Rajratan Global Wire Limited (517522) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Rajratan Global Wire's Limited Q4 FY '24 Post Results Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sailesh Raja from Batlivala & Karani Securities, India Private Limited. Thank you, and over to you, sir.

Yes. Good evening all. Thank you for joining us for Rajratan Global Wire Limited Fourth Quarter of FY '24 Earnings Conference Call. During this call, from the management side, we'll be hearing from Mr. Sunil Chordia, Chairman and Managing Director; Mr. Yashovardhan, Executive Director of the company; Mr. Pranay Jain, CFO, Rajratan Thailand; and Mr. Hitesh Jain, CFO, Rajratan India. I would now like to turn the call to the Chairman and Managing Director for the opening remarks followed by Q&A. Sir, you may begin now.

Yes, yes. Good afternoon, friends and my dear shareholders. Happy to connect with you all today for the con-call after our Board meeting where we have adopted the financial results for FY '24. I'm happy to share that last year has been a mix of growth and, you know, pressure on the margin. So, we have grown in Thailand in a big way. Our volumes in Thailand are up 43%. We have little volume growth in India also, marginal 2% volume growth. So, overall, on a consolidated basis, the volume growth has been 16%. And there is no revenue growth because the prices have come down. Globally, the steel prices have come down and subsequently the prices of our product also came down. So, there is no growth in revenue, top line. The EBITDA margins are overall down by 21% and the profit after tax is also down by 28%. So, we have ended the year with close to INR 72 crores of net profit of the company. And I'm also happy to share that our Chennai investment is complete. We have started machines, we have started some trial run. And this quarter, we'll announce the commercial production also. So I'm happy to take the questions from here.

[Operator Instructions] The first question is from the line of Parth Bhavsar from Investec. Please go ahead.

Sir, I have 2 sets of questions.

Sorry to interrupt you sir. May I request you to use your handset, please, for optimum audio quality? Thank you.

Hello. Yes. Is this better now?

Yes, sir.

Sir, I have 2 sets of questions. One is on India business. We reported flattish volumes in Q4. So what happened exactly? And on the other hand, our EBITDA margins have or -- profitability has improved. So, what drove this?

There was an import of cheap Chinese quality coming into India, okay, which was against the quality control order by government. And I think government has taken effective steps to curb those imports. And we are optimistic about such cheap imports not coming to India in the next financial year. And it is partly the effect of that. Last quarter -- last month of the quarter, there were -- the imports were reduced drastically. Yes.

Okay. So sir, for the quarter, how much was this import? You could quantify?

It had gone as high as 3,500 to 4,000 tonnes in a month, which has come down to 1,500 tonnes level.

Okay. So in the last -- in March, it was 1,500 tonnes? Okay.

Close to that. Yes.

Okay. And sir, what led to this improvement? If I look at the profitability of Indian operation, it has reported good numbers like even on quarter-on-quarter basis as well. So, was it only the steel prices coming down or it was something on the operational side as well?

No. On operational side, we are continuously focusing on improving the cost, quality, quality of customers everything. So, it is the effect of -- combined effect of all of that. Yes.

Okay. Okay. And sir, in terms of our Thailand operations, we reported a very good set of volume. It was -- the volume growth was very nice. But in terms of profitability, like, what impacted the profitability during the quarter? Like, it reduced even on quarter-on-quarter basis.

Yes. So, in our earlier communications, we had indicated that Thailand business is exposed to global competition. Okay. And there are a number of Chinese tire companies who are also our customers where the profitability is very low. Okay. But we decided to use our machines, our capacity. Our Board decided to give us a direction that you should run the plant to full capacity. If there is a small contribution also, you should not leave that customer. So we worked on that strategy. And that is how you see huge volume growth in Thailand this year of 43%. And over years, we will shift from those low-cost customers or low-priced customers to better customers by exporting more to better MNCs and supplies to a few major tire companies, which are not Chinese in Thailand. That will happen in the coming years. But as it is, we didn't want to lose the market share. And leave the space for competition.

Right. So sir, what was our market share in Q4? Like, did it improve from Q3 to Q4 or like it was at 30%, 35%?

It is 35%, 37% only. Q4 is 37%.

[Operator Instructions] The next question is from the line of Nitin Gandhi from Inoquest Advisors Private Limited. Please go ahead.

Yes. Sir, with regards to Chennai, what's our cumulative investment and what kind of asset turn we can expect going forward? And do you think margin pressure or will there be some new different way of handling because of new plant? And similarly for Thailand, what's the cumulative investment, if you can share as on date?

Yes. Up till now, we have invested around INR 230 crores in Chennai. Some balancing equipments are yet to come for a capacity of 60,000 tonnes. So the plan is to invest INR 300 crores in Chennai for a capacity of 60,000 tonnes. And at current price level, the CapEx turnover will be twice. Like the maximum turnover from this 60,000 capacity can be projected at INR 600 crores. And yes, for the first year, because we won't have approval from the major tire companies, we will have to sell it to low-cost customer, where approval doesn't take much time. Okay. So there will be -- I don't expect a big margin from Chennai investment, particularly in the first year.

Regarding Thailand, what's the cumulative investment, if you can just share?

Pranay, can you answer this?

