Mishra Dhatu Nigam Limited (MIDHANI) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to MIDHANI Q2 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, sir.

Thanks, Lizan. Good morning, everyone, and thanks for joining the call today. At the outset, I would like to thank the management for giving us an opportunity to host this call. From the management team today, we have Dr. Sanjay Kumar Jha, CMD; Mr. N. Gowri Sankara Rao, Director Finance. Without much ado, I would invite Dr. Jha for opening remarks covering the performance and outlook, post which, we will open the floor for an interactive Q&A. Over to you, Dr. Jha.

Yes. Very good morning to all the investors, stakeholders joining through this investor conference call. I'm very pleased to join with all of you. And with me, we have our Director Finance, Mr. Gowri Sankara Rao. And we have our Additional General Manager Marketing Mr. Babu is there and the company's Secretary, Mr. Paul is available with me. So I would like to start from the results which we have -- you have seen for the second quarter for this current financial year. The second quarter, we have achieved a turnover of INR 227.48 crores, and we have registered a growth of 25% -- around 26% against the previous quarter of the previous financial year. And also the VoP has increased by 16% compared to the second quarter of FY '23. There is a substantial increase in the total VoP and turnover from -- in the half yearly basis also, H1 of this FY '24. We have a growth of almost around 40% on the turnover and also 21% on the VoP compared to the FY of '23. However, there is a drop in the PBT, PAT for the FY '24 from -- to the FY '23, on all the quarter basis also and the half yearly basis also. And we have the reason behind that mainly because of -- if you see our -- all expenditures are well in the control, except the raw material has taken the major, I think, toll in this half yearly accounts. On 2 counts, first, because of the consumption also has been on the higher side because many of the alloys, which we have produced during this period is all superalloys, which is nickel-based alloys. Nickel being the very costly raw material. It has been -- there is impact. But moreover, that the increase in price also is there from the -- if you see the FY '23 to FY '24, there is a substantial increase in the raw material cost, which has given the major impact. And that part is almost coming to almost around -- more than INR 50 crores is coming because of the increase in the cost of the raw material. So this is mainly because of the superalloy productions have gone up in this quarter. And we see that the possibility of reducing and consumption and all because the requirements is mainly for the aerospace grade and aerospace grades. The virgin pure raw material only required to be put for making the different heats. So we'll see that as we have the product mix, it may get stabilized in the future. Our order book position also is coming all consistently. It is around INR 1,500 crores. And in -- if you see in the H1, already, we have booked order almost -- INR 720 crores order we have booked in the first half and H1. And we'll be seeing that similar type of growth coming in the second half also, the indications of the order book front. Export has been also significantly up, but of course, the base was very less on the last financial year. So we have a substantial change because of that. But we expect that this trend will be maintained on the export front also for this financial year. So with this, the initial introduction, now I'll leave it -- I'll be more comfortable in taking the questions because you will have the many queries so we can have questions coming from our investors. Thank you.

[Operator Instructions] The first question is from the line of Venkatesh Subramanian from LogicTree Consultants Private Limited.

Wish you a very happy Deepavali and a very good New Year ahead.

Yes, happy Deepavali to you also and all our investors and New Year ahead for all our investors.

Sir, basically, two questions, sir. You're saying -- of course, MIDHANI is a very unique company and we are looking at being a provider of various solutions in the defense and other spaces over there, both in domestic as well as exports. My question is what is the total size of the opportunity that MIDHANI can participate over the next 3 to 5 years? What is a broad, big picture number -- considering if MIDHANI had all the resources in place, how much -- what is a big picture? Number two, what is that we can target as an entity over the next 3 to 5 years? My question is example -- for example, the total size of the pie is INR 12,000 crores or INR 15,000 crores, can we be -- can we have a top line of, say, INR 3,000 crores over the next 3 to 5? Do you foresee that happening? And are we prepared for it?

