Maiden Forgings Limited (543874) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Maiden Forgings Limited H1 FY '25 Earnings Conference Call hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh Nalawade from Kirin Advisors. Thank you, and over to you, sir.

Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Maiden Forgings Limited. From the management team, we have Mr. Nishant Garg, Managing Director. With that, now I hand over the call to Mr. Nishant. Over to you, sir. Thank you.

Thank you, Ganesh. Good evening, and welcome to the Maiden Forgings Limited Earnings Conference Call for the first half of FY '25. It is a pleasure to connect with you all today. Maiden Forgings Limited has come a long way since our inception in 1988. Starting as a sole proprietorship, we transitioned to a private limited company in 2005 and became a public entity in 2023. Over the years, we have built a strong reputation as one of the leading manufacturers of bright steel bars and wires, offering a wide range of customized ferrous metal solutions to industries like automobile, engineering, infrastructure and much more. Our advanced manufacturing facilities in Ghaziabad have a total installed capacity of 53,000 metric tonnes per annum currently, dedicated to producing a wide variety of bright steel bars, wires and pneumatic nails. We place a strong emphasis on the leading value-added and specialized products tailored to diverse customer needs, equips its comprehensive in-house processes such as annealing, cold drawing, peeling, grinding and testing. We ensure the highest quality standards. The addition of nails to our product portfolio further expanded our capabilities, enabling us to serve over 500 customers, including exports to prominent markets like the U.S. and Europe. The steel industry globally is navigating a challenging environment marked by subdued demand and volatile prices. However, segments like defense, railways and infrastructure are witnessing steady growth, presenting a significant opportunity for manufacturers focused on value-added and specialized products. The Indian government's push for indigenous products in defense manufacturing further complements our strategic direction, providing an encouraging landscape for our entry into the B2G segment. In the first half of FY '25, we achieved several key milestones that underscore our strategic progress. Notably, we became a registered supplier to the Ordnance Factory Board Kolkata in April 2024. Building on this momentum, we commenced supplies to HAL in October 2024 and NTPC in November 2024 recently. These achievements mark our successful entry into the government procurement segment, aligning us with industry's poised for sustained long-term growth. Acquisition of approx 4 acres of land, which will allow us to consolidate 2 existing plants into a larger, more efficient facility as well as our ability to expand for the next 5 years. This consolidation is expected to deliver operational synergies and annual cost savings of around INR 2.5 crores. Additionally, we are committed to sustainability by installing a solar plant at the new site, covering 50% of its energy needs, significantly reducing our carbon footprint. So despite industry-wide challenges, we delivered stable performance in H1 FY '25, reflecting the resilience of our business model and the strategic focus on high-margin products. The results are as follows: total income, INR 109.19 crores, EBITDA INR 9.77 crores with an EBITDA margin of 8.95%. Net profit INR 4.05 crores, translating to a net profit margin of 3.71%. Earnings per share would be INR 2.85 per share. Okay. These results underscore our ability to sustain steady operations while navigating market fluctuations and focusing on long-term value creation. Looking ahead, Maiden Forgings Limited is on a transformational journey, driven by strategic initiatives to enhance operational efficiency, expand market presence and strengthen financial performance. The acquisition of approx 4 acres of land in Modinagar sets the stage for the consolidation of our plants streamlining operations, reducing costs and boosting manufacturing capacity with advanced technologies. This move will significantly improve margins and operational efficiency. We have made substantial progress in expanding our global footprint with exports to high-value markets like the U.S. and Europe, now contributing 6% to 8% of our production. To optimize logistics and strengthen our international presence, we plan to establish warehousing facilities abroad, which will reduce shipping costs and improve delivery time lines. Key products such as stainless steel, bright bars and nails, which have seen a 21% production increase remains central to our growth strategy due to their higher margins compared to carbon and alloy steel offerings. Our entry into the B2G segment through our maiden order from the Ordnance Factory Board positions us to capitalize on the immense potential in defense and infrastructure driven by the government's indigenization initiatives. We have successfully expanded into the B2C market through the sale of coil nails on Amazon India and now planning to broaden our reach by launching on Amazon U.S. and U.K.. We are diversifying our portfolio by venturing into high-demand products like stainless steels, screws, and wire meshes, which will bolster our position in high-margin segments. Sustainability remains at the core of our operations. Planned solar installation at our consolidated facility will reduce our carbon footprint and align with global ESG standards. Financially, we aim to reduce our debt to less than 10% of our ML turnover through proceeds from surplus land sales and funds raised, further lowering finance costs and enabling reinvestment into growth initiatives. Our long-term vision is to establish Maiden Forgings Limited as a premium brand recognized for quality and innovation, catering to B2B, B2C and B2G markets both in India and internationally. In conclusion, H1 FY '25 has been a period of resilience and progress for Maiden Forgings Limited. Our strong foundation, strategic focus and relentless pursuit of operational excellence position us well for sustained growth in the coming quarters. I now invite you to ask questions regarding our financial performance, operational strategies and growth initiatives. Thank you for your time and continued confidence in our company Maiden Forgings Limited.