Hello. Yes, sir. Can you just again speak? Hello.

What is the cumulative investment in Thailand? What is the total CapEx in Thailand up till now? Gross block.

Yes, sir. Sir, we have invested 410 million in Thailand.

THB 410 million, right?

Yes, sir. THB 410 million.

That is the gross block there, Pranay?

Yes, sir. The gross block, which is added to the existing fixed assets, sir. What we have invested for expanding our capacity from 36,000 to 60,000.

So what is the total now?

Sir, the total gross block has been reached to -- just a minute, sir. It's THB 1.1 billion.

THB 1.1 billion. Yes. Okay.

[Operator Instructions] The next question is from the line of Prathamesh Dhiwar from Tiger Assets. Please go ahead.

Yes. Sir, just wanted to know on the realization front, like as you told, the Chinese imports has been down right now, like going down. So, from Q1, are we looking at better realizations?

There will be some improvement because we won't be competing with Chinese prices. But overall, we are not expecting or we are not projecting a huge change in the prices. Okay. Because our competitors have also increased the capacity and we will have to -- there is an advantage of Chennai that our cost to deliver to customer is very low. We will be very close to customers. So all those -- then considering all those benefits, I don't expect a much pressure on the margin from Chennai.

Okay. And sir, on the overall margins, how are we guiding for the coming year?

Yes, very difficult to -- you can see that we have been able to maintain 17.5% of EBITDA in India, okay. But yes, we -- the EBITDA percentage in Thailand was very low. We expect this year, there will be an improvement in EBITDA percentage in Thailand also, because some of the customers where we got the approval have much better pricing. Okay. So volume will shift to those customers in the coming years.

Okay. Okay. Okay sir. And sir, just on the capacity utilization side, what's our current capacity utilization and what will be in the coming, let's say, FY '25?

Yes. So, our India, the Pithampur capacity 72,000 tonnes, and we have done 60,000 tonnes in FY '24. We plan to continue using similar capacity in Pithampur, because we have to make close to 15,000 tonnes in Chennai this year business plan. So Chennai will be adding 15,000 tonnes volume to the business. And in Thailand, our capacity utilization is close to 75%, 80%. Okay. And with that capacity utilization, we plan to do more than 50,000 tonnes of business in the coming year.

[Operator Instructions] The next question is from the line of Shridhar Kallani from Axis Securities Limited. Please go ahead.

So, I would just like to have a clarification on the capacity that you mentioned in Thailand. So it is close to 40% increase. We have been able to reach 80% utilization in Thailand. Is that right?

Yes. But that is on a quarterly basis. So if you look at last quarter, the capacity utilization was close to 85%.

Okay. And for the whole year, it should be around?

For the last year, it was 75%. For the coming year, it will be 85%.

85%. Okay. And sir, is it possible for you to share EBITDA per tonne in Thailand and in India? Because if the commodity prices change, then the EBITDA percentage is a little difficult to understand for us how much on a per tonne basis are we earning?

Yes. So it is difficult to talk about EBITDA per tonne because there are customers where price differences are huge. Okay. Like -- and same in Thailand. Some of the Chinese customers where EBITDA per tonne is very low, but there are multinational companies where EBITDA percentage is high. So EBITDA per tonne also is high. I don't think.....

And on the aggregate basis, what would be our EBITDA per tonne in Thailand and in India, if that is possible?

Yes. So you can assume 9% EBITDA percentage in Thailand, okay, which is on sales, you can -- and volume is there. Pranay can you calculate and give?

No actually in percentage, but EBITDA per tonne.

Yes, sir. It should be around...

Pranay will give.

Yes, sir. It should be about THB 3,100 per tonne.

Hello?

Yes, sir. EBITDA per tonne will be around THB 3,100 per tonne for quarter 4.

For quarter 4. And in India?

Yes, 1 minute.

Thai baht. Sir, it is in Thai bhat. THB 3,100.

Okay.

It will take a minute to give you the number.

Sure, sir. Sir -- and there is a -- like, on the side, there is a small subsidy that we have received of approx. INR 3 crores from state government.

INR 3.27 crores. That was a CapEx we had done 3 years back to expand our capacity in Pithampur plant, where we were sanctioned a total subsidy of INR 22-odd crores, which is to be paid to us in 8 years' time. So out of 8 years, we have received the third installment on 31st March. Yes. So for next 5 years, we'll get similar amount.

Okay. And what is, sir, generally the inventory turnover that we have over here? Like I just want to -- like inventory days, how do we -- how much do we maintain?

Yes. So you can see that working capital cycle is close to 55 days in India. Yes. This has been brought down....

That's it from my side, sir, with the question on EBITDA per tonne in India?

Yes, 1 minute. Yes. It is close to INR 15,000 per tonne.

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.

Sir, firstly, as you mentioned that the turnover has remained flat. So -- but I missed your point about the volume growth. So the utilization levels for FY '23 and '24 on a combined basis, if you could give the comparative number?

Yes. So as answered in the previous question, Thailand has gradually reached the utilization level of 85%. Okay. But average utilization has been 75% throughout the year. Similarly, India, Pithampur plant is running at 85% -- 84%, 85%. And we expect the same utilization level for Pithampur. And we are starting a new factory in Chennai. So that will start utilizing the capacity installed there.

