Kirloskar Ferrous Industries Limited (500245) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Kirloskar Ferrous Industries Limited 2Q FY '25 Earnings Conference Call hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pallav Agarwal from Antique Stockbroking. Thank you, and over to you, sir.

Yes. Thank you, Miswan, and good evening, everyone. Welcome to the Second Quarter Results Conference Call of Kirloskar Ferrous Industries. We have the senior management of the company represented by Mr. R.V. Gumaste, Managing Director; and Mr. Ravi Srivatsan, ED Finance and CFO. So I would like to now hand over the call to Mr. Gumaste for his opening remarks. Over to you, sir.

Yes. Thank you, Pallav, for the introduction. And we'll start the call with very short-term highlights from my side and then over to the question-and-answer. First of all, let me take this opportunity to relay my best wishes to all the people who have joined this call, belated happy Diwali wishes. And let me start with some details on the production during the quarter. Quarter 2, we had [ pig iron ] production of 1 lakh 65,495 tonnes, compared to last year's 1 lakh 15,000 tonnes and 1 lakh 55,000 in quarter 1. So compared to the quarter 1, we have increased the output of 7% compared to last year's second quarter, 43% increase, because of the last year's stoppage of the furnace. With respect to castings, we have finished during the month during the quarter, 37,748 metric tons, which is 7% more than the last year similar quarter, and a quarter-to-quarter increase of 13%. And the tubes production is 51,167 tonnes, which is increase of 11% compared to the last year's second quarter, and compared to last quarter, first quarter, 19% more production. Whereas steel is a little bit flattish, it's at 65,140 tonnes, compared to 64,350 tonnes, just 1% more than the first quarter, and compared to quarter 2 last year, it's a 12% increase. Moving on to sales quantities. I think there is an increase in the pig iron sales, external sales also to the extent of 42% compared to last year because of destocking in the last year. Casting sales also increased this year. Castings sales was 37,000 metric tons compared to 31,000 metric tons year this quarter, increase of 17%. Overall casting between copper and [ solar ] we have a growth of 17% from last quarter, compared to last year first quarter, 9% growth. Although we have increased production, sales-wise, we have a marginal drop in the sales compared to last year second quarter. A number of things have played, one of them being some issues related to delayed sales because of the mergers required all the customers to give us the new account code and new orders [indiscernible] industries. Some impact has come, but I think we will have the opportunity to make it up in the next quarter with increase [ that will happen ]. Sales value-wise [indiscernible] the metals are under pressure because of which our sales realizations have gone down quarter 2 compared to last year's second quarter by 6% on pig iron, 2% on castings, and the bigger impact has been on tubes by 12% and steel about 1%. Because of this, the growth in terms of value is lower than growth in terms of quantities. So even then, we have been able to overall record the small growth compared to the last year. Up to 7%, which, of course, is lower because of this value drop as well as because of the muted growth in steel and tubes. In general, the market continues to be under pressure. And especially, I would say that a lot of margin per share, the community, including iron and steel are under pressure, whereas we have been able to run all the manufacturing units well and improve on the quantities. I think demand for KFIL product continues to be good, whether it is pig iron, whether it is casting, steel or tube. I think the margin pressure will continue for some more time because we have got some relief in the coal prices and we will get some more benefit going forward, because this quarter we will have the full benefit of coal price reduction because, typically, we carry 3-month stocks. Whereas the iron ore prices locally continue to be holding on to the level of landed price of INR 6,500 to INR 7,000. We don't have any relief on the iron ore prices, whereas some relief coming out of the coal prices. Coming to the important projects, I think there have been delays because of the continued rains extending into the October for iron ore mines, which were supposed to become operationally, were slightly delayed. We expect that we should be able to close everything in November and start the operations. Similarly, the solar power plant going to 70 megawatts got delayed because of the rains and we are quite hopeful that we should be able to complete everything before the end of the month. And we have another project as far as coal injection with oxygen [ in this side ]. That's also in the process of commissioning. And we believe that middle of November we should be able to commission and start getting the benefit of oxygen engagement as well as increased coal injection. I think these are the 3 important projects. In addition to that, Oliver Engineering, the foundry has been made already, but we have started taking the trial production and sample submission to customers. In the meantime, we are also getting the purchase orders with the Oliver Engineering account, and we should be able to start commercial production shortly. I think with this short note, I think I will stop here and allow the participants to ask questions so that I can cover more questions in the remaining 45 to 50 minutes. Thank you very much.