[Operator Instructions] The first question is from the line of Vaibhav Kapoor, an Individual Investor.

Sir, you were talking about a reduction of debt by land sales and this new facility that you have 4 acres of land that you have bought. So could you just run us through the numbers of how much you paid for this 4 acres of land and how will you -- what kind of realization will you get from the selling of the existing facilities?

Vaibhav ji, I can give you the exact details later on. But for now, I will roughly tell you that the acquisition has already been made completely. The construction is going on currently. So ultimately, it should cost around INR 20 crores. The new land with construction and a bit CapEx and all, okay, it should roughly cost around INR 20 crores, INR 21 crores. And like we said that some of the proceeds from the land sales because the land sales has not currently occurred. It's under process, but it hasn't occurred completely. The complete transaction has not happened. It will happen somewhere like the first transaction should take around 4 to 5 months from now once we have shifted the facility -- one of the facilities. So post that, you can -- like you said that some of the major would be for debt reduction. And which should bring our number to like on the debt currently, the working capital debt and every debt combined, it should come down to approximately 10% of our total sales after those lands have been sold. And some part will be used in the working capital part.

Okay. So in the September balance sheet, what would be the amount that you've already incurred for the new plant? And what would be the remaining amount?

Approximately INR 11 crores has been already utilized.

So INR 9 will be the balance.

Yes. Approximately.

And could you give some kind of a rough even a range for when the...

The land acquisition has completed in those INR 11 crores.

I am not talking about the land acquisition of the new plant, I'm talking about when you make the sale of the old plants along with whatever and you will go for the reduction of debt, what would be that amount, that range?

That's what I'm saying, we should be able to manage all these things post that sale proceeds. Approximately, there would be...

The reason why I am asking this question is because it becomes a little fuzzy because you've given an overall debt reduction number. But then as time goes by, there will be more working capital change, there will be turnover change, that's why if you could give me a range for just that land asset?

Approximately say, INR 30 crores.

Approximately INR 30 crores.

The next question is from the line of Nishant Gupta from Minerva Global Capital.

2, 3 questions. One is why did the sales and the margins, et cetera, fell in this particular half year, if you can elaborate more on this particular point. That would be the first question.

Sorry, your sound is like not exactly clear. Please can you repeat it?

Yes. Is it better now?

Yes, it's much better.

Yes. So I'll start with the first question, like why is the revenue decline in this particular half year as compared to the previous half year, and obviously, the margins, et cetera. So if you can throw more light on this, like what went wrong and how do we see the growth coming going forward?

