 60%?

I think so, this is about 55% to 60%.

Okay. Okay. That's good to hear. And second question is, I mean, on the hospital front, I mean what kind of volumes are you targeting over the next couple of years, assuming that you get a few more such contracts and you start creating a new segment out of this. So what is the outlook here, I mean, in terms of volumes?

Most like in 1 square foot of area, there are total two concerns, almost 5 to 6 KT [indiscernible] depends on the design. And the first order we get from the hospital, this is 7 hospitals -- 7 hospitals, we get an order of almost 12,000 tonnes. So we are working on at least every year, we can design the infrastructure on the tube almost 15 crores square foot area. And if we take the average building, these were almost 3 lakh square foot or to 5 lakh square foot will be per area. Then close to 300 buildings, we have to develop each -- every year. Right now, we are working on almost 50 buildings. So we are very certain in the next 2 years, we can cross this landmark of what we are targeting 15 crores square foot area every year. So we can get almost a demand of 10 lakh tonnes -- 5 lakh tonnes.

0.5 million tonne, Urvil.

Okay. Okay. That's good to hear. And this will be -- I assume this will be some value-added only. So the margins in this segment will be higher?

Yes, no doubt -- because our is the higher [indiscernible] also coming. And maybe this line has started in month of March or April of FY '22. So we are very hopeful because this is the first time not in India, in Asia.

The next question is from the line of Jiten Doshi from ENAM AMC.

Good afternoon, everyone. Congratulations, Sanjay, for a wonderful performance in a challenging environment. I just want to know from you, when do you think you will be actually exhausting your entire capacity, what you're putting up in Raipur. And what will be your strategy in terms of future expansion? What point do you think you will expand, let's say, for another 1 million or 2 million tonnes? Because we see India now on a massive growth trajectory, both in terms of infrastructure, CapEx, as well as a lot of new projects coming in. So how are you actually planning and what sort of lead time do you require for this?

Basically, right now, we have -- without Raipur, we have capacity of 2.5 million tonnes right now. And this year, our business plan is in the early of the year, it's 2 million tonnes. But due to corona, we reduced the business run and we had stick to 1.8 million tonnes. So I think the next year, with the existing setup of APL, we can cross 2 million tonnes. And that would give me almost 0.5 million tonnes from the new plant. So next year, we are planning to cross 2.5 million tonnes. '23-'24, we are targeting to cross 3.2 million tonnes. And '24-'25, we are targeting to cross 4 million tonnes. This is already near our plan, and we are doing very -- we're very hard on this -- all the projects. After 4 million tonnes, right now, we are searching some opportunity in the east market in Calcutta and Dubai in the Middle East. But right now, we have no such as a concrete business plan. But I think with the existing system as well new some, small, small trials, we can cross almost 5 million tonnes in '25-'26, maybe '24-'25.

So what would be your lead time to set up all this capacity?

[Foreign Language].

Okay. And then after that, it takes about, what, 18 months?

[Foreign Language]. So we're taking a roadmap of 2024-'25 and we're very, very sure [Foreign Language].

So Sanjay [Foreign Language] when will we be INR 10,000 per tonne and when do you see it in '24-'25. When do you see this INR 10,000 per tonne coming for us, at least selectively in our portfolio?

[Foreign Language] but this is possible, [Foreign Language] this is possible. [Foreign Language].

[Foreign Language] how much percentage would be value added?

Almost 75% to 80%.

Okay, which is will be far higher than what it is today?

Yes, we're targeting [Foreign Language].

Okay. So you will more and more reduce the commoditized products and go for more value-added products?

Yeah, we are not increasing. We are not increasing commoditized.

Okay, not increasing. But whatever incrementally you're doing is only value-added?

We are only working on the value-added [Foreign Language] then we are going too keen to go for outsourcing.

Okay. Okay. Wonderful. So basically, your model will continue to be remaining asset-light.

Yes. There is no doubt about this. [Foreign Language].

[Foreign Language].

[Foreign Language].

Okay. Okay. So you will come out with a decent dividend policy looking at the cash flows?

Yes, yes, boss. No doubt at all.

Wonderful. Wonderful. Many, many congratulations and all the best for the future. Thank you, Sanjay.

The next question is from the line of Bharat Shah from ASK Investment Managers.

