Steelcast Limited (513517) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Steelcast Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Jain from Orient Capital, their Investor Relations Advisors. Thank you, and over to you, sir.

Good afternoon, everyone. Welcome to the Q1 FY '25 Earnings Conference Call of Steelcast Limited. Today on the call, we have Mr. Chetan Tamboli, Chairman and Managing Director; Mr. Rushil Tamboli, Whole Time Director; Mr. Subhash Sharma, Executive Director and Chief Financial Officer; and Mr. Umesh Bhatt, Company Secretary. Before we begin this call, I would like to give a short disclaimer. This call may contain forward-looking statements about the company, which are based on beliefs, opinion and expectations as of today. Actual results may differ materially. These statements are not guarantees of future performance and involve unforeseen risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on Page #2 of the investor presentation of the company, which has been uploaded on the stock exchange and the company's website as well. With this, I now hand over the call to Mr. Chetan Tamboli sir for his opening remarks. Over to you, sir.

Good afternoon, everyone. A very warm welcome to the investors call for the results of Q1 FY '25. We find ourself dedicating a landscape profoundly shaped by global geopolitical ships. The ongoing conflicts and escalating tensions in the Middle East, upcoming elections in the U.S. and evolving political scenarios in the U.S. and UK arouse poised to influence the global economy trajectory. Major central banks have hinted at potential rate cuts throughout the year, yet the persistent challenge of inflation remains. During our Q4 FY '24 call, we anticipate growth of Q1 FY '25 and also Q2 FY '25. While we did experience a revenue degrowth on a year-on-year basis, primarily due to liquidation of inventory in North America and Europe. However, we remain steadfast in our optimism for a performance turnaround starting from Q3 FY '25. We very strongly believe that Q2 FY '25, in all probabilities, will be the bottom for the year FY '25, and we should be on upward trajectory starting from Q3 FY '25 onwards. In Q1 FY '25, we reported a revenue of approximately INR 78 crores. Despite the slowdown, our commitment to managing operating expenses allowed us to maintain a good EBITDA margin of 26%, exceeding our guided margin of 21%, 22%. The strong performance is a testament to our continuous efforts to optimize costs during challenging times. Our EBITDA for the quarter stood at approximately INR 20 crores, with a margin of around 26%. Our PAT for the quarter was INR 13 crores with a PAT margin of 16.3%. Our revenue split between exports and domestic sales was 51% and 49%, respectively. We experienced volatility in both markets due to global inventory liquidation and a slightly slowdown in the mining, construction, equipment sector. The domestic mining and construction equipment industry reported a 5% growth in April, June quarter. Hindered by a slowdown in new project award due to general elections in the country. However, we are very optimistic about the government sustained focus on infrastructure development, which is expected to ramp up new project awards and faster volume increases than anticipated in H2 FY 2025. Amidst this challenging macro environment, we have remained focused on our strategic initiatives. To cultivate new customer relationships and expand our export markets from 15 to 18 countries over the next 2 years. We have diversified from mining focus and construction sector. Including the railroad business, which aims to grow from 3% in FY '24 to 20% in the next few years. Additionally, our focus on ground engaging tools [to this sector improvement] and our venture into the Defense sector has seen us complete deliveries of critical components, reaching as the first company to develop such components for defense. Over the year, we have repaid all our short-term and long-term debt and are now focusing on using internal accruals to fuel our CapEx starting from FY '26. The increasing adoption of China Plus One strategy by customers is also a positive development with companies like American railroad come seeking to supplement their supply chains from non-China countries bolstering our entry to the railroad sector. Despite the current global economic headwinds, including war, inflation, and significant elections, Steelcast has successfully implemented strategies for cost optimization, exploring new sectors, advancing technology and focusing on new export markets. Our resilience aided by Indian government support for CapEx positions us well for the future. We believe that the measures we have taken over the years [indiscernible] in driving our success in the coming 2 to 3 years. On behalf of Steelcast and [indiscernible] finance team, I want to thank you all for joining this call. However, if you have any questions, feel free to ask them. Thank you.

[Operator Instructions] The first question is from the line of Sahil Sanghvi from Monarch Network Capital.

Now my first question is, sir, can you give you me the volume number for this quarter?

In the first quarter, April, June FY '25. We sell [ 2,635 tonnes ].

So that should imply some bit of correction on the pricing also the realization.

In the last 2 quarters, there have been some reduction in input. So the price reduction is to the extent of 1.5% to 1.75%.