Okay. Nishant, thank you for the question. See, the profit margin is approximately at the same percentage, okay? The revenues have dropped despite, I'll tell you some other figures that were not there in the presentation. Okay. So first and foremost, we have increased the number of customers, regular customers from 450 to approximately 500 now that means over the last 1 year, we have added on approximately 50 new customers, that is 10% more, which includes one of the global big player who is buying like approximately [Foreign Language] 2 containers per month [Foreign Language], order in pipeline always, there are 4, 5 containers from them. So despite these factors, [Foreign Language]. So despite this plus the entire volume is slightly higher vis-a-vis H1 '24, financial year '24, volume [Foreign Language] total revenue, that is approximately about 3%. And that dip is majorly first and foremost, the steel prices are at rock bottom. We expected last year that, that was the rock bottom. But this year, it has gone down by approximately 7% to 8% vis-a-vis last year, average pricing. So that is one major reason. And second major reason is we have retained almost all customers while adding on to new customers. I'm not giving the exact figure. I also don't have. But whatever research we have done, that none of our customers have lift us or new entrants, some new supplier has come to them. And they have shifted some part quantity to them. That kind of activities haven't happened in these 6, 7 months. But the overall demand approximately from our customers, those were existing plus the new customers, they have only about 60% to 70% demand of what it used to be. So whatever we have maintained at the similar level that has been despite the incremental efforts that we have put in to acquire new customers and generate new sales. And that was purely and purely, you can say the market operations at play, such as the high volatility of prices, like I mentioned in my presentation, so these 2 reasons, that is, first and foremost, the overall slump in the demand for last 6 months as well as the pricing fluctuation and the lower prices vis-a-vis last year and last to last year.

Got it. So just one number point on this one. So this half a year capacity utilization was 70%, what was it last year?

Approximately 70%. 68%, 69%.

So then it's -- okay, I get it. Sir, moving on to the next one. Since you have highlighted in your presentation that now you registered with government for Ordnance Factory Board, et cetera. So can you explain in more layman terms like orders of quantum [Foreign Language] revenue potential? And what are you targeting as a company from this particular thing?

Like we mentioned that, see, we haven't ever -- in the 36 years of the company's existence, we have never done any orders for the government organization. This is a very first time. In January, we started targeting the B2G segment, and that was majorly because we identified last year that there are multiples even in railways, defense, et cetera, et cetera. All organizations are utilizing bright bars right now in alloy steel specifically a lot as well as the nails, the pneumatic nails and everything they are using for. If you have seen on road sometimes you come across vehicles carrying defense equipment and all. So they are getting loaded in the boxes -- wooden boxes and all. So for their packaging they use the nails a lot as well as for the border sensing and all those works, they are using our products. So the potential is very huge. Currently, since you also must be understanding that once the company starts, they don't get a bulk order straight away, if they are very much lucky, then they get; otherwise, they start from smaller orders. We have already served last month to HAL. And this month, we have supplied to NTPC, our first order. So the potential is huge. Right now also, we are filling a tender -- multiple tender with some of smaller quantities and some of huge quantity. And we are also -- because we are first time entrant, we are also understanding the market. But looking at the volume of tenders that flowed for our products, it seems to be huge.

Okay. HAL and NTPC [Foreign Language]?

I will have to check the exact, but it was not very big. But yes, the good for a startup.

Okay. Okay sir, I get it. So one last one. On the CapEx front, right, I couldn't connect everything although I heard. So your existing capacity, 53,000 metric tonnes per annum [Foreign Language]. So are you planning to double the capacity? That is the plan if I heard correctly?

Not at all. Not at all. We -- see, I have -- I don't know whether you have attended earlier earning calls or conference call with me or something like that or a Zoom call. But my policy is very simple that we are approximately producing every month [Foreign Language] roughly 3,000 metric tonne of steel bright bars and wires in all types of steel, okay? Nails sales over and above that. So our growth and expansion plan is always focused on increasing obviously, the top line will also increase since we will go for high-value products. But the product mix is changing gradually. So the [Foreign Language] for that, what we're doing is our expansion plan has been well defined from beginning that we would be going for multiple forward implications through which we can reach the end consumer, developing a complete distribution network for our company so that there is brand visibility. And there are far more better margins in those products. For example, the [Foreign Language] last year. Now like I said even in the presentation, we are targeting -- for coming 1 year once the shifting is done, we are planning for stainless steel, screws, fasteners and products like wire meshes. So majorly in stainless steel because their value is high as well as the margins are high because of lesser number of players in that market. So if you can say a blue ocean kind of a market. So with less competition, less number of suppliers and a growing demand. So we could be enhancing the capacities for bright bars and wire gradually as and when these forward integrations are getting in place and their market is getting developed. So [Foreign Language] which approximately gives other [Foreign Language] But we try to maintain it at maximum 75%, 80% only, so that we can keep intact our [indiscernible] models. So [Foreign Language] so that we get trainee customers, and we can serve them better and charge a premium for that.

