IFGL Refractories Limited (IFGLEXPOR) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q3 and 9M FY '24 Earnings Conference Call of IFGL Refractories Limited, hosted by Monarch Networth Capital. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you, and over to you, sir.

Thank you, Vanaja. Good evening, everyone. On behalf of Monarch Networth Capital, I welcome you all to the Q3 and 9 months FY '24 Earnings Conference Call of IFGL Refractories Limited. We are pleased to have with us the management represented by Mr. James McIntosh, the Managing Director; Mr. Kamal Sarda, Director and CEO India; Amit Agarwal, Chief Financial Officer. We will have opening remarks from the management followed by question-and-answer session. Thank you, and over to you, James. Sir, please go ahead, sir.

Good evening, everyone. Thank you for joining us on the conference call. Along with me on the call, we have Kamal Sarda, Director and CEO India; Amit Agarwal, our CFO; and SGA, our Investor Relations Advisors. We have uploaded the results and presentation to the stock exchanges, and I hope everyone has had a chance to go through this. As we navigate the dynamic global economic landscape, I'm excited to share insights on the significant opportunities that lie ahead in the Indian market, in particular. The Indian economy has proven its resilience, particularly in the face of challenging high interest rate environment. This tenacity is a testament to the nation's economic powers and its ability to overcome obstacles. IFGL initially emphasized the exports, but current strategy underscores a deliberate shift towards a more concentrated approach in the domestic market. This reflects the company's commitment to bolster and elevate its overall capabilities. It is crucial to acknowledge the favorable conditions that the country offers for sustainable growth. As you all know, at the moment, IFGL markets mainly revolve around the world of steel. According to the World Steel Association, the steel sector is exhibiting a robust annual growth rate of around 7% in India. Overseas operations, however, are encouraging slowdowns, particularly in Europe with contributing factors, including labor shortages and ongoing regional crisis. Repercussions of the Russia-Ukraine war coupled with elevated interest rates and energy costs are placing substantial burden on the manufacturing activities of -- in the affected areas. Additionally, on the export front, challenges in the Red Sea region are manifesting in a significant increase in freight rates further complicated international trade dynamics for these operations. In response to the observed slowdown in our overseas operations, particularly in Europe, we are taking proactive measures by embracing automation and robotics. Our main goal is to strategically reduce cost with the anticipation of an eventual market turnaround. By leveraging cutting-edge technology, we aim to enhance efficiency in production and supply of our products. This forward-looking approach positions us to be well prepared to meet demand and capitalize on the opportunities when market conditions become more favorable. Further commenting on our subsidiaries worldwide, in Hofmann Ceramics, we believe there is still considerable potential to improve margins by concentrating on technology initiatives. Currently, the company is operating at less than 60% utilization levels. As part of our optimization strategy, the Czech Republic operations are planned to be closed and transferred to the German operations. The shift expected to be completed, and the overarching focus will be on enhancing profitability, streamlining flow processes and facilitating better integration within the organization. This strategic approach aims to maximize operational efficiency and financial performance. At Monocon International Refractories, the precast shape planned development and investment of around GBP 1 million has been successfully completed and is now fully operational. On the metallurgical lances, which are the main product line of Monocon, we are investing in vertical integration of our manufacturing capability with new machine, which previously outsourced operations and has best strategic shift [ that hovers ] the success of similar development, an MCI, USA around 40 years ago which has proven successful in terms of both technical advancement and manufacturing efficiency advances. And the El Ceramics in the United States, we have plans underway to consolidate the two existing plants into a completely new location and the project -- the time line for this initiative is around 2 years. The rationale behind this strategic move includes objectives such as modernization, cost savings and streamlining management. By combining operations into a new facility, the company aims to leverage modern technology and practices leading to increased operational efficiency and reduced costs. Additionally, this consolidation allows for a more streamlined and centralized management structure, potentially enhancing overall organizational effectiveness. At Sheffield Refractories in the United Kingdom, the new asset is addition to our company, and it specializes in blast furnace casthouse products and shotcreting materials. As part of our strategic initiative, the company plans to transfer this technology to India with the first transfer project expected to take place in around 12 to 18 months. Sheffield Refractories has renounced its expertise in stack repair of blast furnaces, which is considered as most significant capability. We envision a substantial opportunity in the Indian market likely driven by growing demand for blast furnace-related products and services in the region. This technology transfers could potentially strengthen the company's presence and capabilities in the Indian market. As I mentioned previously, our focus towards the domestic market has proven to be a major driver in our success as a company. And it is, therefore, important that we continue to improve and invest in our capability both technologically as well as capacity. With this, let me now hand over to Kamal for his comments.