Yes. This is very good questions, I'll say. And we also -- we have been working very hard to find out that what will be the opportunity in the future. And also the many -- our internal assessment we have done, we have done the market analysis. We have seen our potential. And considering, as you said, the market potential is of INR 12,000 crores. So this also is a very good figure. And definitely, we'll be -- you'll be seeing the growth in our sales also, revenue also coming in the future. In fact, in this quarter, only -- this half yearly only you can see that 40% there is a change in growth in our revenue on the half yearly basis. And if the trend continues, I think we'll be definitely coming to not less than 25% growth overall as this year-to-year basis. And coming to the future, that what will be the FY '25, FY '26 and all, we are expecting similar type of growth, but you know that for any growth and all, you will have to see our capacity also. So whatever capacity we have now, we have made and we have invested our CapEx and something is already also going on. I feel that similar type of growth will be possible for the company to maintain. And in this entire activity, I think there's a tremendous pressure will be there on our -- how we are able to make our finance because mainly the coming that our working capital is the one issue, which we have to see that how we can cope up. But the moment you have -- you increase your capacity and all, there will be definitely requirement of working capital increase. So you must have seen our finance cost also has gone up. So these are the challenges are there, but definitely -- and also as you said about INR 12,000 crores of the market potential, this INR 12,000 crores having a lot of competition will be there. It will not be very simple cakewalk for any companies. So we have to also see that how we can optimize our cost of production and then we can also see that how we can capture the many orders. So if we divide this INR 12,000 crores expected market, there will be, I think, hardly 20% to 25% -- 20% only will be there for -- maybe for the very exclusive type of -- not even 20%, I will say -- I can say around 20% will be there -- or 10%, I can say will be there, which will be a good potential margin will be there. But the other aspect will be mainly which is having a lot of competition. So there is a tremendous pressure on the margin also because of this. But definitely, I see the revenue will be going up as we go year by year. So that will be -- already we have worked out our corporate plan and all is there. So we'll be sharing the information as and when we'll meet our investors.

Okay, sir. So just a follow-up question on that is I understand that obviously, considering the current resources and current capabilities that you have, you said over the next 3 years, we can probably pursue these opportunities. But to target additional growth, you said you will be seeking more working capital or capacity increase as we go along. I'm sure you'll find a solution and MIDHANI is a blue-chip company. I don't think it should be an issue, sir. But my question is out of this size of the opportunity that you're talking about, is it just India domestic business or exports put together? Do you have 2 different buckets under which you classify your business growth?

Yes, export also is in our bucket list and export always the target which we have set for this year is around INR 200 crores out of maybe -- almost coming to around 15% of our expected turnover. So 10% to 15% definitely we'll target to get the export. But export has a bigger potential also. But today, the challenge is that, first, we have to see how we can make the domestic requirement. Then based on that additional capacity only, we have to go for the export. So one, balance has to be maintained by a company like MIDHANI, where if the spare capacity is available, then only we should enter in the export market, otherwise domestic requirement also is increasing and there's a lot of...

Sir, I think MIDHANI is strategically important for the country. So I think our requirements come first. Is that right, sir?

Yes, yes, yes. True.

Okay. Sir, this new announcement with Hindustan Aeronautics and Boeing, where they're thinking of setting up some facilities in India, et cetera. Would that -- would we play a role somewhere in that?

I think not Boeing, I think Hindustan Aeronautics and GE, GE for...

The latest one that has come up where Hindustan Aeronautics and Boeing, they're going to set up some sort of MRO facility for Boeing planes in India?

MRO, yes. MRO is one area which -- I think MRO initially -- the major challenge in the MRO is first to start establishment. And then before that, I see the opportunities there in the other areas, where you see that aero engine manufacturing with the GE collaboration and all is going to be take-off faster than that. But MRO also we can join. But first of all, in any -- the foreign OEMs supply chain, unless you enter in the main manufacturing side, then only also you can put in the MRO also. So our target today is that how we can enter in their supply chain of these OEMs, international aerospace companies. So this is our target MIDHANI is pursuing in the current scenario. And we have got -- initially, we have got -- we have made some initiation. I think that will pay in the future, and we'll be getting this type of opportunity also to enter in the MRO also and as and when the requirement arises. But before that, we'll be having the major -- I think our target should be to enter in the aero engine manufacturing when they are entering our country. And we should see that they should also source the material from the Indian source -- India only.