Okay. And you were mentioning that it will take time to get approval from the OEMs. So what kind of ramp-up are we expecting for this year in terms of the Chennai unit?

Yes. This year, we are expecting 15,000 tonnes of volume from Chennai.

Okay. That is 25%. 60,000 has been in place.

Yes, 25%. Right. You are right.

Sir, can you give us an outline towards the current business environment? You spoke about the unabated imports from China. So if you could just explain to us how the business dynamics are shaped up and what's your -- what are you visualizing in terms of the business in particular? And also the key factors that led to this decline in the EBITDA. I think revenue-wise, we were flat, but EBITDA was down by around 20%. So if you could just give that number?

Yes. So as told in the earlier answer, EBITDA was down in Thailand. Okay. Not as expected by us because of very competitive factors. China is not able to consume because of their economy internally is not doing well. So they have exported a lot of material into market, including Thailand, including India. But in India, there is a quality control order. So it happened for 2 months, and now it is reversing. So that is about India. In Thailand, there is no such restriction or no such measure possible. So we have to compete with Chinese prices, and we have decided to do that. Okay. To remain with a higher market share in the market, we didn't want to leave the space for a competitor. In our products, if the volumes go down, our cost of production also goes up. So, it is a loss for longer time. Okay. And now for the future, our efforts are to -- as I might have told in earlier discussion with shareholders, that we have started a company in U.S.A. for marketing. We have started a representative office in Europe. We have got good results from 2, 3 companies where regular business is happening. And more approvals and more business is likely in the coming years. So with 3 facilities, 2 in India, 1 in Thailand, we want to become a global supplier to tire companies. It's a process which takes time, but it is happening. Okay. And unfortunately, in bead wire business, overnight improvements are not possible. Okay. So you will see your company gradually improving on all these parameters. Yes.

Sir, on the volume front, you have guided to us that we are -- we will be experiencing increased volumes, especially from the new unit also and also for the Thailand unit where the average utilization will go up by 10 percentage. For the new unit at Chennai, sir, do we have any tax benefit or any PLI part that unit has come? Will it be an export-denominated unit particularly or what's the thought process of setting up the Chennai unit?

Yes. So Chennai, we have the PLI benefit of 8% of sales, one-time benefit. And the thought behind Chennai is that it is located very close to customers. So Rajratan will be the only company very close to all the tire companies. So around our facility within overnight distance, there are at least 10 tire companies. Okay. Most of whom we are supplying from our Pithampur facility. So as and when we get approval from those companies, we will start supplying to them. And there is a saving of around INR 3,000 in the freight cost for supplying to them. And this facility, the new facility in Chennai is closer to our raw material supplier, JSW, Vijayanagar. So there is a close to INR 1,000 saving on the inward freight on the raw material. Okay. So these are the reasons for us to be very optimistic and confident about our Chennai investment. Of course -- sorry.

You complete first. I'm sorry.

Yes. So, that is the thought process. And our plan is to reach 60,000 tonnes in 4 years' time. Okay. So, current year, like FY '25, we are projecting a sales of 15,000 tonnes from Chennai facility. Yes.

Sir, this 8% PLI benefit is for how many years and any optimum level of production we have to reach when the benefit will start accruing or from day 1 of sales, we will be getting the benefit?

No, no. We are getting in the first year, we will get on 14,000 tonnes. That is the projected sales we have given to the Steel Ministry. And we are reaching 60,000 tonnes in 4 years' time. So say, if we do 14,000 tonnes this year and then we do 30,000 tonnes next year. This year, we'll get on 14,000 tonnes, next year we'll get on 16,000 tonnes. And subsequently, like this on up to 60,000 tonnes. So as I told, it's one-time benefit of 8% on the sales value.

Two small points, sir. Firstly, on the debt number for this plant, what is our drawn limit for the same? And what is the current -- as on 31st March, I missed your balance sheet numbers, what is our debt number, the long term and the working capital and the cost of funds?

Both put together is below INR 200 crores. So, it is INR 190 crores of total debt on the balance sheet on consolidated basis, which has debt for working capital in Thailand, term loan in Thailand and similarly, working capital in India and term loan in India. You want breakup of India and Thailand?

Yes, sir. Please.

Yes. So on stand-alone in India, the debt is INR 135 crores and [ THB ] 55 crores of debt in Thailand.

Okay. And what is the cost of funds, sir?

Average is, I'll say, 8%. Sorry, including Thailand, it will come down. It will be 7.5%. But, Pranay, can you throw light what is the cost of funds in Thailand? Average?

Yes, sir. Just a minute. Yes, sir. 1 minute.

And one more point on the ForEx impact part, sir. Since it is -- I think so, will be in the currency for Thailand. What would be the impact of the ForEx translation, if any?

Pranay?

Yes, sir. Sir, cost of debt is around 5.8% in Thailand. And what about ForEx question, sir?

In terms of translation to rupee, do we have any ForEx losses or ForEx gains embedded in the numbers?

I thought we have gained ForEx gain in the main balance sheet in the parent company. I think it is there in the balance sheet. 1 minute. Foreign currency gain. 1 minute.