Thanks, Jim, for giving an overview of the global scenario and our operations worldwide. Let me give you a brief on the Indian operations. The financial performances summary will be given by Amit Agarwal, our CFO. At the outset, I would like to bring to the notice of all that the financial results under review on consolidated basis includes provisions for trade receivables aggregating for INR 33.27 crores. Goods sold but in transit aggregating to INR 8.26 crores and a reversed commission aggregating to INR 1.48 crores in respect of one of our Czech Republic customers, who have opted for preventive restructuring under laws of its own country. Financial results on a stand-alone basis also includes similar provisions aggregating to INR 38.48 crores. While our management is taking all necessary steps, including having meetings with the customers and their principles for recovery of debt receivable, we have made provisions, therefore, as a matter of abundant precaution and prudence. During the period, in the revenue, the company opted for new tax regime as per Section 115BAA of the Income Tax Act 1961. By virtue thereof, the current tax liability and the deferred tax liability for year-ended 31st March 2023 and also for the period ended -- 6 months period ended 30th September 2023 of the current financial year have reduced. And for this reason, you will observe this current tax charge and a deferred tax charge of INR 450 lakhs and INR 1,037 lakhs, respectively, have been credited in the consolidated financial and stand-alone financial results for the quarter ended 31st March 2023. So the total reduction is about INR 1,487 lakhs for the period. Aforesaid are one-off adjustments, provision for receivables from Czech Republic customer has been for circumstances beyond control of the management. Excluding these adjustments, performance of the company, both on consol and a stand-alone basis during the quarter and the review has been satisfactory despite ongoing geopolitical conflicts and turmoil in several territories, which have, in general, affected markets outside India. Our Research Center was inaugurated on 24th November 2023. The Research Center is focused on benchmarking all our existing products, developing cutting-edge products and also bring high-quality cost-effective solutions for our customers. Notably, the Research Center utilizes metal-melting technologies, giving it a distinctive capability for throughout -- for thorough product testing. This unique feature set the Research Center apart as no other company currently possess similar metal-melting technology. In the initial period, the Research Center aims to meticulously benchmark all products within the group across various geographical locations. This approach ensures the comprehensive evaluation and adaptation of products for successful integration into the Indian market, highlighting the center's commitment to quality and innovation. The company aims to differentiate itself based on excellence and ensure that its offering meets or exceed the high lift industry standards. This strategic focus aligns with the long-term vision of building a reputation of cutting-edge, high-quality products that resonates with the customers. Regarding the new Odisha plant, we are expecting the land allocation from the Odisha Government in the current quarter. Once we have this, we will start planning and moving to the next step in the development of this product -- this project. In our three domestic manufacturing locations in Odisha, Gujarat and Andhra Pradesh, our expansion plan is in full swing and almost on target. Over the last 7 years, IFGL have been actively involved in manufacturing of casting flux for various -- for continuous casting. Looking ahead, the company is set to introduce a new production line at Visakhapatnam plant, integrated state-of-art fully automatic plant for casting flux and also precast shape. This strategic initiative is expected to make a substantial contribution to our businesses. All the announced CapEx plans are proceeding as scheduled and are expected to be completed by quarter 1 FY '25. All of these initiatives, along with our efforts to diversify into developing products for non-steel industry, we hold an optimistic outlook on the abundant opportunity that awaits us in the Indian markets. Let me hand over to Amit Agarwal, our CFO, to take you through the financials. Amit please?