Got it, sir. Super. Sir, I have one more question on nickel self-sufficiency, but I'll join the queue, and I'll come back again, sir.

The next question is from the line of Romil Jain from Electrum PMS.

And I wish everyone in the company, a happy and a prosperous New Year. Sir, I have a couple of questions. So one question is on the raw material side. So I understand, I think in the last one year or so, we have had a lot of challenges on the raw material side. But if you could just explain a bit more in detail as to which are the raw materials, which are contributing to the stress right now? And if at all, we have any sense when this raw material issue can reverse? And probably what would be the sustainable margins going ahead? If things start normalizing soon. So if you can give some gist on this.

First of all, regarding raw material side, I would like to mention here that major -- if you see the tonnage wise, nickel is going to be the -- play major role. And you see the nickel price is controlled by the LME price, that is London Metal Exchange price will be -- LME will be the deciding factor. So LME fluctuations are there quite big in case of nickel. And we are also affected because of this. And we cannot stop also in the large quantity when the price is low. When it is low, we also cannot sell. So many times that effect will be there. I was just trying to turn the page and see that in this year itself, if you see our raw material, the last year in the same half yearly, our convention, that time, the rate of nickel was around INR 1,700 per kg. And in this half yearly, it has gone to INR 2,100 almost. So there is an increase in the price in that way. And that is, I think, going -- has played a vital role almost, you can say, around 20% increase is there. So that type of fluctuations are there. And since the nickel consumption is a larger number of quantity now, so this impact has come. So as of now, nickel price has cooled down, and I'm expecting this will continue for some time, but you never know. The current geopolitical situation is very tough to predict. And it is precisely controlling the entire raw material price because of this. Many places because of the tariff situation, because of the uncertainties, people try to start make the stock. And when they find after some time that the stock is excess, then they release in the market. So the price will be cyclic in nature, and that is going to continue for some time. And other raw material, I'll say the titanium sponge, which used for titanium alloys, that price also has gone up almost 40% -- 50% price has gone up.

So what is the price right now of titanium sponge?

Sponge, that is the input material for making the titanium alloys.

No. So what is the price right now for that, sir? The current rupees?

I was just -- again that price, last time, it was INR 700 per kg. And now it has gone to almost INR 1,200. So INR 1,200 almost -- not INR 1,200, I'd say, almost INR 1,300 you can say. So there is a substantial increase in the price, and orders which normally we book, we have to book on the fixed price. We are not putting any variable costing with the raw materials. So these are going to impact because our main product is going for the nickel-based alloys and titanium-based alloys for all aerospace and high-end applications in the area of defense and space. So there, we are getting this type of impact. So if you ask me to predict again the price, how it's going to be in the future, right now, nickel, as I said, they have cooled down, but then titanium sponge is -- again, it has picked up. It is on the higher side. This is a scenario today. But as and when the impact will be there, since our consumption also is not scrap, we cannot use the scrap, recycled one. So especially, we have to take on the pure metal side only. So that type of impact is there.

So sir, just one clarification on this point that you mentioned. So the contracts are in terms of pricing, we don't have pass-through, right? So they are fixed price contracts. But at the same time, when we get the contract, are we hedging it or can we hedge these prices to some extent? Or that's not possible?

See, hedging is not allowed. First of all, we are not going to hedge it. But if you -- even if somebody is -- I'm not taking about MIDHANI, if some company is trying to hedge the raw material price, how you are sure about that the price will not come down. So today suppose I'm hedging the price and tomorrow, if it is coming down, then you will be in loss. So that situation is prevailing. And for the items which I mentioned, the source will be -- in fact, you cannot -- there's not available plenty in the market. The source is -- supply itself there's a constraint. Titanium sponge today, we have a single source, single supply source. And there, the requirements has gone up extensively. So it is not -- it is a supply-demand situation. So demand is on the higher side, supply is less. The entire titanium sponge is controlled by the Russian company. Now Russia is not even sparing a single gram or so of titanium sponge. Ukraine has already -- you know how it is getting devastated. So there's no production in the Ukraine for this. Many are suffering because of that.