Got it. So basically [Foreign Language] you are going to...

Brand value [Foreign Language].

Okay. So effectively, you're saying that of product mix [Foreign Language], you will move more towards the value-added products which the margins better happen, right? But the capacity overall will remain same, right?

[Foreign Language] we have to go for value addition products. We don't believe the [Foreign Language].

Got it. Got it. Got it. So just one final question. So considering that the coproduct mix, you can change and you can get better margin. So considering the capacity which you have right now, let's say, you run it at an optimum level. But what is the peak revenue which you can...

Optimum level [Foreign Language] But at that level, [Foreign Language] So at that level, we would be able to do a sales of approximately INR 400 crores.

Got it.

[Foreign Language] That's the peak at 90% level.

Got it. Got it. Got it. When you have changed your product mix more towards stainless steel 40% [Foreign Language] what would be your EBITDA margin and PAT margin level?

It should be very much incremental [Foreign Language] far more better. But [Foreign Language], it's too soon to comment on that.

Got it. Got it. Got it. Fine. So this year, like, are we going to achieve what we -- like any growth over the previous year number in terms of...

October numbers were far more better November is still awaited. And frankly, telling see, around Diwali, 10 days plus and minus, the demand is always a little bit lower vis-a-vis the entire year. So because everyone is in Diwali mood, labor is in shortage because of [indiscernible] food and all, okay? But as on date, we have a lot of orders. I don't know the exact order book as of now, but there is a reduced quantity we are running shorter in delivery somewhere. So I assume it should be -- this should be good.

[Operator Instructions] The next question is from the line of Karthikeyan, an individual investor.

Nishant, I have 3 or 4 questions. Number one is regarding the increase of authorized share capital. In the last thing, it has been discussed and you have been sent from INR 15,000 crores to -- INR 15 crores to INR 20 crores. How it is making? Yes. That is number one question. And number 2 question...

What was the question in there?

About the increased -- authorization of increased share capital, when it will be happened, do we get any bonus shares or...

See, I wouldn't -- until and unless something is finalized, I won't comment on that right now. Because nothing has been finalized that we have done as a precaution if something happens post this quarter or maybe next quarter. So we have -- because we were almost at the roof ceiling of our capital. I think the authorized was INR 15 crores and INR 14.6 crores or something was already issued out of that. So we did that so that if we had to take any corporate action, so we have a scope for that. That was the reason behind doing that.

Okay. Fine. Sure. Okay. And another one is in the last meeting, you said that you'll be migrating from BSE to NSE migration will -- may happens like the -- you have given a hint in the last meeting. Will it be in the near future? Or it will be...

It was for migration to the main board first and foremost, and once -- whenever we migrate to main board, our efforts, our target is to move to both the platforms, NSE and BSE, both exchanges. So that is the target.

Okay. Will it be in the near future or at least it is in the pipeline?

See, I have certain perspective about that, that at a particular revenue level, I will shift it over there, this we should achieve in the next financial year, which I can't disclose right now because I can't give any guidance, right? So next year, we should achieve that number possibly if the market also favors. This should favor because the cyclical time of fleet should come in the next financial year. So we should see that number and post that once we are ready, we would be making efforts to share to the main board.

Okay. And regarding the planned migration that is to the new plant is it -- when the new plant will be completely operational? And when are we shutting out of the existing plant?

See, it won't happen in 1 day. The shutdown or -- one of the plant is getting shut down and that will be operational. It is an ongoing process, which we target complete, if you say, complete shifting I won't say shutting down 1 plant and making another plant fully operational, it would be machine by machine. Got it? Because we have multiple units of machineries, so it will happen one by one, right? So we will be seeing because, for example, I'll give you 1 example, one of the major machine is combined wire drawing and -- complete drawing line. So we have 4 of them. So we will be shifting them one by one. One machine shifting takes approximately 1 week time to dismantle as well as to install it and make it running. So you can say 4 machines will shift in 4 weeks. Parallel to that, some other machine would also be going there. So this way the entire transition, one of the units should shift completely and become operational by March or April. And then another 3 months for the shifting of second unit. So maximum by September 30 next year, the entire plant should have been -- even the older both units would have been shut down with no machine over there and there would be -- complete operations would be at the new facilities.