Thank you, sir. For a quick overview, let me just give you a brief on the financials. Starting with the standalone financial highlights. Total income increased by 9% year-on-year to INR 200 crores in quarter 3 FY '24. EBITDA before exceptional items decreased by 5% year-on-year to INR 28.2 crores in quarter 3 FY '24. EBITDA margin before exceptional items stood at 14.1% in quarter 3 FY '24, with a decrease of 200 basis point year-on-year. Let me now move over to consolidated financial highlights. Our consolidated financial highlights also include our international subsidiaries. Our total consolidated income increased by 16% year-on-year to INR 370 crores in quarter 3 FY '24. Consolidated EBITDA before exceptional items grew by 9% year-on-year to INR 40 crores in quarter 3 FY '24. Consolidated EBITDA margin before exceptional item stood at 10.8% in quarter 3 FY '24, with a decrease of 71 basis points year-on-year. With respect to liquidity position, we remain net debt free with a strong balance sheet. Cash and cash equivalents stood at INR 197 crores on consolidated basis as on December 2023. Our ROCE stood at 9.79% and 9 months -- in 9 months FY '24 and ROE stood at 8.7%.

With this, I would leave the floor open for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Harssh Shah from Dalal & Broacha Stock Broking Private Limited.

Three questions from my side. Firstly, could you give us, in terms of percentage, how much has our Indian operation grown on a Y-o-Y basis, excluding what we export from India?

Only on the domestic market?

Yes. So that is excluding. So whatever -- I mean, excluding what we export from India. I mean, how much has been sold within India? How much has been -- how much growth has been there on a Y-o-Y basis?

It will be about 10%. I don't have the figure right now in front of me. It would be about 10% or so.

Could you -- do you have in terms of the split between domestic and export within the segmental that you give? How much revenue you have generated within India? So would you have split, domestic and export? Is it 60-40, 50-50, how is it?

Domestic, overall, on a 9-month basis, the domestic market would be about more than 60%, somewhere around 60% to 65%.

Okay. Yes. Secondly on the gross margin front, if you could help us understand what has led to a dip in the margins on a sequential basis. So what I see is that gross margin has contracted by somewhere around 170 basis points on a sequential basis.

It's primarily what we have mentioned is the write-off, which -- the provisions which we have taken. That's one. And then overall, the volumes which have gone down. And what we have mentioned in our speech is the European market that Jim mentioned very clearly in his speech. The European market is into a very big turmoil. You had the effect of Russia-Ukraine war. You had the effect of Israel war. You had the effect of Red Sea and then various energy prices going up, it is a sequentially effect. So the European market is in a turmoil. Jim, if you want to add anything on this? Jim, are you there. I'm just trying to check whether the -- if James McIntosh will be there in a bit. Or is his call blocked?

Hello?

Yes. Yes. Jimmy, if you want to add on to the overseas market situation?

No, I have got nothing to add.

Okay. Okay. So it's an overall volume drop because of the overseas market as we mentioned.

Okay. And so -- I mean, in terms of guidance on an annual basis, what should be the gross margins we should be looking at going forward?

I think we have mentioned this in our past calls and also our meetings that we are looking at 12% EBITDA margins for on a consol basis. And that I think we maintain that.

I was asking about gross margin. Should we work with 50%, 48% to 50%?

I will now talk of the gross margin -- the EBITDA margins. Let's put that EBITDA margin in place.

Okay. And lastly, on the revenue guidance of INR 1,750-odd crores, so it looks like it's not possible that we will be achieving. So ballpark, where would we be in FY '24 and any revenue guidance you would want to give for FY '25?

I think what we should look at -- because of the turmoil, which is happening in the Europe and other segments in the overseas market, let's look at the quarter 4 operations more clearly. And then we will give you the guidance for FY -- where we can give more clarity on FY '25. But looking at the situation, quarter -- the next couple of quarters will have its own impact due to the situation in Europe.

The next question is from the line of Rajesh Majumdar from B&K Securities.

Sir, excluding the export side of the business, could you give us some clarity on how the domestic business has fared in terms of margins on a Y-o-Y basis? And whether that's sustaining around the 12% level. That is my first question.

I will not be able to give you a segmented margin, gentlemen, okay? So that's something. But we have -- domestic market, as we mentioned in our speeches, the domestic market is where our focus remains. And we are increasing our efforts to go into non-steel, nonferrous markets to increase our visibility or reach to the domestic market. So on a segmented margins, I'm sorry, we'll not be able to provide that.

Right, sir. And sir, in terms of the product mix, how much would flow control would be contributing in terms of the overall sales?

Most of the products which you make in India would be part of the flow control business only.