So are we looking at some alternative sources in titanium? I mean what is the way out here, sir?

Yes, yes, there are some programs are -- there is some -- think tank is working on that. It is some for strategic requirements. So we'll be trying to see that how we can indigenize in our own country, but all those will take time. And also -- there also it will have to pay price. It has not come at a very low price as we -- because at the initial stage, you have to also have the old technology, then the equipment are old. So the increase in the production requires some sort of investment. So -- and that investments are not economical in nature because economic scale is not there. See, even if you try to make the sponge in the country, your requirements will be, let's say, 1,000 tonnes, 2,000 tonnes. But the plant will be economical with 20,000 tonnes. So you have to look for the alternate market elsewhere. Otherwise increase the consumption in our own country. So these things are all -- is going to take some time, but we have initiated some program on that...

Okay. And sir, on the inventory side, any concrete steps that we are taking to kind of control the situation? Because I understand about the scrap issue. But what are we trying on the inventory side? Because, sir, in terms of growth that you mentioned, revenue growth and order inflow, I think there is no problem on that side. There is no issue on the opportunity size that you mentioned. But I think inventory is one area where we need to really work hard on. So any concrete steps and any guidance you can give that in the next 2 years we're going to come at some sustainable levels or something like that, sir?

Retaining the current level of inventory itself is a big challenge because one way that your cost of raw material also is going up. So definitely, even the tonnages will be reduced, less tonnage, but the cost will be on the similar line. This is the one challenge which we are facing now. And many materials which we produce, we are not having a secondary market or secondary source where we can sell it. So this is the challenge we are facing. But nevertheless, if you see in this quarter, we have tried to balance control our inventory, but the scrap has gone up by some amount. So again, the scrap cost valuation -- also valuation is in the higher side because your content raw material, which is there in that, that cost also has gone up. So this is -- the balance is planned. But today, I'm not seeing the immediate future because as you have told, because of uncertainty, some raw material also I have to store. Otherwise, I'll be having -- production will get suffered. So raw material side also some inventory has to be maintained. Otherwise, we cannot maintain our flow of the production, it is happening.

The next question is from the line of Viraj Mithani from Jupiter Financials.

Yes. Am I audible?

Yes, audible.

Yes, sir. Sir, you talked about this inventory raw material cost price inflation. I just want to know why can't we have a contract where we can pass through the raw -- in such an environment where there's so many geopolitical issues, why can't we have this built up in the contract with our customer?

I think you're asking that we should have a long-term contract with the supplier?

No, no, increasing the -- since you are mentioning the raw material prices are so much fluctuating with...

Including in the order with the customer?

With the customer, yes.

The customer -- see, when the customer is sourcing material from us, they are also getting the projects based on certain -- see -- if you see that whatever projects we are taking, they are also getting at the fixed price. So they cannot afford to have that type of fluctuation in their project. So let's say, if I'm supplying the material to HAL or any aircraft manufacturing company, they have a fixed contract, the cost is fixed. So they cannot absorb that fluctuations if you are asking that type of clause. So basically, this is not possible. In certain cases, earlier, when we have the long-term order coming from -- let's say, from the space earlier where the order is for 3 years, 4 years, so there, we had some provision for that raw material sort of that inflation and all was inbuilt in that. But it is not being done in all the projects because their supply time is very less. Now we are getting the orders where we have to supply within 6 months, within 3 months, within 4 months. So for that, nobody -- no customer is willing to give that type of provision.

And sir, what would be a breakup of our revenue and order book, if you can give the breakup in terms of space, defense and non-defense?

You are asking that current order book?

Current order book breakup and even the revenue breakup this time?

Whatever we have achieved now. I'll share that information. What we have done, if I see the sales-wise, we have, in this period, 25% from the space, 30 -- almost, I would say, 50% coming -- 50%, 55% from the defense, then energy sector, we have around 4%, others 10%, and export 4%.