Hearty congratulations. You've written on capital employed, clearly beautifully improved, why -- and now we are in excess of 30%. But structurally, I thought we should be touching somewhere closer to 50% plus because CapEx per tonne, let us say, is about INR 7,500 to INR 8,000. And let us say, INR 1,500 of booking capital, should be lower actually, but maximum of INR 10,000 of the capital employed, and we can make, kind of, EBIT of INR 5,000 plus. So we should be touching return on capital employed above 50%. Doesn't that sound structurally the realizable number?

[Foreign Language] there is no doubt, we can touch 50% of ROC and ROE.

[Foreign Language] we should be touching this kind of a number?

[Foreign Language] up to 2024-'25 [Foreign Language] in the next 3 years. [Foreign Language] but I don't think it -- if everything goes, it should be done very soon. But other -- as per our business plan, we can touch in '24-'25.

And also, Bharat, I mean the numbers what you said that INR 10,000 per tonne of capital employed, which includes INR 8,000 per tonne of gross block and INR 1,500 per tonne of working capital, on that EBIT of INR 5,000 per tonne so as an inherited ROC, yes, we are touching these numbers because our capacity utilization today is around 60%. So that's why on the blended basis, on the consol balance sheet, you are not looking that. But if you look at the core ROC of the business, it is 50%, what you mentioned.

Therefore, if we don't take into account the new capacity, which is still in the process of being built, structurally, next year, now that INR 5,000-plus kind of EBITDA seems to be structurally embedded in our business. And given that -- it's that value-added is rising as a percentage, structurally speaking, if we not take into account new CapEx, we should be 50%-plus in next year itself, isn't it?

Definitely. Definitely. And also, see, I mean, the numbers what we gave in our presentation, this 30% ROE, ROC. So for capital employed, we have taken the total asset and reduced only the current liabilities, right? So if you calculate as per the accounting, this number will be much higher, 35%, 38% also. But we are just highlighting the conservative number here, where we have deducted current liabilities on the total asset base, right? So that it takes account of all the ongoing CapEx in the balance sheet and other assets. So if you take the core business ROC, it is 50% today. Yes.

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language] we are close to 1.8 million tonnes. Next year, we are closing 2.5 million tonnes, we are targeting. The next year is 3.2, and '24-'25, we are targeting 4 million tonnes.

[Foreign Language]

That is 3.2.

3.2?

1.8, 2.5, 3.2, 4.

[indiscernible].

No, that's remarkable.

[Foreign Language] I think in the presentation in Slide 27, the year labeling seems to be wrong, [Foreign Language] So I thought I'll just bring to your notice.

Slide #27?

[Foreign Language] Later on, you can take a look at it.

Yeah. Sure.

Thank you, Sanjay, and hearty congratulations to entire APL team.

The next question is from the line of Abhishek Ghosh from DSP Mutual Funds.

Thank you, Sanjay, for the opportunity, and thank you for charting out [Foreign Language]?

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language] because of our difference between the long product and the flat product, lots of people are coming in this sector. So this is a matter of time. [Foreign Language].

Okay. [Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language]

[Foreign Language].

[Foreign Language].

The next question is from the line of Vivek Gautam from [ GS Investments ].

Congratulations once again on a consistent set of numbers. A few questions from my side. I saw that you are now catering to the government clients, Delhi government [Foreign Language]. First question. Second question is about the -- how successful has been our brand ambassador's experience [Operator Instructions].