Okay. So around 85%, 90% would be flow control only?

Yes. Most of it would be.

Okay. Okay. So if you look at the flow control market, sir, our margins are much lower than flow control products because peers in this business are earning between 19% to 20% EBITDA margin. So will we have a jump up in the profile once our capacity expansions are completed on the margin front?

Yes, that is what we are working on. With the capacity expansion, definitely our volumes will go up. And with the volumes going up, the margins should improve.

Just on the volume or will the mix also change?

Yes, that's what we are working on, yes.

The next question is from the line of [ Siddharth Dudeja ] from Blue Star Investment.

Many congratulations on your new R&D Center. Just one question. Could you please provide more details by when can we expect products in the market and your strategy to expand through them in the domestic market?

Sorry. I couldn't get your point.

So I was just saying, like you've opened a new R&D center, so can you please give some specification by when can we expect new products from this R&D Center in the market? And what is your strategy to expand through them in the domestic market?

Jim, could you take this?

So the question is products coming from the Research Center. So our initial objective in the Research Center, which we have mentioned in previous calls is that we want to benchmark our current group products worldwide to establish the best products, which are available within our group to be transferred to the Indian domestic manufacturing. We estimate this closer to the interim probably about 1 year from beginning to end in terms of the benchmarking of the product lines. Our objective is to initially focus on the isostatic product lines of EI Ceramics and look at benchmarking them versus our products in Kandla and Kalunga. We feel that in this area, there is some definite low-hanging fruit for us in terms of developing new products for the Indian market. And that is the reason why we have chosen to make this our top priority. And -- but in saying that, we have other products, as we've mentioned, there from Sheffield and from Monocon which also could be beneficial to the Indian manufacturing plants and markets. And this will also be part of the benchmarking process. So all in all, you'll see benchmarking probably taking the company around about in total 1.5 years. And during that period, we will be filtering in as we develop and benchmark the specific product lines, we'll be filtering them into the manufacturing processes in India. The majority of the growth in the Indian domestic market will come from our new manufacturing plants in Visakhapatnam for the casting flux, which is used in continuous casting and also for mag carbon bricks, which is used predominantly in the ladle for the steelmaking process. And these two areas, we've got a fairly decent plan for how we're going to ramp up manufacturing and all of those product areas, we've already done substantial trials with customers. So it should be a fairly high ramp-up schedule. Kamal, you may want to cover that in a little bit more detail?

No, I think what you have covered, I think that's sufficient, Jim. That covers most of it.

Yes. And the second thing, just a follow-up on this, like once let's take a year or so, how much will be like top 5 clients' contribution to the revenue through these products, like any numbers on that?

Which products?

These new products, what you mentioned, like from the R&D Center, you take a year to implement these.

That's difficult to -- because you know the top 5 Indian steel makers. So there will be the -- definitely, there will be the top 5 customers.

Okay. Like what contribution, any percentage of the new products?

No, we will assess the data once we get into the market.

[Operator Instructions] The next question is from the line of Sanjay Nandi from VT Capital.

Yes. Sir, can you just guide us like I've missed the initial comments things like what kind of EBITDA margin can we expect in coming quarters? Like there has been some significant drop in this quarter. So can we expect the numbers to be back in the previous -- like previous quarters?

Yes, I have mentioned in the past and also in this call that we are talking of an EBITDA margin of 12%. So that's what we are giving a guidance of. Maybe some quarters may have a small plus and minuses. But overall, on a yearly basis, on a long-term basis, it will be that.

Okay. Okay. And sir, what kind of synergies can we expect from our new R&D facility which you have recently opened up?

Your voice is getting...

Yes. Now it's audible, sir?

Better.

Yes. Sir, can you please guide us like what kind of synergy can accrue from this new R&D facility? Like what are the key focus areas you'll be focusing from that R&D?

Just now, our Managing Director spoke on this subject.

Sir, I joined late, sir. So okay, if you can just kindly explain once again, if possible.

The initial focus will benefit the isostatic products. So that would be a continuous casting refractories in the Flow Control segment of the business.

[Operator Instructions] The next question is from the line of [ Aditi Sawant from ADM Advisors ].

Firstly with regarding to acquisition, like do you have any other plans for acquisition? And if yes, could you provide details regarding this? And the second is future outlook on our international subsidiaries?