And sir, order book breakup would be same or different?

Order book is also in the similar line, I will say, almost you can take on the similar lines, order book also. If we see what is order book -- the order book also in similar level. When we have the space around -- in fact, it has come down. Now it is coming to almost less than 20%. It is coming almost 15%, 15% to 16%. And the defense is coming in the big way, almost I'll say 70% is coming from that defense side, and balance exports and railways and all.

And sir, what guidance would you give for this year and the next year? I mean what will be the growth and the profit margins?

Profit margins, I cannot say right now, but -- the growth, as I told already, we are planning to achieve around 25% growth on a year-to-year basis.

Would it be fair to predict that the next half would be better than the -- this current half would be much better because of the nickel price is going down...

It is always the case with MIDHANI that second half will be better because likely cooling off of the raw material price also. But how much we are going to gain because this, we have -- problem is that in the first half we have -- our consumption level has been substantial. We are trying to minimize in the second half. So we will see, it will improve further I'll say. But how much value and all will be once we see the quarter 3 results, we'll be having the more confidence.

[Operator Instructions] The next question is from the line of Romil Jain from Electrum PMS.

Yes, sir. Sir, one question is on the orders that we have received in this quarter. If you can just -- if possible, which are the key orders that we have received in this quarter?

We have got from almost space around -- 20% almost from the space. And we have got the majority of coming from the -- 70%, I'll say coming from defense. Naval is around INR 289 crores. Aero INR 80 crores. Then we have got from the missile around INR 54 crores. So that way, it is coming to that level of 70% and then 20%. Rest 10% is coming from the exports and others.

And let's say, based on the pipeline that we have, I mean, how is the pipeline looking? Has it increased in the last 1 year or so? And where can we end the year in terms of order book?

See, last year, total order book was INR 920 crores. This year we have almost crossed INR 720 crores right now. And I'm expecting another INR 700 crores definitely coming from the next order.

So another INR 700 crores order is roughly coming in the second half?

Yes, yes, yes.

Okay. Okay. Got it. And sir, one question on the pricing environment that you mentioned. So obviously, there is a raw material issue, and it is not in our hands also. So when we are bidding for the orders, right, is it not possible that we increase the prices to -- for the uncertainty? Or we are not allowed to increase the prices, how that works, sir? Because everybody knows that there is a problem of titanium or there is a problem of supply chain, then probably why should we the one who will take it, right? So can't we increase the prices to that extent?

See, first of all, you have to be -- see the orders which we are getting now, many orders we have to go on the competitive bidding. So if we add up so much price for the raw material itself, probably we will not get the order itself. That is the first thing. Now next that we are -- whatever the new margin you have to keep, you have to keep from that particular time. You cannot go for predicting that raw material price will be 30% higher, 40% higher. Nobody can be doing, otherwise it is difficult to be in the market. So normally, we see the current price we quote it. Then if the price is going up, then only we have to see that our margins.

Okay. And sir, in case of competitive bidding, so almost all the projects or orders that we are getting are competitive bidding, right? So how many players are there in this bidding? And how many Indian players are there? How many non-Indian players are there, if you can give some idea about that?

It depends on the order to order. Many places, we have only 2. Some places, we have 4 to 5. Some places, we are finding even 10, 11 also. And many cases we see today that people even -- we have to beat against the international competition also. So these are the challenges are there. And today, for the projects which people are getting like platform also, their pricing also are very, very competitive when they book their platform. So they will also try to negotiate very hard even though if it is on single tender basis because they go for all your costing data and all, then only you can give. So you know that many orders which they are getting on the Ministry of Defense is giving now. They do a lot of analysis, then only they fix the price. And they will be compared with the international bidding and all. So it is inbuilt in the platform itself for which we are bidding. So these are the challenges which everybody has to face, not only MIDHANI, any company regardless still they have to face. Even as far the [indiscernible] also. Right now, you see now we are supplying to all the private people. We are supplying to a consortium made by L&T, HAL. So there also, we have to be highly competitive. So they have to compete. They have won this order against the competitive bidding. So they are trying to see that how they can minimize the cost of the input material.