Right. So coming on the first point, see, I mean the product is going into a government order, but we are not dealing with the government while doing the transaction. Okay. So there is an EPC contractor who has been appointed by the government to construct the buildings. We are supplying to that EPC contractor, and it is on advanced payment basis, okay? With the government, what we are doing is we are going and giving presentations to the government agency who deal into the construction like CPWD, state PWD, NDCC, NCRTC, okay, there are various government agencies who are doing a lot of construction work. That could be towards construction of buildings, that would be construction of infrastructure projects. So we go and try to convince them that if you switch from concrete construction to tubular construction, you can achieve 4 things: One is speed; second is environment; third is cost; fourth is quality, right? So our dealing with the government is limited to the education and telling them about our product, about our technology. And then, the things are in hands of the contractors -- large contractors, right, who deal with APL Apollo, and we have a very strong business development team who has been dealing with these OEM clients for a very long time. But we are very, very, very averse to extend any extra credit to any of the contractor developer or builders. We are -- I mean, we have learned -- I mean, you have seen that how we have reduced our debtor days. So no way we're going to have any impact on that. And second, on the branding equity announcement. So see, I mean, appointment of Amitabh Bachchan happened 2 years ago. And at the same year, we started our branding exercise in a big way. So the result is already there, that we have been able to increase our market share from 40% to 50% in last 2 years. We have grown much faster in the rural areas where we increased our margin also. We have expanded our base in the rural markets. Then, our brand premium has improved in the last 2 years. So this is the exercise which we just started 2 years ago, right? And we have already seen very favorable results. When we look at our other building materials here into other industries, they have been evolving their segment for the last 10, 15 years, right? So we have also the same vision where we can command a much higher premium versus #2, #3 player in our industry. And as our gross margins improve, we will take out that and invest into the brand equity investments, right? So yes, Amitabh Bachcha has been successful, now Tiger Shroff for the specific product category, which is towards very structural tube where we have branded our product as Apollo Column. So all these activities have yielded results and on -- and from that encouragement only, we are in -- like we are going more aggressive. Now we are sponsoring all the -- every year's IPL events, right? Bollywood -- we are taking help of Bollywood. And now going towards like this B2C consumer-facing app, our distributors opening furniture stores, right? So this is all attributable to the fact that we want to reach as near to the end consumer and we want to grab as much mind share of it as we can.

[Foreign Language].

[Foreign Language] When steel prices started going up. You can see every Q-on-Q, our RM cost per tonne has gone up. Our NSR cost per tonne has gone beyond that, right? So this demonstrates our pricing policy. And this is not only APL Apollo. Seee, I mean any industry where one product is in such a high proportion. So all the players work on the same model. And not only in India, globally also when we look at our global peers, a few names, we have given in our presentation also. So they also work on the same model. So there is no rocket science that, I mean, any fluctuation in the steel prices need to be passed on to the end customer.

And technology innovation is our strength? [Foreign Language].

So right now, the clear focus is on 2 things: One is the heavy structural tube. Like we said, producing 500x500 mm diameter tubes. I mean no one is doing in Asia, right? So this is altogether a new technology, which we are bringing in India, and it has the potential to revolutionize the whole construction industry, okay? Number 2 is color-coated tubes. Again, I mean, nowhere the color-coated tubes are being used for any building material application. There are some companies who make color-coated tubes, but for the industrial applications, circular, round tubes. But square and rectangular tubes, which would replace aluminum profile, which will replace wooden structures, which would replace, steel hangers and channels. So again, it's a total new innovation -- innovative product what we are bringing in the Indian market. Beyond that, technological advances, I mean, advancement -- we have all our mill producers who are our partners from Italy, Japan, U.S., and China. So I mean, to increase the speed of the mill to enhance the quality at the mill, to reduce the rejection, right? So, I mean, this process is always continuous. Every year, we come out something -- with something new, which helps us reduce costs and improve the overall efficiencies.

[Operator Instructions] The next question is from the line of Bharat Shah from ASK Investment Managers.

Sanjay, one trend is absolutely clear, that commodity, Apollo Standard product would continue to remain where it is. And therefore, it's percentage will keep diminution and value-added shares will keep rising. But value-added -- whether even superior value-added product percentage, I suppose [indiscernible] presented?

Bharat, we are working on a lot of products. I can't say it but to make -- even right now [Foreign Language].

[Foreign Language].

[Foreign Language].

Now that is something really to be proud about. And firstly while domestic market itself is really exciting and important both in terms of the opportunity for growth as it relates to the value creation. But at some stage, will exports be an important enough market? Or do you think that is still a long time away? In any meaningful way.

[Foreign Language].

No, I understand. One last question. [Foreign Language].

[Foreign Language].

[Operator Instructions] The next question is from the line of Alisha Mahawla from Envision Capital.

[Foreign Language] Volume guidance to reach 4 million tonnes by '25. Obviously, this includes utilizing the Raipur plant, which includes a lot of products which are new in the market. So what is giving us confidence that we will be able to completely utilize this? Because first, you'll have to feed the market and acceptance takes time, which we've learned when we introduced the [ DTF ] technology also. So just wanted to know [Foreign Language].