Right. And lastly, sir, I had a point on this with cost of wire bead component in the total tire cost and also taking into account that we are the, I think so, the only player in Thailand, what are -- who are the nearest -- the next competitor size, I want to understand that the economy of scale in the wire bead segment, where we are competing. How many players are there? And also in China, what is the minimum size? What is the capacity of the smallest player, sir? If you can share?

No. Look. China is huge. Okay. And we don't get very clear information about Chinese players. If you look at their website, they mention 0.5 million tonne of capacity like this. But to my understanding, the -- apart from Chinese, Rajratan will become globally #2 after Chennai. Okay. We'll be with 180,000 tonnes per annum capacity. The #1 player other than China is a company in Korea, who has 4 locations other than China. They also have 1 company in China making this. So in China, there are 2, 3 very big ones also who are 0.5 million tonnes, 3 lakh tonnes, 2.5 lakh tonnes kind of. But we don't have the exact numbers, yes. Other than China, Kiswire is one big company. Bekaert, a European company also has 2 locations -- sorry, 2 in Europe, 1 in America. Rajratan will have 2 in India, 1 in Thailand. So I'll consider this as a competition. Yes.

Okay. Right. And the cost of wire bead in the total cost of tire?

Sorry?

The components we make are wire beads. What does it constitute to the total cost of tire?

3% to 4% of the total cost of tire depending on the size of the tire. Yes.

The next question is from the line of Aashav Rakesh Patel from Molecule Ventures PMS. Please go ahead.

Sir, my question is that, as we mentioned that we are also expecting the numbers to soon start contributing from the Chennai plant. So I just wanted to understand what is the industry norm? Do we need to get the approval on the new plant in the same country from our existing clients also? Pre-approval of all the production?

Yes, yes. We have to get the plant approval. We have to get the product approval. Yes. The advantage with us will be that customers are also keen to source from a nearby location. So they will cooperate and hopefully do faster approval. Yes.

So sir, if customers are so keen and if we are in the same vicinity of their own production, why do we envisage the actual ramp-up to happen over a period of 4 years? Earlier, we were planning it to happen over the next 2 to 3 years, right?

Yes. These numbers are based on the projection of the tire companies also. Okay. They are expected to grow and our competitors have also grown. Okay. So it will go with the growth of the market. We cannot suddenly -- and this product, nobody will buy it. It doesn't go for any other application. [Foreign Language]

[Foreign Language] Even faster, so that is very much possible. But [Foreign Language]

Correct. [Foreign Language] that detailed work we have done and that is how we are projecting it. Yes.

But production ramp-up, if provided the demand is very robust, then production ramp-up should not take so much time, right? Next -- within 1 to 2 years, provided the demand is very robust.

Generally, production ramp-up doesn't take time.

Got it, sir. And sir, what would you -- can you please share the outlook of the tire manufacturers, Indian tire manufacturers because we have been seeing a couple of quarters of export -- lackluster exports from their side. But now, it seems that they are increasing the utilization level as well at this point in time.

Yes. They -- we had meetings with all the tire companies in the last 15 days, because once in a year, I personally visit all the companies and talk to them for, outlook for next year business plan, request them for bigger wallet share from their business, all that. So, it is a mix information. Companies like Apollo, their business plans are to grow 7%, 8%, but they say realistically, we don't see that number happening. Okay. JK said we are optimistic this year we'll grow. We will also invest INR 1,400 crores in the capacity. I met BKT, who said this year will be better than last year. Okay, their exports have started and they are positive of at least 8% to 9% growth this year. MRF doesn't talk much. Okay. CEAT is optimistic. They are starting their TBR plant in Chennai and expanding capacity also. So, I'll say it is a mix information.

Got it, sir. And sir, by when do you...

Sorry to interrupt, sir. May I request you to rejoin the question queue, please? [Operator Instructions] Our next question is from the line of Gunit Singh from Counter Cyclical PMS. Please go ahead.

Sir, my question is regarding the main raw materials that we use. So, I believe steel and copper are amongst the main raw materials, but what percentage of, I mean, total raw material costs do they individually constitute?

Yes. Our main raw material is only one, it's steel, high carbon steel wire rod. Copper is not the raw material, it is copper sulfate we use to coat the -- so, the volume and quantity is very small. Okay. So -- and the main raw material is around 62% of our total cost -- total sale. Yes.

So, steel is 62% of total cost. And what about copper sulfate?

Very small. It's INR 200, INR 300 a tonne.

All right. And sir, can you please help me with the volumes in Q4 FY '24 versus Q4 FY '23?

Yes, you can see our presentation, which is uploaded on the website and on the stock exchanges also. We have given all those information in the presentation.

All right. Sir, and with regards to the projection that you're giving of 15,000 tonnes from the Chennai plant, you mentioned that our competitors are also increasing their capacities. So, I mean, who are the main competitors in India and what kind of capacities are they coming up with? And given that this is happening, I mean, how do -- why do we -- what gives us the confidence to, I mean, still project 15,000 tonnes of output from the Chennai plant?

Yes. So, our main competitor is Tata Steel. They have increased the capacity last year. Okay. And they will also try to push bigger quantity. What gives us confidence that we are in this business for 25 years. And if you look at our track record, year-on-year, we have grown. In spite of having 7, 8 competitors, okay, Rajratan has grown. And I think if we are focused, we continue to make good quality, give at a competitive price to our customers, we have the customers who will buy from us. Yes.