Okay. Fine. Sure. And regarding the ordnance factory of Kolkata. Regarding the ordinance factory betting, to my knowledge, it is a very high competitive place, I believe so. So how we are mitigating this competition and in upfront in front of -- upfront to the competitors?

As far as my experience of this year for HAL and NTPC like we supplied, right? So the margins were better than any other supplies that we make. So first and foremost that, that also depends on the product growth. For example, I'll tell you for NTPC orders, we supplied approximate -- one special grade of alloy steel in hexagonal and square shapes derived from that. So for that product, I very well knew that there won't be many suppliers bidding for it. So we have that kind of products. So you also understand that otherwise, those products normally the customers don't ask, the private sector customer. So I knew that there was a scope for exclusivity over there. So we successfully delivered. So there, you can understand in such categories, there are high chances that you don't have to compete much, so it all depends on what products they are buying. For example, if even ordnance factory would be buying a simple, HR coil or CR coil, which are not our products, they are very commoditized items, right? So there, will be the competition is very high. But it's like we have always said that we are -- one of our USP is that we can provide most precise products in terms of whatever the specification of that product is because we have all the facilities in-house. So we have those capabilities, and we are targeting those kind of products for government suppliers.

Okay. And I have still 2 more questions. One is, we participated in the German exhibition in the last -- during March and...

April 2024, we participated.

Yes. Did we win any big orders from there?

Yes. We have 1 -- we have already delivered 2 containers to that customer. And it's a continued business. So right now, you must know that Europe is under crack down, so all demand is very low plus the financial year we are closing for them is on December 31. So it's always usual that they usually order in December mid before going to Christmas holiday for the next financial year. November is usually dry from our customers in Europe and U.S.

Okay. And one last question. Can you just comment on the share price, which dropped almost 40% from all-time high. Any comments from your end?

Most 40% from all-time high was like -- all-time high was, I think, last November or something.

Yes it was INR 138 something. From that, it is almost 40% drop.

I feel like that the share price is going as per the sunset right now, what my observation is because we don't intervene in any way in these activities. We are just -- like I have always commented that we are more driven towards performing as well as ensuring that, that performance is conveyed rightly to the investors and potential investors. So maybe the overall market sentiment and the steel market sentiment has made that happen.

The next question is from the line of Vikas, an individual investor.

Nishant ji, I wanted to know, as you said, we are operating at 70% capacity number right now. So -- but what is your target in terms of writing of this capacity in H2 for this financial year, in the next upcoming financial year? What is your internal target?

It's -- if you -- see, we have common machine is for stainless steel, alloy steel and carbon steel, okay? So I won't exactly comment in terms of volume. I will tell you in terms of the revenues that our target annually for the growth is somewhere between 15% to 20% in the top line. That is our internal target that we targeted, earlier we targeted 20%. But we consider it decent if in our kind of nature of industry, it happens between somewhere between 15% to 20%, it's decent. Considering, obviously, like the last 6 months were for me also a little bit unexpected because the steel prices went down by like 8%, considering the same level of pricing, not even incremental, but same level of pricing. So it should go up by around 15% to 20%. So that is our internal target like you asked.

So basically you mean to say, overall top line growth will be driven by the volume growth rather than the pricing, correct? Can you understand for this?

Correct, correct.

If you had 15% to 20% growth, because the -- ideally steel prices have corrected almost...

No, like last, I'll tell you -- I'll go a bit historic in this. Last year, we had a growth of around 8%, 8.5% average. But that was, again, last year also the prices dropped by like 10% to 15% in stainless steel and carbon steel. Last year, vis-a-vis financial year 2022, the overall volume growth for us was around 18.5%. But the reflection in the revenue top line was just 8.5%. That was majorly due to drop in the steel prices. But see, if we are losing on the top line revenue due to falling prices for 2 years, then the third year is automatically bound to cover that up because historically talking in '92, the steel prices were around INR 3, INR 4 per KG, and currently -- I'm talking about the cheapest one, the commercial steel. So currently, they are at around INR 44 level. So ultimately, the inflation will impact, so every 2, 3, 4 years, the prices are bound to take correction. So yes, it will average out.