Okay. And sir, lastly, how much is the CapEx we are expecting this year and maybe next year FY '25? And out of that working -- the total borrowings that we have roughly, I think, INR 400 crores, how much would be the working capital borrowings?

Our borrowings is only -- we have INR 100 crores. So we have the CapEx there.

INR 100 crores CapEx this year?

And balance is working capital only. And yes -- this year means it is already drawn and we have already made the process already. That values we already have completed. The balance already, which we are trying to do this year is around INR 80 crores is our CapEx.

Okay. Okay. And on the working capital loan, sir, how much would that be?

But CapEx, we have not planned additional borrowings.

It is INR 350 crores.

INR 350 crores.

INR 350 crores is the working capital loan?

Yes, yes.

[Operator Instructions] The next question is from the line of Amit Dixit from ICICI Securities.

I have a few questions. The first one is potentially on the revenue breakup, if you can give between superalloys, titanium-based alloys, and specialty steel for this quarter.

Okay. That we will provide you. We are not having the readymade data available coming from the superalloys and all, but I will provide you that information.

And going ahead, sir, as we see that the order inflow that we are expecting...

We will give you the right figure. I'm not -- I'm having the approximate, I don't want to give you that figure. But definitely, I'll leave you -- share that information.

No problem. I'll ask company secretary for it. The second one is on essentially that going ahead, do you expect this INR 700 crore incremental that we are expecting in H2, will be component of -- do we see the higher component of specialty steel and superalloys in that compared to titanium? Or how is that? Is it going to be very similar to what we have seen until now?

What we have booked? Booked order, we have -- expected or booked?

Expected as well as booked if you can provide...

What was your question, can you repeat?

So the question is that we are expecting INR 700 crores...

Booked, already, we have made the -- yes, just you listen, special steel INR 252 crores. Superalloy is INR 171 crores, maraging steel INR 151 crores, titanium alloy is INR 128 crores and others coming to almost INR 13 crores. And if you see the expected one and all, also -- so expected also, we are having almost in the similar mix, it will be there. We'll inform you that once -- it is going in the sequence wise. So very difficult to talk about that which order we are going to get first and all. But we are...

Mr. Dixit, are you done with your questions?

No, no, I have a couple of more, I have actually, the management were discussing their business, I was waiting them -- for them to complete. Yes, so the second question I have is on -- sir, since we are increasing our titanium capacity quite substantially. And as I understand that we have got capability to participate in the aerospace program for the future, along with HAL maybe. So I just wanted to understand, I don't want a 1-year, 2-year perspective, but from a 5-year view, whenever titanium capacity would be up and running, what kind revenue growth or profit growth do we expect? What all platforms do we expect to participate? And if you can highlight some of the major upcoming platforms such as the Tejas Mark 2 engine or Mark 1A engine as well or whether we are going to participate in certain of the missile programs. So certain platforms the big ticket items would certainly help at this stage from a long-term perspective, sir.

If you ask me on the platform, by consumption, is it not? So for Tejas. Tejas, one thing is there. Tejas, the engine is coming from GE. So whatever we are supplying the materials are very basic in nature, that there we have mainly titanium alloys and some of the steel -- special steels and a little bit of superalloys, very less. But what we see in the major convention, the superalloys for the Indian program is coming from development of Kaveri engine, Kaveri dry engine, which you might have seen now for the unmanned vehicle, which India is developing so for that purpose. So also, we have -- there are some programs for making the ATG and also development of the alloys for AMCA, that is for advanced multi-combat air vehicle. So for these areas, only the special alloys are required, and more forecast where now the things are coming for indigenization of the -- some of the alloys for our foreign platforms. So those things are expected to now originate, but that once it gets the slice then I'll inform you. But there also, there is a lot of combination of, again, steel, superalloys and titanium alloys. So basically, in the aero engine only, if you are entering then, we have the major consumption of titanium and nickel alloys. So we are expecting in those areas and some of the areas where we are exporting also.