All right. Sir, and what kind of EBITDA per tonne can we expect from the Chennai plant in FY '25?

No, first year, I will not -- would not like to give any number on EBITDA from Chennai because it's a new plant. It will take some time to stabilize.

All right. And sir, when -- by which quarter can we expect.....

Sorry to interrupt, sir. May I request you to rejoin the question queue, please?

Yes. This is a follow-up of the same. It's my last question. So I mean, by when can we expect sizable revenues to come from Chennai, from which quarter?

This year, you will -- this year, we'll do around 14,000, 15,000 tonnes volume, which is, you can say, INR 125 crores, INR 130 crores of top line from Chennai.

[Operator Instructions] Our next question is from the line of Saumil from Kotak Mutual Fund. Please go ahead.

Yes. One question from my end. What would be the landed cost of imports for our grade of material, which we sell for the quarter, which went by and especially for the month of March, where you saw a sizable reduction in the import as you alluded?

A Chinese import was coming at a very low price, $800 to $850. Otherwise, from Malaysia or Vietnam, the imports are coming at $980 to $1,000 a tonne. Yes.

And sir our Chennai plant, since we have roughly on a normalized basis, roughly about INR 3,500 to INR 4,000 of cost savings, which you told, would we be significantly competitive and able to arrest the imports? Or you believe, again, it's a fluid situation?

Very difficult to predict what China will do. We will have to look at government support to fight with China because they supply without margin, they supply at a loss also. So that is not a competition we can talk about. Yes. Otherwise, we are competitive with any other country, any other plant in the world other than China.

The next question is from the line of Varun Sharma, who is an investor. Please go ahead.

Sir, in 2020, we did not buy Aradhya Steel.

Sorry to interrupt, sir. Mr. Sharma, your audio is not clear, sir. May I request you to use your handset for optimum audio quality?

Yes, sir. Sir, in 2020, we did not buy Aradhya Steel. Do you feel your decision was right, sir?

Yes, it was the right decision because whoever took it is still struggling with quality. And what I hear from market that they want to scrap the entire bead wire line and put up a new line. But in any way, we were not interested in that technology and that junk. Yes.

Yes, sir. Sir, and my next question is that from the Chennai plant, as we have seen in this quarter that Indian operations in volume terms have not given good results. So, from the Chennai plant, where would the demand come?

No, no. We will sell it to some customers who are low-cost customer. And we were refraining from selling it to them. But because we'll have added capacity, added production and approval from main customers, the bigger companies will take some time. We'll have to sell it to them. We also have some customers in the global market, where approval process is not very long. So, we are targeting all those customers, at least for the first year. Yes.

[Operator Instructions] Our next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.

Sir, a couple of questions. Sir, first on quality control order. Sir, you indicated 1,500 tonnes in the month of March. 1,500 tonnes, I think, in the month of March. But you also indicated that this is something, which can actually give us benefit for 1 year. Sir, why only 1 year, why not 3 years, 5 years? That is one. And sir, what led to this drop in import volumes? Is it cancellation of licenses? Just trying to understand the time line quantum with respect....

No, we have -- we don't have the detailed information. We are only tracking the volumes and volumes have come down. Okay, some counters where, we are the exclusive suppliers and only 1 competitor from Malaysia is supplying to them. So, that counter we are now supplying 100%, which tells us that there is a problem in import. Okay. When we talk to a few customers or try to dig more information, that there are problems -- that is not allowed under the quality control order. Similarly, our own company in Thailand was exporting quantities to India. And now BIS has canceled our license. And on a very flimsy ground. And when we are asking them to, give us a license, applying for that, visit our factory, do the inspection, it is taking very long time. So, there is a resistance from the government as a policy. I cannot say more than this on the call. Yes.

Sure. This is helpful. Sir, just second related question, I think Tata Steel has capacity of 60 KT. How much would their utilization be right now? Any broad ballpark number?

Our information is that they are doing only up to 3,500 to 3,700 tonnes a month, which is what -- which is around 70%, 75% capacity utilization.

Okay, perfect. And sir, just last question on Thailand. Sir, earlier, you had indicated 30% of the volumes basically we export out of Thailand. We have spoken about incremental approvals in U.S. and Europe where we have set up offices. Can you provide some color where this number, 30% is? How it can move going forward? And any updates on the approvals? Sir, that's one bit. And the second bit is there's one bit of Chinese company, Ringda Steel Corp. I think they have announced to set up a facility in Thailand. The headline number is 260,000. Would we have some color on the bead wire capacity over here? And how is it likely to impact the local demand supply, which has obviously adversely got impacted by imports? These are 2 bits on Thailand.

Yes. I think Yashovardhan should answer this. He's looking after exports. He's heading that. Yes.

Yes. So about Ringda, they have a capacity in Thailand, but that's for steel cord, nothing for bead wire. If you have relevant information to share, I would request you to do that. So we have not heard any investment in bead wire manufacturing in Thailand. I believe your next question was regarding export tonnage from Thailand, if I'm not mistaken?

Yes. approvals. Yes, sir.