[Foreign Language].

So if you see how we have grown at 20%-plus compounding so consistently, because we are taking market share from other building material products, which are conventional, right? So our steel tubes offer better proposition in terms of quality, in terms of cost, in terms of easy installation. So that's what is giving us confidence that we can continue this journey even with the launch of new products. So if you see last 7, 8 years, 5 products where we have been able to replace. Number 1 is steel angle channel, number 2 is aluminum, number 3 is wooden structures, number 4 is concrete RCC, and number 5 is long steel products, which are like H beam, I beam and [indiscernible] building structures. So that being said, all these products, I mean whatever will come in Raipur plant. So the market creation experience, the team, everything is in place, and we just have to go and educate the market which we have a lengthy experience.

Understood. Great. And except Raipur, is there any other CapEx that we have plan for currently?

Very small CapEx for maintenance or routine improvement to cut down the cost. [Foreign Language] I think with this new space -- with these new lines, our zinc consumption has come down to 9 kg or 8 kg. [Foreign Language] this type of small, small improvement we are doing in the system. Otherwise, capacity wise, there is no increase.

And sir, I just wanted to understand, excluding the Raipur facility and the products that will come [Foreign Language] 7,000 per tonne [Foreign Language] existing facility and capacity and the product portfolio we have, can that sustain to do EBITDA per tonne above 5,000 like we have shown in this quarter also?

Last -- up to last year, we're struggling for INR 3,000 per tonne EBITDA. In the corona, [Foreign Language]. And in the last call, we have not [indiscernible] more than INR 4,000 per tonne at any cost. Now right now, in this call, I am very confident [Foreign Language] now my company base is very strong on the 5,000 per tonne EBITDA. [Foreign Language] We are the best in the industry. We are the best in the other -- with our near, any competitors.

I'm sorry to interrupt you, Ms. Mahawla, may I request you to rejoin the queue for follow-up questions. [Operator Instructions] The next question is from the line of Anuj Upadhyay from HDFC Securities.

Congratulations on the set of number. Sir, can you just elaborate more on the pricing front considering the raw material cost has gone up significantly and we believe we have already taken a price hike for the passed out quarter. But considering the raw material prices have been on an uptrend going in the current level as well and we -- unlikely likely to settle down in the current quarter is what we believe. So are we planning a similar level of price hike for Q3 or Q4 as well?

So, Anuj, see, I mean, I'm repeating this. Last year, steel prices were INR 35,000 to INR 40,000 per tonne, right? They are between INR 60,000 to INR 65,000 per tonne. So there has been a 60%, 70% increase in the steel prices. And if you look at my 6-quarter performance, you will see that we have been successfully able to pass on this to our channel partners, and it has been well absorbed in the system. And this is not only for Apollo. Like I said, this is for the whole global industry where one product, one element, which is steel, is at such a high proportion of the overall product value, that industry works on the pass-through model. This is not only for Apollo, this is not only for Indian steel tube industry, it is for the global steel tube industry. That's how it works. You talk to any of our global peers in U.S., Japan, China, I mean they work on the same model. The question is that what is the -- what are the levels where demand starts getting impacted, right? So far also, if you see last 4, 5, 6 quarters, our volumes have also been decent, right? There is -- in any of the quarter, there has been any collapse in the volume, right? So that means demand has also not got too much impacted or hampered due to the increase in steel prices. That being said, I mean, if you look at the global trends, how China and other local markets are behaving, so I think $900 per tonne kind of steel levels, they look highly unsustainable. There has already been some drop in the Chinese steel prices. So I guess this does give the signal that steel prices had picked around $900 per tonne. From here on as the global capacities will start coming in because China is cutting on the supply due to environment due to reduction in exports, et cetera. But then other countries will come up and they will start putting up the factories, new capacities. In India, we are already seeing that. So that means that global steel prices also should settle somewhere around $800 per tonne, which is good enough for demand to grow at the global level.

So now with the China playing the strategy of bringing down or cutting down the supply, would this open up a decent door for us for the export markets? I know sir has already mentioned about the highest base rates and all, but if we see some softening on that end, so could we explore the export market as still going ahead?