Understood. So last question from my side. So in your presentation, you have mentioned you have started supplying to ordnance factory, of course, this depends kind of products to the government entity [indiscernible] Kolkata and you have started in...

See, I'll just correct. We got registered with the ordnance factory. But as of now, the orders that we have delivered are to HAL and NTPC. Till now, we haven't secured any order from ordnance factory itself.

I think in presentation, it was mentioned we have started -- we have gone...

We have started supply to the -- in September and October, we also delivered that, but that was to HAL, that is Hindustan Aeronautics Limited.

So can we know the size of the other amount? How much of it was...

Like I said, earlier also one gentleman asked, no, it's a repeat order, like the tenders keep on coming. So the order size was not too big, not too like I think it was around INR 10 lakhs roughly as far as I remember in value.

And how will you see it is scaling up at prior level?

Sorry?

So how do you say in terms of potential?

In terms of potential, Vikas ji, potential is very huge. Everyone knows that it depends on everything. And we are -- by now we are bidding the tenders and everything and delivering to order. We have realized that there are lots of tenders coming up every month for the products that we can serve manufacturing them in-house.

[Operator Instructions] The next from the line of Chirag Yadav from Raj Industries.

First question is, can you just discuss the rationale behind targeting high-margin product for the future growth?

The rationale for selling the higher-margin products?

Yes, exactly.

Chirag ji, simple, we can either keep on growing just the top line and keep asking for funding in form of equity or debt to finance the enhanced working capital needs as well as the CapEx needs. Or we can strengthen the company's bottom line and make good results and surplus for the company so that it can be utilized -- the own fund of the company can be utilized for the future growth, so that is the rationale.

Okay. So are there any plans to further diversify the product portfolio beyond the current range of steel grades and shapes?

Yes, yes. Definitely. See, I particularly talk when we are -- when I talk about that in future we would be doing stainless steel screw and fasteners. I talk about entirely complete new product lines. All right? The range of shape, grade, everything, that keeps on happening on a day-to-day basis. That is something for us because the product line is same, SKUs may have gone beyond 3,000 right now. So that we keep on doing depending on the customer demand, like if they are demanding, we do some -- we have our in-house R&D department with experience of more than 25 years. Also some people are there who have more than 25 years of experience in stainless steel, bright bars and alloy steels bright bars. So they keep on -- we keep on doing written trials, like, for example, [Foreign Language]. So it happened on the spot, so that we keep on adding.

The next question is from the line of Vaibhav Kapoor, an Individual Investor.

Sir, I wanted to know the volume change in the first half of this -- first half FY '25 versus...

It was approximately, I will tell you 6%.

So there has been a jump of 6%?

Yes. Yes, right.

So sir, if you could give some kind of...

No, no, no. Just a moment, 7%, 8%.

Okay. Less than 8%. So what I understand is there has been an 8% volume jump. There has been about a 15% EBITDA decline, right? And you are saying that 7% to 8% of this was attributable to a reduction in the steel price. What is the reason for the decline in the overall EBITDA considering the volume?

See, I haven't analyzed that much thoroughly because in a manufacturing concern, EBITDA can fluctuate from quarter-to-quarter. That is not...

I am talking about 6 months.

Yes, yes, yes, that's what I'm saying, for example, we exhibited in Germany that alone costed around INR 25 lakh -- no, INR 30 lakhs, INR 35 lakhs with all the visiting and everything. So maybe that is one of the factors. Second factor could be that we acquired the land. So there was a few extraordinary charges over there, which doesn't come in the gap of PAT and EBITDA, right? That is deducted before EBITDA. So these are the 2 major reasons that I can -- I don't know the figure. I'm not commenting exactly. But more or less, I can see there are such reasons in every quarter or...

So let me elaborate on this question a little forward. So if you take like FY '23 to '24 there has been an 18% volume jump as per your investor presentation. But your EBITDA is more or less remain the same or there has been a -- it's not been a consequent jump in your EBITDA, which means your EBITDA per tonne or the EBITDA has declined. EBITDA per tonne has declined definitely. Now this is a full year, sir. If you could give some kind of an understanding.