The next question is from the line of Khush Nahar from Electrum Portfolio Managers.

So my first question was, sir, broadly, can you mention the percentage of revenue, which is a titanium-based and nickel-based?

As I told to the previous question itself, that this communication I'll send you in our format, that's what we have achieved in the H1 of FY '24, we'll send you that information. Broad classification that how much percentage and all we have done this. Right now, it is not there as a complete information. I want to give you the right figure. I'll tell you. Okay?

Okay, sir. Yes. And sir, my second question was, sir, what kind of shift are we seeing? So for example, our order book in the previous years was around in the range of INR 800 crores, INR 900 crores. And today, we are expecting around INR 1,600 crores in this year. So what kind of macro changes are you seeing in the industry?

I have told that this year, we are expecting order book of the buildup of around INR 1,500 crores. That's what I have told. I have not told about the INR 1,600, of course, around INR 1,400 crores to INR 1,500 crores. This is one question. Second that you are asking that classification, which sectors, which I've already have told that defense will be the major one, almost will be -- you'll find that 80% will be on the defense side only this year, and which we'll be maintaining that, majority will come from the defense only. And balance coming from that export and space. But definitely, space is dipping down at least very less, because already we have made -- all supplies to the space almost we have completed. Now very less requirements are left now. So they have a good level of inventory now with them. So they are -- unless they consume that, then only will go for the next requirements.

The next question is from the line of from Amit Dixit from ICICI Securities.

I have three questions, and these are more of a bookkeeping question. The first one is, if you can just let us know the revenue -- incremental revenue that was booked from Rohtak armor factory and Wide Plate Mill in this quarter?

Order book for the Wide Plate Mill?

No, no, the revenue that was booked in this quarter?

Sales we have made from this quarter, from Wide Plate Mill. Wide Plate Mill sales, we have a direct sales coming from Wide Plate Mill, how much? Around INR 100 crores, INR 120 crores? We're going to say around INR 100 crores plus for H1.

And for Rohtak armor factory sir?

Rohtak, it was around INR 60 crores.

INR 60 crores, okay. Second question is, sir, what would be the level of contract assets and customer advances on the books?

Which one?

Contract assets and customer advances.

Contract asset, we are not having that.

The customer advances will be there.

Customer advances will be there. You're asking about the advances in the terms of money?

Yes, money.

See, we get advance of 32% -- 30% normally, customer advances, 30% of the order value they give. Presently -- in fact, earlier we got from the VSSC, that is ISRO, now we are completing that supply, that advance has come, but still we are getting some advances. Only in the first half, we got INR 200 crores advance.

So currently sir, how much is there in the books actually, in your balance sheet, customer advances, is it INR 300 crores?

Balance sheet, we will tell you that figure.

Okay. The next question is...

Tell me, yes.

There was a substantial increase in payables in this half year. So can you let us know what was it, I mean, on the account of around INR 153 crores...

Which one?

Increase in payables.

Yes. You must have seen -- see, as we have explained our pressure on the inventory, our inventory has built up, it has increased by INR 248 crores compared to last year. So as we explained the raw material consumption, most of the payables are raw material only, nearly INR 150 crores like that, because of -- and pricing, we have to delay some payments, because we are not going for any further working capital because already MIDHANI has tied up for INR 350 crores and drawn INR 330 crores.

But we also have the receivable now, receivable are taking a lot of time because of that payment has to come from the government. So it takes time in processing and then the submission. So that's why considering that, we are not taking any working capital loan. So this is -- basically, the balance is coming, but then both sides, payable is also getting delayed, receivable also we are getting delayed.

Okay. Okay.

Clearly, INR 360 crores advances.

INR 360 crores. Okay.

In that INR 200 crores we received in the first half only.

The next question is from the line of Rohit Ohri from Progressive Shares.

Few questions. First one is related to ISRO. After the success of Chandrayaan, they are looking at Gaganyaan and we have already worked for them. So would you like to take us through what sort of work can MIDHANI do currently with Gaganyaan and the projects associated?