Aditi, we are at the moment looking at acquisitions both in the export or in the export front as well as domestic. To give details of these, I would say it's a bit early for us to give any details in those particular areas for obvious reasons. With regard to the outlook for the overseas operations. The United States is definitely starting to see, I think, some positive trends, which will enable us to see the growth coming back in the United States. We've had some very good results in Mono Ceramics, which is one of our companies in the United States, good growth and also profitability. And this, coupled with an uplift in the market, hopefully, will enable us to see and some good growth coming in the United States. But it's always difficult to gauge in an election year, how things are going to go. But we're very positive about the U.S. As Kamal mentioned earlier and also I mentioned the European industries are really still struggling with that. We hope to see -- we hope that this is the bottom, if you like, and that we'll start to see some turnaround from here. But it's fairly difficult to gauge, that really is very difficult to gauge. Our focus on the European market really is on an internal look to make sure that we improve our operations as much as possible to be ready for the upturn when it occurs. And undoubtedly, it will occur at some point, it's just trying to find the bottom at the moment. For the operations elsewhere in the world, we feel very sure that we've got some very good projects ongoing, which will enable us to benefit from growth. So yes, all in all, I would say that acquisition-wise, our focus is to look at acquisitions. We have several in the pipeline. And we will obviously inform the market when we are in a position to do that.

Just one follow-up. Can you share the utilization levels if possible for each of the subsidiaries?

I'm afraid I don't have those kind of numbers. And Kamal, I don't know if you got.

I don't have those numbers either.

Yes, it's not something I tend to look at too much to be honest.

The next question is from the line of Abhishek Poddar from HDFC Mutual Fund.

First is regarding the recoverability of this amount in the Czech Republic. If you can give some understanding what is the process and what is your sense of amount coming to us?

So this is something which we'll have to watch for the next coming months how things shape up. As we mentioned in our notes to the accounts that as a matter of prudence, and we found it right that we should take a provision because the company has opted for a restructuring plan. And our understanding was that the problem may go a bit longer, and we don't know the certainty of that. So we'll have to wait. I think, Abhishek, maybe one or two quarters more before we really have more details because it's just a matter of a couple of days we have on this when we took the provision. So we'll have to wait for a few more months until we have a clarity on that. But yes, as of today, we don't see that immediately anything is going to happen. But Jim, if you would like to add anything on this further?

No.

I understood. And any more problematic accounts that you see? And have you provided for them already being conservative on accounting?

We follow a very, very conservative approach on these matters. So based on that, the answer is no.

Understood. And if I adjust for that, the EBITDA margin for the quarter was, let's say, 10.9% versus sustainable 12%. So should we think of it as a quarter phenomenon and not concerned -- be concerned about the 12% range that you've guided?

It should be the quarter phenomena. And as we mentioned that there is a serious problem in the overseas market. And our feeling is that the issues in the overseas market are bottomed out, there should be only an upturn from there. And we should look good [ day times ].

And it would be great if we had a crystal ball. We hope that it is [ possible ], Kamal.

Yes, yes, we hope, we are. Bottom down and then it should improve from there only.

There is so much turmoil.

Yes. There are a lot of uncertain issues and the clarity is very, very little on that. You have those Russia-Ukraine war, and we mentioned about the other conflicts which are happening, the Red Sea issue, the energy crisis not really completely over. There are issues, and then you have those carbon tax, which is there in the European market, which is also affecting the profitability of the listing companies primarily, I would say. We need possibly one or two more quarters before we have more clarity. But Abhishek, I would say that on an annual basis, on a long-term basis, whatever figures which we have given, we should look at those numbers, not looking at a particular quarter or one or two quarters.

Certainly not looking at this quarter.

[indiscernible].

Yes. So if I look at the last quarter numbers, it's basically Europe, which is a challenge for us, and that's where I think generally, sense is that it's bottoming out and things should improve from here?

We hope.

We hope.

All right. And sir, the last question is about the Indian operations. So if I look at the domestic steel companies, the way they are expanding, there is a significant ramp-up in capacities in '25, '26 and '27 also. So how are you thinking of the demand supply in India? Do you expect the supply tightness happening because of the volume ramp-up by major steel companies?