[Operator Instructions] The first question is from the line of Pratik Kothari from Unique PMS.

Sir, one is broadly you can talk about the demand scenario on ground. Last quarter call, we had mentioned that post elections we were expecting some pickup. And we are seeing some of those in your numbers, in your manufacturing, in your sales. But across segments, we began casting with tubes. If can talk about the demand on ground.

Okay. Thank you very much. I think I just mentioned about the extended monsoon and the extended rains. Typically, we expect a good pickup in almost every sector after the rains. And this year, I would say that the demand cycle in terms of festival demand, I think, is a bit muted. And we are not totally disappointed, but I think some of the sectors like commercial and auto steel [ holding on at least with our ] customers. Some corrections can be seen on the passenger commercial vehicles. Tractor continues to do okay, but not really very strong right now. And typically, November, December are the months wherein demands are a little bit lower side with respect to tractors. But in general, I would say that the demand for casting continues to be reasonably good. And because of that, I think demand for pig iron is quite okay. But presently, I can say that the supply is stronger than the demand. And because of that, the margin pressure continues. Whereas steel, I think, continues to be on the pressure and the prices have not picked up, and whereas the input cost pressures continue to be on the manufacturing margin, pressures being continuing on -- continue to be under pressure. Whereas as you see most of our production numbers, sales numbers being on the growth market [ 52 ] by the steel, I would say that the demand continues to be reasonably good, except the margin pressures. Thank you.

Right. And then, sir, on the tube side, the seamless tube side, anything specific because of profitability, I mean, for the last 2, 3 quarters is down substantially. So anything to call out there?

Actually, I would -- not getting into more details on that. But to be very specific, I just mentioned that the pig iron overall, we have lost 6% in the realization, whereas casting is 2%, whereas overall tube is 12%. Certain sectors in the tube, we have lost 20%. For example, the line pipes is under tremendous pressure because of the dumping from China. Some way or the other way, I think the dumping is happening below cost from Chinese. And we have been able -- we have been representing the government, but I think various different methods are used. And we have [ directness ] of the dumping of the tubes, and it's happening in a big way. And it's a very bad effect on Indian manufacturing plants because we will not be able to compete with this. We have already cut the 20% just to survive in the market to supply -- continue to supply the line pipes. I think that's a bad effect. But other than that, I would say that oil and gas or even projects continuing well. Demand is there, but dumping is affecting the Indian manufacturers.

The next question is from the line of Manish Goyal from Thinqwise Wealth Managers.

Sir, first on the castings, I believe the growth in the volumes have been quite good after a very long time. Probably it would be highest quarterly volumes, if I am right? Sir, just want to -- probably if you can dwell more into -- you made mention that volumes are better across the board. But if you probably look at the tractor industry, which has been muted in Q2 as well, so is it that we have gained market share in -- from some of the customers? And probably -- or are we probably getting new customers not only in tractors, but other segments as well? So if you can give us a little more perspective on the castings business. What is the growth outlook? And on the margins as well, because, sir, in the segmental, we are clubbing castings and pig iron, so we're probably not able to get a perspective onto the profitability of both the segments. So probably refresher, too, if you can probably going forward provide those numbers separately. And on the casting [ I just had ] a couple of more questions, like what kind of volume we can expect from Oliver Engineering in the -- probably the second half? And what would be the overall casting volume in FY '25? We're planning to start phase 2 of Solapur foundry, so probably, I believe we should be having a fair degree of volume visibility from the customers. If you can probably share that? And can you probably also give perspective on our [ 2 part ] foundry, what is the status of this plant? And how do we see it going forward from the foundry? And sir, on the related segment, on the machining plant, in the presentation we have mentioned that we are creating more capacity. So how much of the volume, what we sell, is probably [ machined ] today? And what can we expect probably next couple of quarters, sir?