For Gaganyaan, majority of supplies already we have completed. And now the limited requirements are still there. So there, we have some special materials like titanium plates and some of the like grid fin, some -- still some requirements are there, which we are executing. So I say 90% already we have -- completion is over for the Gaganyaan requirements.

And there's no other players or the players to work the same project that ISRO is looking at?

ISRO, right now, they have the -- more they are going for a public private partnership model. So the many things are now getting in the offering now. It will be coming in the future. It will take some time. But they have one thing has come out now that 5 PSLV, they have given to L&T and HAL Consortium. So that 5 PSLV orders we have received and which we are already executing now. So this year -- this current financial year for the 5 PSLV requirements, we'll be giving from -- already supply has started. We'll be finishing in this financial year for the entire supply for the 5 PSLV also.

Okay. Sir, knowing that these material will be of very high quality and high purity requirement, do you think you will be able to kind of liquidate the strategic material that we are already carrying since last 2, 3, 4, 5 years?

That's a big challenge because these are the strategic value, I rightly word put the strategy. And today, the world is very in a difficult critical situation. So these are strategic materials. First of all, you have to find out the buyer. And the buyers will be having no bad intention, which would be used for a constructive purpose. And also it is better, if it's withing the country. So there are many challenges. We are trying to see that how best we can utilize. We are -- we have got some success also in that area. Our focus is that in today, recently, also, we have done a very unique development and technology. Earlier, we used to use for space requirements with fewer materials. So now we have gone to 50% scrap. Now we are looking for even higher content of scrap also. So these things are not done immediately because many testing qualifications are required, and customer has to agree for that. So some work is moving in that, but that is very less because whatever we have piled up is not 5 years, it is right from the inception. Many things are right from the inception only it has been piled up. So we have to see that how best we can utilize because these are all valuable materials, having a lot of good -- you have the nickel, you have the cobalt, all relevant materials are there. We are trying our best how to utilize that. One way is just to find out and sell it in the market, but that sort of possibility is not there, if we can get some good customer.

Okay. Sir, my second question is, looking at the margin erosion that we have seen and aware that in the second half we generally use quite a lot of scrap material, but if you look at the bottom line, do you think you will be able to close the year with the PAT levels of pandemic or pre-pandemic levels of INR 130-odd crores or something like that?

We are hopeful. Let's see. We are hopeful, and we are trying for that. And we definitely trying to see that how best we can optimize that.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Amit Dixit for his closing comments.

Yes. Thanks, everyone, for attending the call this morning. I would also like to thank the management for sparing their valuable time for interacting with us. I will now invite Dr. Jha for any closing remarks.

Yes. First of all, I am extremely thankful to all the investors, stakeholder for showing your interest and giving a lot of very valued -- your questions and queries. And we have tried to answer to the best of our abilities. Certain things which you have asked early, we have not answered to the level of satisfaction. But many things we have to see that how we can take care of the interest of the company also, because many informations are very crucial in nature for the strategic program of our country also. So we have done to that extent. And whatever you have seen in the results, which has come, we are also trying to see how we can improve it further in the coming quarters, and see that MIDHANI will be in the right place. But one thing is there that this industry is now and in very, I say, transformative state because of the change in the requirement of the materials in the different types. So we have to see that, and this is a time where investor has to put the confidence on us. And I am sure that we will not make you -- we'll make you happy at the end of the day, and entire company management is working hard. We have a very good team of engineers, committed people. They are working very hard to minimize and many new products we have developed, which if you can say that. Recently also, we have got the product development for C-276 Hastelloy for BHEL executed successfully. And also, we are trying to make many alloys for our aero engine program. Many foreign supplies we have made for aerospace industry right now. So we are trying to see that how MIDHANI can be a leading material supplier for the aero engines or aerospace in the future, not only in the domestic, in the international front also. So this is a challenge. So I'll say this is the stage where we are -- the company is in the complete transformation, and we need the blessing and support of all the stakeholders. Thank you very much.

Thank you, members of the management team. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.