Now this is a full year -- last year?

So FY '24 and FY '23, as per your investor presentation only, there's been an 18% volume jump, but [Foreign Language] that means there has been a decline. We were saying that you're going to higher value add overall then there shouldn't be an EBITDA per tonne decline in it for the entire year, right? So I'm not understanding this. If you could give some color on...

See, I think you didn't attend our last IR call. I very transparently told in that, that during that year, see, we are comparatively newer players in these high-margin products, high value-added products, right? For us also, these are newer products. We have been doing them for the last 2 to 3 years, right? So initially, the marketing costs are higher. So last year also, we exhibited in Greater Noida, Delhi and Mumbai. There were 3 exhibitions. There were -- we also appointed our agents in the U.S. market last year. So now they take on commission basis, like they have a percentage in the order value itself or the margin itself, okay? But at that time, initially, we had to pay them some amount upfront. So last year, the marketing cost to push these products went higher. So there are -- see, when we are handling 2, 3 plants and we are trying to grow, there would be some extraordinary expenses at initial stage. Then it will start stabilizing. So we are still in terms of what we'll say in a listed space, we are still a baby company right now. So we are investing in it so that the baby can grow healthy and fast.

Okay. So just correct me if I'm wrong, my understanding from your commentary is that you are aiming for higher value-added products, and we are trying to focus on the bottom line, but in the past 1.5 years, those -- you put that effort, but it's not gone through in terms of higher EBITDA per tonne.

Yes, this year it will definitely happen. Last 6, 7 months was somehow like I said to previously to also to some one of the gentlemen that last 7 months have been a very volatile market, and we expected that the last year's investment that we put into marketing and all they should have adjusted result. But unfortunately, the results were not as expected for the 6, 7 months. But definitely, like markets are always right with us. So it should improve soon. And whatever efforts we have put in once the market conditions improve, I'm very sure because we are not losing any customer, we are not -- it's not like that we have not outgrown the number of customers that we had last year. So all the customers are retained. So definitely, once the demand boosts the impact would be come at one go and it will be shown in the results as well.

Okay. And sir, my last question is linked to the first question I asked at the start of the con call, is that what I understood is that you told that there will be an additional CapEx of INR 11 crores to set up a new plant, and we should receive something in the range of INR 30-odd crores when you sell the existing plant. So by that logic, there should be about a INR 20 crore cash inflow net because INR 11 crores is what we'll get spending and INR 30 crores is what you were receiving, so the difference is about INR 20-odd crores, and your current borrowings are about INR 75-odd crores.

No, no, not exactly.

No, I'm missing something, could you to elaborate?

It is around INR 63 crores as per my knowledge, that's to my knowledge.

I'm looking at the screener numbers and the screener numbers are saying long term...

I will check that back. But as per to the best of my knowledge it's INR 63 crores, INR 64 crores as of now.

Okay. Even if we take INR 63 crores, INR 64 crores, which is a number you are saying, let's take that, and you reduce INR 20 crores, that's still a INR 40 crores net borrowing and there will be a working capital increase as you increase your volume, right? So in your commentary, you were saying that there will be a 10% of turnover is what [indiscernible] keep your borrowing.

Vaibhav ji, I think we can -- for this, we connect back again, okay, in an individual call or something, okay? And we can connect the entire thing because there are multiple equals like, for example, for this we will have to go deep down to what is the assumption that we have taken that in another 1.5 years to 18 months' time, what would be the profit accumulation that we will have. What would be the entire net-net inflows of funds, so then I can give you a better...

I said that the broad estimate where I said that the excess...

Because you are considering...

As and when increase in the working capital, that's still a INR 20 crore differential.

Correct. Correct. Correct. That you will find, but with the problem...

But are we happy to go deep on this.

Sure, sure, sure. Done, done.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Ganesh Nalawade for closing comments.

Thank you, everyone, for joining the conference call of Maiden Forgings Limited. If you have any further queries, you can write us at [email protected]. Once again, thank you, everyone, for joining.

Thank you, everyone.

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