Yes, I think a very exhaustive question, but let me try and answer. One thing is very clear, that as far as Kirloskar Ferrous Industries is concerned, we are focused on quality capacity creation. And the quality capacity creation is across the board from medium-size castings to large-sized castings. And we are focused on customer requirements. And as we are focused on customer and customer requirements, we are adding these capacities aligned to customer interest in our company and customers servicing and taking care of their requirements and resolving their good-quality casting sourcing challenges. So definitely, it means that we are creating capacities. New customers are added. And we are also developing the new components for the existing customers. With this, you'll find that our share of business in the market is picking up. We are increasing. And interest for our castings continued across both being export, real export as well as the domestic requirement, from the tractor, auto and the molding equipment, all sectors. So we have, as you know, last month, we completed the revamping of the Oliver foundry. And we have started developing the castings. And we have started making trial production, and very shortly we will start ramping up the production and sales operations from Oliver. And given the opportunity and the requirement from our customers, very shortly we expect that we will have decent growth in volumes coming from Oliver, in addition to decent volume growth coming from Line 3 in Solapur that was also your question. One of the customers we would be starting from January bigger volume supplies, twofold. And we expect to take progress in utilization of those blocks. And that has -- I think it gives us very decent volumes. We have today, just went to Solapur Line 2. We did the groundbreaking of [ Puja ] for the start of construction of [ Tupar ] foundry. And it will take 15 months to complete the construction, erection and commissioning. And until that time, we continue to make large casting in small volume in the existing foundry. So with this, definitely, we are working towards achieving some substantial growth this year overall with the addition of Solapur Line 2 and also Oliver foundry. And at least depending on customer needs and requirements, we are looking towards next year how to go very close to 200,000 casting production and sales.

Okay, sir. And on the machining side, sir?

Machining side, we are doing a lot of work. Still it is really not showing consolidated numbers and figures because of 2 things. One is we continue to grow in the castings. So you will find that I still continue to talk about 25% of the castings supplied to our customers because we continue to expand machining as well as casting production. For example, recently, we have ordered about 32 [indiscernible] machines. And this year, I think we will overall add about 50 machines. And it amounts to close to investment of INR 100 crores, and it is supposed to generate INR 40 crores to INR 50 crores of machining business. We are lagging on generating the business, but we are creating quality capacity. I'm quite hopeful that the machining values will start picking up and will substantially contribute to our overall top line as well as the bottom line. And also it is the right direction to give customers machine castings with lower reduction figures, which is the given requirement of the customer. But we will continue to grow. But we have not progressed much in giving the fully finished components, and that is the area we are working to improve. Thank you very much.

Okay, sir. Just one more question on power cost and related operations -- other operational efficiencies. Like we continue to see that like power cost inching up. This time, sir, we have started phase 2 of our waste recovery, waste power plant as well as I think phase 1 of solar power plant is also operational. I believe that's 35-megawatt. So power cost still continues to inch up, now at 9% of overall revenues, if you can share how do we see this going forward. And on second, also like you did mention that there are certain operational efficiency projects have been delayed, like oxygen management and some other projects. So by when do you think that we should be able to see the improvement on the margin front from this project?

Thank you very much. I think sharp and focused question. I think you are touching my concern in the area as well. Some of them have been with the extended rains, with extended land acquisition challenges and right-of-way challenges. I think they have been really patient testing the scenarios. I think some light at the end of the tunnel. I think entire team has promised me, and I think I'm quite hopeful that by end of this month we should be solar, very close to 70-megawatt in place. So we will start generating power, and PCI with oxygen engagement, again, this month itself. And I'm hopeful that even iron ore mining and iron ore supply also should happen in this month. I think 3 big projects, really they should get completed and start adding value. Some of them already cost is in place, but not value addition and the benefits are not in place. So I think we will complete, and from 70 megawatts solar to 100 megawatt solar, and some wind to the tune of 12 to 15 megawatts coming into place. All these projects slightly also getting delayed. One of the aspects, we are cautious progressing people. And with that, I think we don't overstretch ourselves on leverage. And because of that also we keep adjusting the CapEx and progress. I still feel that about 100 megawatts by the end of the year on solar, about next year we'll begin the addition. We will keep progressing on reducing the power and fuel costs, including other methods hopefully like going to piped natural gas instead of [indiscernible] instead of -- so some progress is happening, I'm sure that 9% is the improved position, further improvement will definitely happen over the next few quarters. Thank you very much.