Yes. So new approvals are happening in Europe. We have -- in the last quarter, we sold our average volume of 400 to 500 tonnes a month to the European market. It took about 2, 2.5 quarters to get approval from that customer, but eventually, we could sell in the last quarter. There is also a development happening with multinational companies in Europe and America. So we are in discussions with Michelin. Also, Bridgestone has registered us as a vendor for the European factories. I believe next year, we are going to work towards getting approval from these plants and some volumes will go in terms of trial lots. I only expect that actual volumes will start going to them after a year from now. So that's the effort we are taking on the export market.

And there are a few customers in U.S. where we are expecting regular business in this year also. Yes.

[Operator Instructions] Our next question is from the line of Lakshmi Narayanan from Tunga Investments. Please go ahead.

I have 2 questions. First is, I just want to understand what are your key strategic priorities for the next 3 to 5 years. The second question is, if I look at Hyosung, I think they are your competitor and they may also have some operations in Vietnam. I just want to understand how Vietnam ramping up capacity by some of your -- some of the other players will positively or negatively affect you? These are the 2 questions.

Yes. So, Hyosung is a competitor, definitely. They are a huge company. Okay. Their main business is making nylon belts for heat belt application. Okay. Bead wire and tire cord is there -- is also there in their product basket. Hyosung has capacity for many years in Vietnam, but they have shifted from Korea to Vietnam. So because their cost in Korea went up, they have shifted their -- they have invested in a new capacity in Vietnam and they have shut down there. We see -- Hyosung never sell it to very low-cost customers, very cheap customers. And yes, they are serious competition. When we go to Michelin and Kiswire and big companies, Michelin and Bridgestone and other companies, Hyosung is also a big competition.

Got it. I mean, and how is Vietnam emerging as a location of competition for you in general? Because there are a lot of agreements between a lot of companies from China relocating to Vietnam is that what we hear.

I have not heard of any other bead wire investment coming in Vietnam. Yashovardhan, are you aware?

No. Tire companies have definitely come up aggressively from China to Vietnam. Hyosung has not announced anything because they already have an ideal capacity, which they have to fulfill. But no further new investment that we are aware of in bead wire.

For making bead wire. Yes.

Got it. And the second question, what are your key priorities?

No. So our focus will remain on making our Chennai investment successful in next 3 years, 4 years, where we want to be doing at least 50% export. It is a port-based location and we want to become a strategic supplier to 2, 3 companies, mainly MRF, Apollo, who have major investment in tire capacities in that location. And also focus, as I told in earlier discussion, that we are aggressively working on export in U.S.A. and Europe, where prices are good. And if we get approval in regular business, that is a profitable business. So focus will be to gain more and more market share in profitable customers and keep growing at 15% to 20% volume every year. Yes.

Sir, how much of your India production is in terms of volume is exported?

India's exports are very low, okay? We are doing major exports from our Thailand facility. But now we want to grow in export from India because of our Chennai location, which is port based.

Sir, just to add there, so why would the volume growth of India looks like muted in spite of the domestic market in India has been, if I'm not wrong, growing at least?

I answered this. In 2 quarters, we had seen influx of imports from China, okay, which reduced our sales in India. We were not able to bring down the price to match with them and customer dependent -- the customers imported big quantities. Now that import has reduced, so we are optimistic about selling more in the coming years.

[Operator Instructions] The next question is from the line of Vaishnavi Deshmukh from Yashwi Securities Private Limited. Please go ahead.

So what is the current market share in India?

Our market share with this increased capacity of Tata and import coming in has come down from earlier level. We are at 38% of the total market share. And in auto companies, it is around 40%.

Okay. So I remember in the last concall, we talked about how the capacity addition from Tata has impacted our overall sales. I think it was by 1,000-odd tonnes? So is that impact still continued in Q4?

No, it was -- Tata tried to sell more, okay, by reducing price, but in this business reducing price doesn't give you more business, okay? So our customers also asked us to reduce the price, okay? And our volumes were intact, but it got impacted in 1 or 2 months, not beyond that.

Okay. Got it. The last question from my side. What kind of total volumes are we eyeing for FY '25 in India operations like from Pithampur?

Yes. Pithampur will be flat because our focus will be to produce more in Chennai and supply from Chennai. So I'm not expecting any volume growth in Pithampur.

Okay. Sir, one last question. The subsidiary that we set up for marketing in the U.S. So that subsidiary would be primarily working for the Chennai operations or the Thailand exports? So what would be the primary focus for this?

Yashovardhan?

Yes. So subsidiaries would be working for sales from all the factories. We have certain existing customers that we supply to in America and Europe from Thailand. So those volumes, we are targeting to grow. And definitely, new business from Chennai will also get developed through these marketing companies in those areas.

Okay. It was -- the question was because we have some kind of 15,000 number in the Chennai operations. So -- and you haven't given any clear guidance for whether this would be additionally impacted. But I know that you are working for the increasing exports from the Thailand operations.

Yes. But some of it will -- we will also try to export from Chennai, but very early to give a very definitive number for next year from Chennai.

The next question is from the line of Samay Kumar, who is an investor. Please go ahead.

So, my first question is about the gross debt, which is INR 190 crores as you said. What will be our plan to reduce it sizable? Is it 2, 3, 4 years? I mean...