This is the reason that why we are exploring to set up a base in Dubai, from where we can feed the Middle East markets, European markets and U.S. markets, because our product already has seen acceptance in the last few years when we started exporting. And if we have a solid base in the Middle, we can cater to that market in a big way. But when I said that China is cutting on the supply, that is on the raw steel. Okay. That is the raw material on the HR coil, not on the processed steel or structural steel tube, which we are selling.

[Operator Instructions] The next question is from the line of Kush Tandon from Ananta Capital.

So my question has been answered. It was more on the raw material prices. It has been answered.

The next question is from the line of Darshit Shah from Nirvana Capital.

Congratulations for the great set of numbers. Sir, I just have one question. This is on regarding to the increase in inventory and receivables as compared to March balance sheet, I mean [indiscernible] probably INR 50 crores, odd receivable. Any specific reason for that?

No. What you see in the March quarter, our inventory is about INR 750 crores and right now it's almost INR 900 crores. But if you've seen volume terms, there is a price increase, almost up to 12%, 13%, I think so. 24%. So the volume has remained same, but the amount has increased, number one. Number two, we have a long-term agreement with our all the suppliers for 5 million tonnes in a quarter. When our volumes should go down to [Foreign Language] so we have less than almost 18 or 17, 18 days of inventory. This is 2 reasons to -- for the increase in the inventory.

Got it. [Foreign Language].

If we cross [ 5 lakh ] tonnes our inventory is less than 18 days.

[Foreign Language].

[Foreign Language].

The next question is from the line of Sujit Jain from ASK Investment Managers.

Congratulations, especially on the trajectory of [indiscernible] per tonne. I have 2 questions. Yes. I have 2 quick questions. If I look at TriCoat, [indiscernible] per tonne in Q1, which has come to 8,200. Even that number is commendable. But in TriCoat itself, why could we -- why there should be such a large variation?

Mostly -- if you see in TriCoat, mainly -- the main product is coated products. [Foreign Language].

So Sujit, that was some phenomena, which helped us on some extra dollars since it was on the table, we didn't need it, right? And we were sure and we guided that to the investors on the call also, that this may not sustain. And whenever there is like some mismatch in the demand supply, so it had to normalize, it got normalized.

And when you say you increase -- you will increase your sales to institute segments such as hospitals, et cetera, would that lead to -- even if you're dealing with the EPC contractors and not government bodies directly, would that not lead to your working capital base eventually going up?

No Sujit, because see, I mean, today, if any contractor has to build any -- or you have to construct any building using tubes. I mean, right now, he has only 2 options, okay? One is Apollo. Second is the #4 player, which is there in our presentation, okay? So the capacity, which APL Apollo has is 10x what the #4 player has, okay, to supply such products. So I mean -- the contractor has no option -- the contractor, he has no option but to buy materials from us, so we can dictate our payment terms and that's what we did in this current order. So we don't think that it's going to be challenged to sustain to 4, 5 days of debtor days in the longer term, even if there are some institutional sales. And also, we have our distributors, Sujit, okay, who fund such sales, such transaction for us. So we will ensure that our debtor days remain in single digit in future as well.

Right. And lastly, market share gain in Q2, your volume has filled 11% and what the market would have been?

If you look at the -- I mean, there are 2 companies who have come out with the results so far, you can, I mean...

There is a liquid business. But if you see the market share, I think my market share in the primary materials is very high right now. Almost 75% to 80%. Not in the structural tube. Right now, in the primary material, if you see my market share, which is more than 75% to 80% because a lot of the industry player is going into the supply materials. [Foreign Language] but in the primary materials, we gained the market share.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Rahul Agarwal for closing comments.

Thank you so much. We really thank the APL management team for giving us this opportunity and I pass on to the management for any last comments and wish you a happy Diwali everybody.

Happy Diwali to everybody.

Thanks, Rahul, and thanks to InCred for hosting us for this quarter second results call. And I would like to thank everyone who has taken time to join on this quorum. Any questions, I know there could be some unanswered questions. We are happy to take off-line. Mine and Deepak's phone number and email IDs are on the back of the presentation. Please feel free to reach out to us, and happy Diwali to all. Thank you so much.

Thank you. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.