The next question is from the line of [ Vipul Modi ], an individual investor.

Am I audible?

Yes, sir. You are audible.

Okay. Happy Diwali to you and the whole team at Kirloskar. Okay. Now my question is, there's carbon dioxide emission tax, which is proposed to be starting as soon as like 2026. And it's like going to create a lot of disruption in the market. So are we proactively looking at -- or is it possible to take advantage of it, like making a -- demerging the company -- demerging some of the units along with solar power into a separate wholly-owned subsidiary and making it compatible -- I mean, comparable to the solar [indiscernible] norms and taking advantage of the disruptions. Is it possible? Are we looking at it, something?

Surely, sir. I think we are working on the ESG front. I think we are keeping in mind April '26 change, what is going to come. We are working on our [indiscernible] steelmaking facility as well as all the plants in Maharashtra, which will start using more and more renewable power, whereas the [ couple ] in Karnataka will use more of recovery power. I think overall company level, we will have substantial progress on the carbon reduction. I think we will -- we are already working with our customers, with our consultants, to ensure that we make a substantial progress before April 2026.

Okay. And one more thing was like how about the steel [ line ] production? So are we looking to develop more products and looking to go deep into this sector?

We are first looking at steel and tubes. Subsequently, of course, we will get into casting them together.

Casting, okay, So are we not looking...

Beginning would be from steel and the steel tubes.

Steel and steel tubes. Okay.

The next question is from the line of [ Heena Fomality ] from Desai [indiscernible] and Company.

I just want to ask you in the pig iron as the margin pressure is so high and pig iron is also replaceable with the [indiscernible], how are we moving ahead in this market and how we are planning ahead in this?

I couldn't hear your question very clearly. I just -- can you repeat quickly if it is possible?

Yes. Pig iron quantities increasing, with the margin pressures are so high on the pig iron. And just further, the pig iron is also replaceable material. So how we are moving forward for the pig iron market ahead?

Yes. Thank you very much. If you see for the pig iron, we have the 3 strategic approach: the short term, medium term and long term. If you ask me short term, you will find the volumes are growing. But if you see the medium term, volumes will drop, because we will take one of the blast furnace to get an output into steelmaking, and subsequently, one more blast furnace could still go into the [indiscernible] if we get into [indiscernible]. We have not yet decided, but there are possibilities. Logical conclusion or logical progress is taking the pig iron into value-added products and come out of this pig iron. But we will still have some figure as we are foundry people. We know that [indiscernible] very, very important, essential ingredient even though we can use 85% steel scrap, but we still need 15% to 25% together to get the better properties of the casting. So as a metallurgist, as a foundryman, I will always finish my heat with some quantity of [indiscernible] and property of the casting. I think from that [ angle ] we want to continue to service Indian foundry industries, and we have dedicated customers. And we will continue to keep some quantity, but quantity growth will come down. But we will continue to play the role of supplying quality to get into foundries. But we will look at value-added products.

The next question is from the line of Rakesh Roy from Boring AMC Omkara Capital.

My first question is regarding, sir, what is the cost of iron ore in Q2 compared to Q1? And share [indiscernible] Q2 or Q1?

Generally, I refrain from giving exact numbers. But I did mention, I freshly have the graph in front of me that iron ore prices have been stable over the last 7, 8 quarters, at least 5, 6 quarters. And they went down a little bit, came up. But for us in copper or [indiscernible] sector, the landed price of iron ore is about INR 7,200. But it continues in that range for -- and it has not come down, though steel -- iron and steel prices are under pressure. Ore has come down, but iron ore has not come down because of the challenges related to supply and demand balancing in the sector.