Sorry, can you repeat your question, please?

Mr. Samay, may I request that you use your handset, sir?

Now is it fine?

Yes, better.

So my first question was on debt. So, currently we have INR 190 crores in our balance book. What will be the -- when we reduce it sizably?

Yes. So our CapEx plans are almost done. Of course, we have to do remaining CapEx in Chennai. But the CapEx in Thailand is over. CapEx in Pithampur is over and we have to utilize those assets for better production and better volumes in the coming year. So, I will say that these number you will see reducing because the cash flows will be used partly to pay the debt.

Okay. And second question on that, sir, in the 2022 call, you were saying that we are the lowest cost producer in the world. Are we still on the same page?

Yes, we do claim that we are the lowest cost producer, okay? And we will continue to say so because -- but not Chinese, mind it. Chinese capacities are huge and sometimes they can be nasty. Yes. But definitely, our cost of production is lower than major companies like Kiswire, Hyosung and Bekaert and including Tata Steel. Yes. But they have their own raw material, so they claim that their cost is low. But if they get raw material at the same price we get, then I think we are more competitive.

The next question is from the line of Vedant Pathella from ORIM Advisors. Please go ahead.

I just have one small question regarding EBITDA per tonne. So you've guided the Thailand number. Can you also repeat the number for India for EBITDA per tonne?

I told you it's around INR 15,000 per tonne.

Okay. And for Thailand, it is THB 3,100, correct?

Yes.

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

Sir, my question -- first question was other than the recent capacity expansion by Tata Steel, any other domestic or global players, have they announced further capacity expansion plans?

Global, I'm not aware, majorly. But India, yes, there is one company who has made big announcements. Bansal Wire, they're also coming out with a public issue. So you guys will have more information about them than us. The same company had bought Aradhya Steel 4 years back.

Sir, how much they are spending? I think currently, they have 600 tonnes per month.

Yes, but I would like you to ask all these questions to them because their numbers are mind boggling, okay? Difficult for us to even say. They are talking of huge, huge capacity for tire cord. They are talking of huge capacities for bead wire as well, okay? So, frankly speaking, no comments.

Sir, secondly, you were expecting to supply higher quantities to Bridgestone for the Europe plant, which you mentioned that it will start from, I think, next quarter and Sumitomo also for the U.S. plant and also we had some approvals from Korean players in line. So what is the plan for these customers?

Yashovardhan, will you discuss about the customer approvals in Europe and in Korea?

Yes. So for Korea, which we had an aggressive plan, but unfortunately, we couldn't translate into much bigger volumes for all the locations. But all the Korean companies have approved our product. We were expecting a much bigger share to the Korean factories. But they have approved us in their locations in Indonesia and other regions of Southeast Asia. We have supplied volumes to these locations since last 6 months. And now is when they have started evaluating trial orders for the Korean factories. So, I'm expecting more volumes to go to Korea this year. And I think this is a mistake we did in including in the last year's business plan. Regarding Europe, as I mentioned, we've been registered as a vendor by Bridgestone, and we should expect a few hundred tonnes to get dispatched as trial quantities within this financial year. And after that, we will be able to discuss with them actual volume business from next year.

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, you were mentioning about Bansal Wire and Industries, which are planning a public issue, just to the earlier participants as our competitor going ahead?

Yes, yes. They are already an existing player in wire business. They make many, many different types of wires, okay? They also want to now make bead wire and tire cord and LRPC, everything on the earth. Their plan is to make 1 lakh tonne of wires per month, but it is not good to talk more about competition.

No, it's okay. Sir, for the Tata Steel part in particular, sir, when has the Tata Steel forayed into the segment? And in the realm of things, how important is this bead wire segment for them in terms of -- since we know that wherever players like Tata compete...

No, Tata Steel is making bead wire for last 50 years, okay? Yes. They have acquired a company, Special Steels Limited, which was making bead wire and they continue to do this. So it is the 50 years growth they have done, okay? That is why I say sudden growth in this business is very difficult. Yes. And it may be insignificant, but they continue to do it.

Okay, sir. And their capacity in comparison to ours domestically is how much sir? What is their...

They have increased the capacity and their nameplate capacity is 60,000 tonnes now.

Okay. That is equivalent to our existing Pithampur unit?

Our Pithampur unit, yes. Yes. But that is in 2 lines. They have added 1 more line. So they make it in 2 plants. Yes.

Okay, sir. Sir, for the raw material basket, sir, how are things shaping up for raw material? And how do we source them? I mean, [Foreign Language], how does that work?

No, we buy it on a monthly basis. There is an annual understanding of how much we'll buy. Main raw material supplier is JSW. We also buy some quantity from Tata Steel and a little bit intermittently from Electro steel, Nico steel and sometimes JSPL. But 80% is from JSW Vijayanagar, where we have a long-term understanding.

Okay. And 2 bookkeeping questions on the depreciation and ForEx, sir. On the ForEx part, I could read from the -- our submitted return -- submitted number that it translated to around INR 8.56 crores loss for this year on a consolidated level. So if you could correct me on Page #3 of our submission to the exchanges, line item #10i, other comprehensive income exchange difference and translation of foreign operations amounts to around INR 6 crore, 66 lakh loss for this quarter and for the year, INR 8 crore, 56 lakhs.