That's quarter-on-quarter or Y-o-Y?

Quarter-on-quarter.

Got it, sir. And what was the contribution from American rail roads in this quarter?

I think in terms of percentage of the total sales will be about 2%, 2.5%.

Got it. Got it. And just wanted to understand the further trajectory when it comes to the realizations because we are seeing steel prices correct -- in the last few weeks also. So are you expecting some little more pricing correction?

No, I think we have -- we believe the input prices are somewhere near the bottom is unlikely to go down now. And if at all, there might be on an increasing trend from the third quarter onwards.

And the margin correction was largely because of the pricing pressure and the fixed costs because of the lower utilization?

I think the main significant reason is the lower utilization. Otherwise, in terms of gross profit margins, the PAT margins we are on track, and we should perform once the volume increases.

Got it, sir. And just wanted to confirm one thing. You didn't speak about some kind of product you develop or defense? Is there some meaningful development on that front over and above what we discussed in the last con call?

We are waiting from Ministry of Defense to float out new tenders. So as and when the new tenders we'll be bidding for it. And as of now, we are the only ones who have developed this part. So we'll be competing with some foreign companies for this past to passing is important now. So we are hoping that these tenders come up as soon as possible. So we get some advantage of those volumes in the current FY '25.

The next question is from the line of Harshil Solanki from Equitree Capital.

Sir, just continuing from last question, can you specify the part which you have developed for the defense? We were supplying [indiscernible] and what new part are you talking?

I'm extremely sorry. These are confidential things. If at all we -- if we -- when we move -- when we meet personally, we can further interact on it. We can show you also those parts. But because of confidentialities, we can't talk about the exact specific part, please excuse us.

No worries, no worries, sir, got it. Sir, we're saying that Q3 there would be improvement. So do we have any order book or a production schedule in our hands, which gives us the comfort that Q3 will be better for us.

Yes. Our order books have gone up in the past 1 to 2 weeks, A. B, after interaction with practically all our customers, we have got forward litigations for the month of October, November, December. So putting all these things together, why we believe that we will be on an upfront from Q3 onwards and which we'll see when we have an investor call after the Q3 results.

And sir, I had two questions on the annual report. So you have mentioned that we are looking to do CapEx to make larger weight items. And then we are looking to make parts which our customers do and enter to next stage of products, which are addressed by the few global foundries. So basically, we are looking to move up the value chain. So can you please highlight what all we are doing in those lines?

So I think 2 quarters back, we had also reported on company's website also as well as on the stock exchange also that there are 4 projects we've been working on. The soft work has already been over. And one of those projects is to make heavier piece weight, other is to put additional capacity of 10,000 tonnes. Third thing is to go into ground engaging tool. Now all these projects, actually, the soft work is already ready. So once we see some visibility from different customers, we will figure these investments one by one, which one will fructify first, at the moment we have no idea. But efforts are on for all the 4 projects which we've been working on. And we also expect the utilization to go to about 75% in FY '26. So additional expansion is bigger there.

And on the productivity side, we have said that, we target to improve it by 25%. So what are the further levers that we have? You've said automation, but can you highlight some more on what are you planning to do to improve the productivity?

In terms of automation, by and large we have finished doing whatever is possible in terms of automation. There is a constant drive towards improvement of productivity, better layouts, lean manufacturing better. So year-on-year, we will definitely see increase in productivity levels. Only thing is for the year [ FY '24 ] when the volumes were lower, in fact, the productivity went down lower because we have not retrenched any people. We have retained all our people. So the -- so no, I don't remember about this 25% increase in productivity level when did we speak, but we will see year-on-year definitely 7% to 8% increase in productivity level.

[Operator Instructions] The next question is from the line of Bharat Sheth from Quest Investment. Please, go ahead.

Good afternoon, Chetan bhai. And thanks, I mean doing wonderfully in challenging times.

Thank you, Bharat bhai.

Chetan bhai, just want to get a sense if there is -- we don't want -- I don't want any much detail on this defense part. But if you can give some color what is the kind of potential that you see in this business? What you spoke that you are expecting some kind of a tender. So -- and will it be our regular business or one kind of -- I mean, one business and again you have to wait for. So if you can give a little more color on the total potential of this business.