Okay. Sir, right now, sir, as you said, you will get a benefit of lower coal price [indiscernible]. Same, how much we are expecting in Q3 and Q4 from lower coal prices in terms of margin expansion, how much?

[indiscernible] I think time will tell because there are more beside pressures. The pig iron or the metal side pressures also continue to reduce the prices. So whereas we are working on how to retain the prices and how to [ confirm ] the benefits in cost. But typically, I think I would say from quarter 2 to quarter 3, we should get a benefit of at least $20. And typically, overall, we consume like 1 tonne of coal per tonne of pig iron. So you can say that this $20 kind of benefit should come, but out of which, how much we pass on, how much we keep it is also a big question mark.

Sir, last question, sir, as you mentioned, iron ore mining [ will pick up ] from November end?

I'm not saying November end, in the month of November. If you ask me, I'm pushing my people to start early. I don't want to lose the benefit of November also. So we were supposed to start in October, but the monsoon affected this very badly. But we will have some good mining as well as movements in November also, not November end, mid-November.

The next question is from the line of [ Parag Sri ] from [ Kush ] Investment.

If you can update us, with this solar power commission in November, we'll have 70 megawatts. Sir, what is the [indiscernible]? Any plans till '26?

Yes. Thank you very much. We are quite hopeful that we should close this 70-megawatt in November itself or by the end of November in case of solar. And we are working with the agency whether this can be taken to 100 megawatts by end of 31st March 2025. And after that, we have to see how things are progressing and what steps we have to take. But we have already taken steps to go partly wind power, 12 to 15 megawatts of power. And generation in case of wind are higher, it's equivalent of almost double the solar capacity. So that is one area we have taken already the steps. And after that, we have a requirement to look at the progress made so far and what steps we take further for additional capacity increase in solar. We are looking at that. And once we have clarity, we will definitely come back to you.

So the 100 megawatts will be in the [indiscernible] only, correct [indiscernible], sir?

Yes, yes. And the next location also -- but everywhere, the challenges of land acquisition, projects getting delayed is what's making us to relook at our strategy. That's why I said that we'll come back once we have more clarity with the next power plant. Otherwise, we were supposed to get -- go ahead with the [indiscernible]. And we are working on that, but still we don't have the full required land in our possession. We have something but not fully required land for 70 megawatts in [indiscernible].

Okay. And sir, any further CapEx are we planning? So what will be the total CapEx for this year and next year?

I think if we look at our cash generation and the loan servicing, we continue to have many ideas in terms of value-added products. So I would say that we will continue to invest at the rate of INR 500 crores to INR 600 crores per year. But more like INR 500 crores per year. And all identified projects, you are aware of it, we are closing 2, 3 projects now related to PCI, related to [ Solapur] and iron ore mines. But we have Oliver to be taken to full capacity, some machining expansion [indiscernible]. I just mentioned that we did [ build ] [ Puja ] for large casting foundry. That will take maybe about INR 100 crores. Whether to invest in it, bring the quality, cost efficiency, improvement in [ material ] that has a project requirement of INR 100 crores. But I would say that we'll continue to invest at the rate of, say, about INR 500 crores per year. And we also have the big project approval coming up very shortly on the steel plant, which is, of course, a 2-year project. That's about INR 600 to INR 800 crores of project. We are lined up for at least next 2 year projects, which have been already discussed, which are known to all of you.

The next question is from the line of Deepak from Sundaram Mutual Fund.

Sir, my first question is regarding power cost. If I look at your past 2 historical quarterly numbers, June Q1 FY '24, power cost percentage was used to be around INR 7,100. And because of operational efficiencies, it came down to around INR 6,500 as of Q1 FY '25. Now again, this quarter, it has jumped to around INR 6,700. So with this 70-megawatt solar capacity coming up, can you please highlight on a per-tonne basis how the power cost should look like on whatever production number which you are envisaging to do?