See, all our CapEx plan are based on the expansion plans of the Indian market. Indian market is buoyant, okay? If you look at '25, '26, '27, '28 and also the national steel policy talking of 300 million metric tonnes by 2030, '31. So all those has -- are in fact, giving us that kind of leverage to go forward. And our CapEx are based on that. And yes, we will gain by the expansion, yes.

Yes. And I think that most of the focus that we've had, as I said, in the last two years has been developing of our Indian manufacturing capability. We have significant improvements and capacity in all locations. Plus we have the new lines, the new product lines that we're bringing in. So when we look at the percentage of our domestic sales versus our consolidated sales, we expect to see that growing in the future. We don't expect to see it staying the same. We expect to see the domestic percentage of our total sales growing.

Okay. Understood. And one more, if I can squeeze. Europe is transitioning towards EF from blast furnace. So how does that affect our demand scenario?

I mean, it's kind of interesting because when we say that Europe is transitioning towards electric furnace, we'll look at one specific area, which is the United Kingdom. And that's in the news quite a lot because, obviously, Tata Steel owned the Port Talbot [ blocks ] and they've made an announcement that they're moving from blast furnace to electric furnace operation. Electric furnace, as said, to be a process, which will enable greener steel to be manufactured. But also in the blast furnace side, there are many, many new developments coming in and new process focuses, which will help to reduce carbon emissions in the blast furnace. So I think to say that Europe is moving towards electric furnaces is quite a large statement. I wouldn't actually support that without further analysis of the European market. And as I said, you've got a lot of development and many of the large steelmakers within Europe for better carbon emissions from blast furnace operations. Obviously, blast furnaces are the majority of the European steel market as well as they are in India. And I think that there will be a focus to really meet the environmental demands and for green steelmaking and all process, it's not just an electric furnace process or a blast furnace. That being said, we have been a company, especially our operation in Monocon, which predominantly was focused towards the blast furnace converter operation. We have a specific development focus in our U.K. operations which we started a year ago to become a better -- to have a better presence in electric furnace steelmaking and then this has our well involved new product lines being brought to the European markets and also to our companies in England. So this is an exciting project, but it's not a project which is based on Europe going towards electric furnaces, just a focus, which is a natural development for the company. We're still very much -- still believe very much that blast furnace is a big part of our future and the company.

The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.

My first question is regarding the Red Sea issue. If you can just give us some understanding on how the freight has moved and what kind of impact can it really have on our numbers?

Freights are still not very clear. But there are certain -- they are charging some sort of the congestion fee or a surcharge of about $1,500 to $2,000 per container. So we'll have to wait and watch for few more days or weeks to understand where the trade goes and stabilizes. But yes, it has increased in the last few weeks.

And I think also, Kamal, it's fair to say that a fair percentage of our business in the company and especially in the European freight as products which are coming from China and India. So obviously, there is a direct relationship with the supply of products from India, China to European companies. So undoubtedly, it's -- it does have an effect on the price of the products to the customer and price to the customer and in whatever way you look at it. So hopefully, we'll see an end to it. And then -- but it's definitely, I think -- Kamal, I can't remember what the figures were like. But in terms of the actual container costs were quite substantial.

Yes. So the freight rates, as I mentioned, there are surcharges which we -- with the shipping companies are now charging $1,500 and $2,000, plus the other effect is that with transit time has also increased, it's now going below the South African seas and then going to Europe. So there are multiple effects. Yes, it will have its own impact on the costs. We'll have to watch for the next few weeks. And then see we approach the customer, if required and then look at -- this is what we did then when we had those very high-freight rates in 2020-'21, if you recollect, Sahil. We had to go and approach the customer that, look, this is an unmanageable thing and customers also agreed for this. So I'm sure the similar situation, in case it persists for a longer time, but let's watch it for next few more weeks and then see where we go.

Right, sir. My second question is, sir, regarding the brownfield expansions that we hope to commission in 1Q FY '25. Sir, since some of these products are existing products, can you expect a faster ramp up? And can we expect some 20%, 30% utilization in FY '25 itself? How should we think about this?

Which expansion you're talking of, Sahil? I think I missed it.

Yes, the brownfield ones, which is happening at the current three locations, sir?