See the potential of the parts which we have developed might be in the region of INR 60 crores to INR 65 crores. And these are parts of combat vehicles, which are being imported now. Now the question is, we have no idea on what inventories the army has. But we have been told that there will be a new tender coming up and we can participate in it. The question is now time. When will it come out and when we will bid for it. But -- so let's hope for the best that this is done as soon as possible, so we get some volumes out of this business.

[Operator Instructions] The next question is from the line of Bharat Sheth from Quest Investment.

Sorry, Chetan bhai, my call got dropped off and I was disconnected. I mean, you said that it is INR 60 crores, INR 65 crores and then my line got disconnected. So if you can...

So the potential for this part is may be around INR 60 crores, INR 65 crores. So -- but we'll have to see -- we don't know what inventories the army will have. We have no idea on it. So -- we'll have to wait till we see the tender document and then we will be bidding for it. And we are hoping that this tender is out immediately open, then followed by opening immediately early and we getting an order thereafter. So let's hope for the best that we get to deliver some part of that in the current financial year.

Okay. And second, Chetan bhai you said, I mean expanding country from, say, 15 to, I mean, 3 more countries, so what is the status of that? And again, for those countries, we are working for the same component currently, mining, or it will be a different industry we are targeting?

For these 3 countries from 15 going up to 18, we already have trial orders for new parts development and these are from the construction industry, not from mining or earthmoving but these are from construction industry. So hopefully, we develop those parts in the current financial year. So we'll do some volumes in the next financial year. But we want to at least cater to about 25 countries in the world. This is why [indiscernible] Bharat bhai. So we should hit -- so we should reach 18, hopefully, in the early part of next year and our drive to increase this footprint of Steelcast to 25, it's an ongoing and continuous process. And also our focus on railroad is pretty much on track. And as I said earlier on this call that from 3% sales in the railroad industry in FY '24, we want to get to about 20% in the coming 2 to 3 years' time. So I can say our direction is clear, the path is clear. The question is now the time and the execution.

Fair, sir. Second, I mean, is -- I mean, if one has to look at, I mean, this has good diverse [indiscernible] but realization-wise and profitability-wise is the same at par with the -- this mining equipment or it is little lower?

No, as we've been -- Bharat bhai, we've been saying on conference calls and also investors whenever they visit that we're aiming at 21%, 22% EBITDA across all parts. We may get sometimes more, we may get sometimes less, but our aiming is 21%, 22%, and then we manage 3%, 4% by way of different cost deductions, exchange benefits and things like that. But -- so the direction is also clear, and we are quite focused on this.

[Operator Instructions] The next question is from the line of [ Dipak Saha ] from DRChoksey FinServ Private Limited.

Chetan, sir, first of all, thanks and congratulations to you for showing such resilience in this quarter despite the challenging times, the kind of resilience you have shown, that's really commendable. Sir, just one thought process I'm trying to understand. If we see Steelcast comparing where it was mainly mining focused company now diversified into mining, construction, earthmoving, defense, railway, right? So that particular thing has taken place over the years and this is very good diversification that you have done. Now moving ahead, if you further enter and diversify into other segments, you constantly do R&D, right, and spending some amount of money on research. What is your thought process whenever -- when thinking about getting into a particular industry and how do you -- as well how the organization thinks before entering into any new particular vertical or a particular sector? Because metrically you have your capabilities focused in a particular industry. Now when you move to another one, how do you think about it before been making that decisive call, this is my first question, sir?

So Steelcast has been now so far was focused on mining, earthmoving and then to some extent, construction. We have added 4 or 5 different industries. So the industries is we cater to are now close to about 9. We don't plan to add any more industry at this point of time. Our focus is -- see other than the 3 major, we'll focus on the 4 where the volumes have to go up from 1%, 2% to anywhere from 10% to 20%. With railroad we want to [ reach ] 20%. So there is a -- there are industries like locomotive, there's ground-engaging tools. So within this 5, 6 industries we want to grow more compared to the base industry what we have been doing. So to answer your question, we don't plan anything at this point of time to add another industry.

That's really fair. I think the kind of trajectory you have taken and your continuous focus to grow the muscle in the existing segments you've entered would be more prudent and -- because [indiscernible] is strategy, clear for that. Sir, another thing, now we've been also a material player in the export segment, right? What kind of movement you've seen on the freight side, what about those challenges within the geopolitical structure that is there. And I know it's a bit difficult to call out whether it is going to be structural shift or transitory, sir, just trying to understand, sir, how is your thought there because we've been seeing this for quite some time, though we are expecting not Steelcast as a company but the industry all around. What is your sense, sir? How these things are turning around?