No, I think Srivatsan can help me to convert the power cost from percentage to rupees per tonne, but we are at 9%. I think it's very important when we are talking about solar power plant, solar power generations have difference in different seasons. And monsoon times, the efficiencies are low, and brighter in the summer times, so the efficiencies are better, generations are stronger. Whereas when we have wind, wind generations are better in monsoon and not so good in other months. But overall, it gets balanced. And what we are looking at is, from the 9% level, how to bring it down to 5% to 6%. 3% is 1/3 of the current power cost. If they present INR 6,600 , we can look for improvement of INR 2,200 per tonne, on the per-tonne basis calculation. And I think reaching the level of 6% from 9% is a big progress, and it's a big CapEx question as time-taking program. And we are committed to take it. And we are also exploring other revenues or other methods how we can bring the renewable energy into, one is a total CapEx model, but any other model which can increase the pace of our progress, we'll be definitely looking at that as well, and try to bring the power cost to more towards 6% than 9%.

Okay. But sir, 6%, this target is for the next 1 to 2 years, right, not immediate?

What is happening is when we say immediate, these proceeds actually take time. When somebody comes and tells 6 months, it ends up at 1, 1.5 years. If you note, our 70-megawatt solar power plant is almost 24 months to complete, and we are working with one of the very good companies. And that is the matter of concern. As it relates into 2, 3 aspects. One is land. Second is the right of way. And because of that issues, the project actual executions are getting delayed beyond the planned execution time line. But we have no choice, but we will continue to explore if somebody has the land, everything ready. So we'll try to take those projects forward. But we would like to work and at least come to a level of 6% within next 1 or 2 years.

Okay. And sir, second question is on steel. So if I look at your realization, it's been very consistent, around INR 76,000, despite some weakness seen in the macro conditions. So do you expect this to continue? I mean, is there any possibility that this may even move higher in H2 as steel demand in the countries moves up?

The wish is always -- if you ask me, iron and steel heated the best over 24 hours, working 24/7. I definitely wish that we deserve much higher, much better pricing, much better value addition. But unfortunately, I would say 2 things are affecting directly and indirectly. One is competition, demand being lower than the supply position. Other one is some areas dumping happening in a variety of steels where we find it very difficult to compete. Two aspects, basically, India continues to depend on coking coal to be imported, and many plants being interior, not like sitting on the seashore, and iron ore prices in India, somebody mentioned that iron ore mining is going bad day by day because [ other ] options are coming competing and taking much higher percentages. That only ensures that the government will get more and more revenue. But iron ore prices will be higher. Steel and steel-related products will not become more competitive in India. It's counterproductive to Indian steel industry, it's counterproductive to job creation in India. Hope that we all can really bring these points to the government and find a [ more immediate ] route how at least we get iron ore at reasonable price, because we have to import coal, and we should be able to, with this combination, manage to compete with the world steel pricing. I think there is a steel challenge. I hope that we will be able to work on this and get some relief from that. But right now, no sight.

The next question is from the line of with [ Vipul Modi ], an individual investor.

I don't know whether Mr. Modi is online. Can we go to the next question?

Hello, Mr. Modi, can you hear me? [Operator Instructions] The next question is from the line of Manish Goyal from Thinqwise Wealth Management.

Any large orders from oil and gas sector? So if you -- and what probably we see from your presentation is that the revenue share from oil and gas has declined in the current quarter. So like if you can throw some light as to when do we expect the acquisition of this order to happen. And can this help improve the overall margin, sir?

Yes, surely, I think you have picked up the right question. I think I did mention that on merger, we were required to get the registration of [ Kirloskar Ferrous ] as the vendor, and after that, get all the orders converted from [ item ] to Kirloskar Ferrous [ then we'll be in the right target ]. So this, in fact, had affected some of our sales and we could not really complete all the sales [ towards ] after getting the purchase orders. I think some sales are getting spilled over last month sales into this month. And I'm sure that it will reflect in the next quarter, the volumes.

And sir, like ideally, the line pipe, what we provision, it should be, what, 14%, 15% of the volume contribution, probably as I see it from a revenue breakup, it is probably the traded segment which shows 14%, 15%. So is it right way to look at it?

I will try to bring this on our website, what -- if it is possible. But right now, I don't have the numbers, though I have seen this in the presentation. But right now, I don't have the revenue breakup of the tubes coming from various sectors. But I agree with you that we have 15% to 20% coming from [indiscernible].