Yes. Okay. So if you look at the Vizag expansion on the casting flux, this is a product which we have been -- we had a smaller plant in Rourkela. So our products are well established and well accepted by. So I think this ramp up once we start the production and we have some trials, it can go quickly, very quickly, very fast. So that's one thing. I'm not putting those numbers now, but this can happen very fast. On the precast shape, we have done some trials. We are in the process of doing a lot of trials with customers, and this can also go up. But I'm not putting any numbers there. Jim, if you want to add anything on this?

No, I think as you said, I mean, in those three areas on the precast plant, on the bricks and also on the casting flux, I would say that it would be appropriate that we would expect to see those product lines moving much faster than our product which we've not been involved because we've already had many trials and already working with the customers on these product lines, so it should be something that we should be able to ramp up quite. I would agree with you, Kamal, to get numbers at the moment, it's not very easy.

No, sir, this is helpful. I mean the direction is also helpful. My third question is sir regarding, I mean, these exceptional items that we've considered this quarter I understand about the -- and on the doubtful receivables that we have provided for, but sir the goods in transit, just help me understand this better. I mean, once we have -- once we had some prior understanding about the receivables being outstanding, I mean we could have stopped the goods in transit, right. I mean, just help me understand where am I -- what am I missing, sir, on this front?

These goods in transit is nothing, but what we have stopped supplying to the customers. So they are in between. They are lying at the customs on the warehouse in one of the ports in Europe. And we did not deliver it because we had come to know that the customer is in trouble, and they are not paid. So that time, we stopped. So all those material are in the custom-bonded warehouse and the customer does not have any kind of the custody of that. We can bring it back. We can recycle it. We are working on it. And then once -- as and when we feel that wherever we can -- because some of these products are tailormade for the customer. So we have to find an answer where we can reuse it. They are within our custody. I would say we will have the significant control over these products.

The next question is from the line of Mayank Bhandari from Asian Market Securities Private Limited.

Sir, my first question is the growth in the Indian market of 8%. Can you give a breakdown of this in terms of volume growth and price-led growth?

Most of it would be volume-led growth, Mayank. And I don't have the details as such. We don't have that kind of a breakup, but most of it would be volume-led growth.

So there is a sequential dip of almost INR 60 crores also in the India revenue. That is a 25% decline. So would you term that as a full volume decline?

As I mentioned, you see the major part of this is the overseas business in the export market. As we mentioned in our -- the various questions. The overseas market has a very big effect on the downslide of the turnover, yes. So most of it would be volume-led.

Okay. And sir, secondly, on this Odisha expansion, if I were to look at your last presentation, production target was March '25. Is it postponed by one year? Is it?

Yes, because we thought that we will get the land by September '23. But then for some administrative reasons, it has got delayed. Now we hope that this quarter, we will get it, and we are putting a 2-year period now because one of the major equipment that delivery times have now also increased to about 18 months -- 15 to 18 months. So we are putting a 2-year period after we acquire the land. It will be March '26 in case we get the land in this quarter. And then we are hopeful that we should get the land in this quarter.

Okay. And thirdly, sir, you see the employee cost in the stand-alone has gone up by almost INR 2 crores. It is now INR 19 crore versus 16 -- sorry, INR 16 crore in comparable year last year, 3Q FY '23 is INR 19 crores now. So I mean, is it completely driven by the hiring that we are doing for the new R&D Center? Or like how is it?

It's overall. It's not only new hiring -- the new R&D sector, but new businesses, which we are getting into the new expansions, which we are working on. You require employees at all levels, plus our non-steel and non-ferrous efforts. So there are -- we are building a good team for -- to help us in future to grow.

This will be the last question for today. I will now like to hand the conference over to Mr. Sahil Sanghvi for closing comments.

Yes. Thank you. First of all, we would like to thank the management of IFGL for very patiently and elaborately answering all the questions. On behalf of Monarch Networth, we also want to thank all the participants who joined the call. James sir, Kamal sir, would you have any closing comments, please?

No, I think -- thanks a lot for participating in this call. And thanks, Monarch and SGA for organizing this. I hope we have been able to answer most of your queries. And we look forward to your active participation in the next call. And for any queries, you may contact SGA, our Investor Relation Advisors. Thank you, and have a good evening.

Thank you.

Thank you, Jim.

Thank you, everyone.

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