Yes, sir, that is correct.

Yes, this is right. Your understanding is correct.

Okay, sir. But when earlier, [Foreign Language] So that was, I just wanted to correct that.

This was the -- this is on the balance sheet side, right? That was on P&L side. [Foreign Language] that we have to do mark to market.

Sir. [Foreign Language]

[Foreign Language] So, as accounting policy, we will have to capitalize.

And what will be the depreciation and losses? [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] I'm not expecting big profit from Chennai, okay? The first year is not going to be profitable there. We are not projecting that.

[Foreign Language]

Sorry to interrupt, Mr. Kapoor?

Yes. I will join the queue. [Foreign Language] and I'll join the queue.

[Operator Instructions] The next question is from the line of Aashav Rakesh Patel from Molecule Ventures PMS. Please go ahead.

My question is that given the steep competition, which we are facing in -- regarding our domestic market, especially dumping from China and Thailand as well. So given the industry is quite oligopolistic and very formal industry with only limited few players, known players. So are you on an industry level planning to reach out to BGTR to actually look into the dumping and initiate an antidumping duty regarding our products?

Very difficult to do that. And secondly, if we do it, customers don't like it, okay? We have to -- because government will ask our customers also. Say, we do it in Thailand. So, we'll be sitting across the table with our customers. And then it antagonized the relationship with customers. We have tried long back 10 years back, and it was not a good experience. Yes.

Got it. So sir, then what exactly is the pain point for our industry? At least, how we are placed in, say, for example, FY '24, we faced a significant challenge on our margin -- at our margin front. So, what exactly do you attribute that to? Is it because of Thailand capacities or Thailand imports or aggressive imports in domestic market or sluggishness in manufacturing of the tire players in Indian market? What exactly is the pain point for us?

No, no. I'll not call it pain point. These are business issues we have to deal. We have to find a solution. But overall, it is a good business. Okay. We have grown against all the odds in last 25 years. So, if I look back to the competition we had a few years back or 10 years back or 15 years back, this is nothing, okay? And we are at a much stronger position today. Of course, margins and business can never remain continuously growing. There will be [Foreign Language] business margin, everything. So -- but it is all within control. I don't see much challenges ahead.

[Operator Instructions] The next question is from the line of Kaushik Dani from Abans. Please go ahead.

Am I audible?

Yes.

Yes, sir. Please go ahead.

Considering the challenging environment, I believe this decent set of numbers is really commendable. So, my first question is, as you said that some portion of your Pithampur volumes will get shifted to Chennai plant. In spite of that, we believe that Pithampur should be able to do 60,000 of volumes. So, if we consolidate, typically, we are expecting some sort of growth in the domestic volumes, right?

Yes, yes. We are expecting 20% growth in domestic also, okay? And in Pithampur, we make some more products, black wire, wire for conductors, wire for spring. So, we'll fulfill those capacities also. In case, bead wire sales goes down from Pithampur, we have the option of selling bigger quantities of those products.

Yes. So typically, out of the 72,000 capacity...

And doing 14,000 tonnes in Chennai is a compulsion for PLI commitment.

Right, right. And as you know that out of this 72,000, 60,000 is bead wire and the 12,000 balance is other products, right?

Yes, yes.

So typically, what sort of number do we have for that balance 12,000, what sort of sales do we do?

This year, we have done black wire, how much we have done? This year, we have done 15,000 tonnes of that because bead wire sales didn't grow much.

Right. So that translates into what sort of value roughly?

What sort of value roughly?

Revenues basically?

Yes. It will be around INR 110 crores.

Okay. Great.

INR 100 crores, I'll say. We can give you all this detail later.

Sure. Yes. No problem. Fine. We can take that offline. Also, Chennai being a new plant, as you said, at EBITDA level, it won't be as profitable as the Pithampur plant, right?

To begin with, in the first year.

In the first year. So, like just now we are talking about of EBITDA per tonne of 15,000 for domestic. This would be excluding Chennai, right?

Sorry, come again?

EBITDA per tonne 15,000 is what we spoke, right?

But that was historical about last year, FY '24.

Yes. So, okay. So, it's excluding Chennai. So on a...

So, Chennai didn't give any revenue in.

Right. So going forward, let's say, when we do 14,000 to 15,000 of volumes from Chennai, this 15,000 also will be tapered a little, right?

Difficult to project right now, okay? So many factors are affecting, okay? As I told you, this 15,000 is for the whole year. But if you look at last month, last quarter EBITDA has increased. So I don't know how it will pan out for the whole year.

Ladies and gentlemen, that was the last question for today. As there are no further questions from the participants, I now hand the conference over to Mr. Sailesh Raja from Batlivala & Karani Securities India Private Limited for closing remarks.

Thank you all for attending this session. We especially thank Rajratan team for their time. Sunil, sir, would you like to make any closing comments?

Yes. So thank you, all the shareholders for your keen interest in Rajratan and keep watching us. We are working hard to grow this business, and we are confident that in coming years, your company will grow and reach bigger heights, newer heights. Wish me luck, and I wish you all good luck. Thank you.

Thank you, sir.

Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.