The next question is from the line of Sagar Parekh from One Up Financial.

Just one question. Any update on the NSE listing?

Update on?

NSE listing?

Question for Srivatsan, please. Yes.

Yes. We started working on that. And since just we completed the listing of ISMT shares can be converted into KFIL Now we are starting that.

Yes. As early as possible, I think that's one pending. We were waiting for the merger. [ Once that's done, ] then we should. But we will start the process quickly so that long pending requirement [ that went ] from our view gets closed. Thank you so much for reminding us.

And just -- sorry, just one more question on the iron ore. So out of the 2 mines, 1 will be operational, right? Or both the mines...

The other one is gone, because of the area declared as wildlife sanctuary, wildlife forest area. So it's [indiscernible] mine, which is starting in this month. And as we start, we will definitely publish and communicate.

Sir, in terms of volumes, how much would it contribute?

Sir, we are looking at mining around 2 lakh tonnes. And subsequently, the provision is for 1 lakh 20,000 tonnes. And whether we can get it enhanced and whether we can manage more volume, I think that's for the future. But right now, I think we have an opportunity to do about 2 lakhs 20,000 tonnes.

2 lakhs 20,000, okay. For the full year. Okay.

The next question is from the line of [ Prolin Nidel ] from [ Fidelis ] Public.

Sorry for some noise in the background. I hope I'm audible. So my first question is on the pig iron side, right? You mentioned in your opening comment that supply still dominates the demand, right? So you have seen the sizes throughout the year, right? How do you see the volumes coming -- hello?

Basically, thank you very much for this question. Typically, I'm quite optimistic. And I have seen the prices going up and down. But it's also depends on who are the steel players who are entering for short period and it becomes a byproduct for them and then keep pressure on the supply side. But otherwise, I would say that as steel activity picks up, construction activity picks up, we think it should pick up. But I would say that there's a worldwide delay in that pickup right now.

Sure, sir. Sir, now on your casting side, can you help me understand what is the current capacity utilization in our -- for our casting? And if I look at your number of customers, right, which you highlight in your presentation, that has been stuck at 26 number, right, for FY '22 onwards, right? You also talked about in -- sometime in January, a new customer is going to get onboard and that can take significant capacity and it's the volume customers. So can you just help us understand what is the capacity utilization? Why is it taking time to onboard some of the new customers? And once this January, if this customer is coming onboard, how much capacity utilization can go up by, let's say, in Q1 of FY '26?

Sir, basically, you can say that we have not created the full foundry capacity [indiscernible]. Once we complete, there is one more step-up expansion in core shop. Five foundries, you can -- we can expect production and sale of 2 lakhs 50,000 tonnes. And on average [ 50,000 ] so that's the kind of utilization we have the capability to ramp up. And as you know, our current run rate is more like 1 lakh 50,000 [ as far as ] run rate, so we have done very close to [indiscernible] 1 lakh 50,000. So we will have to enhance our run rate. And typically, casting business, being the hardcore manufacturing, this additional 1 lakh, if we are able to -- from where we make [ 25,000 ] volume increase per year, we can reach 2 lakhs 50,000 in next 3 to 4 years' time. Around 20,000 increase from the current levels each year is a very decent volume increase. And that's what we are looking from whatever 20, 22 or 24 customers. And we are regularly adding customers, and more so, we are adding more components on the existing customers. So there is interest. There is demand. We are working hard on not only working with, engaging with the customers, but we are also working hard on new product development and making use of technology and meeting the customer requirements. And I'm quite hopeful that we should be able to take it to a 0.25 million tonnes between next 3 to 4 years' time.

Thank you. We will take this as a last question. I would now like to hand the conference over to Mr. Gumaste for closing comments. Over to you, sir.

Thank you very much for joining this conference call. I think it's always a great learning experience with very sharp and focused questions coming from all the participants and it also gives us tremendous confidence of investors confidence in KFIL and we look forward to working with all of you and all the best. Once again, thank you for joining. [Foreign Language]

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