Are you talking about the geopolitical situation or some other thing?

The freight part that the challenges you are facing on the freight side. Because you're exposing on the export, so you have to do that transport part, right? So how challenging those things have become compared to? And then how quick you expect certain turnaround? Or is this at all expected and going to be the new normal probably?

Okay. I think you may not be aware, but there are many investors who are aware that since 2019 onwards we changed our policy that we will sell on ex works basis only. So any increase in freight cost, which that happens directly to our customers, we are not being affected. But that doesn't mean we are happy about it. Because at some point, if the freight costs go very high, then they not become viable to buy from India. So as such, this is not affecting us. Yes, but what is affecting us is the voyage time between India and the countries we export that has increased significantly. So with that result, there are shipments getting delayed. Customers are also worried about on time still getting it. But, I think, by the end of the calendar year, whether it's Russia-Ukraine war or the Middle East tensions or things like that, they should all subside and we should -- the world should be more peaceful effective January '25. This is my personal intuition, you call or my personal -- what feel might happen.

Got it. And that's really helpful, sir. One last thing because I wrap up from my end. Sir, on the railway side, usually you give a guidance of, I think, if I'm not mistaken, around 5% for FY '25 and keep on increasing it on the subsequent year. So are we still sticking to those kind of numbers for the full year?

Absolutely. I just said that we want to get to 20%. So that's the goal for FY '28. So you should see -- should keep seeing improvements year-on-year when we move forward. And maybe at some point of time, we will also report on the stock exchanges and also in the annual report of our industry-wide sales year-on-year will give the past data and also the likely future projections also.

[Operator Instructions] The next question is from the line of Praneeth from Samatva Investments.

So one thing I was curious about, you're interested adding more customers across different industries other than mining itself. But the thing is that, at the end of the day I think we are still very mining concentrated, right, earthmoving and all of that. So are you not planning on onboarding customers little away from the mining industry itself? Like, right now, you've ventured into construction and locomotives. So are we -- on the same tangent are we going to onboard more other industries? Or like are we planning on changing few, some at least to take the risk away from mining industry to other...

No, no. As I said, the major concentration within 3 industries, but we have added 6 more a few years ago. So the focus is how do we increase customers in those 6. And that's a continuous and ongoing process. We will keep adding more customers in these 6 different industries than what we have been before. And -- the efforts are also on, and even in the existing industries where we're catering, we keep adding customers in those industries also. So the idea is to become more and more broad-based and make the company significantly risk-free. So, like in the past, we need to have uptrend and downtrend 40% -- 30%, 40% that has been reduced to 10%, 15%. In the next 1 or 2 years, we want the variation just to be 4%, 5%. And that happens only when the company is broad based with new customers or more customers in every industry. So the process is on, the path is clear, the direction is clear. So we will get there, hopefully, in the next couple of years.

Understood. So I had one more question around similar lines. In a previous earnings call, you mentioned that -- our products are 25% cheaper than the European electronics that are made. Are we -- does that thing still remain till this date? And does this 25% price parity include the freight and transmission costs, the landing cost of the consumer at the particular location? Or is it before all of that?

No. For sure. The -- our costs are definitely 25%, 28% lower. And these are all comparisons based on landed cost at the customer end, which includes all the invert costs in the respective countries, the freight cost or any other logistics cost, these all put together. We were lower and we are continuing to be lower.

Understood. One more question on the broad base of the company. So, basically, in 2013, we had INR 287 crores worth of sales. And it took almost 10 years -- 9 years for us to reach back to a similar level of INR 302 crores in 2022. Like in between, we reached in 2019, but that was an again spike. So what -- like you told you've been onboarding customers throughout this time. So why haven't we seen the changes like the revenue growth before this?

I think a very good question. If you see 2013, we did the number what you just said, but we also had a huge debt. So we were financially in great difficulty. We almost became an NPA company, but just managed to survive before getting the black spot on the company. So then the company struggled for all kinds of funds and when there are survival issues, the focus is more on survival than growth. This is bound to happen for any company in any field. So few years went away in trying to survive here. Having survived, we have -- we are on the path of -- we made company debt-free, we added more customers. So those things will accelerate now.

Understood. That's a great job you are doing that. So like the sudden drop was the reason because you intensely avoided few orders to improve the balance sheet or that customers left us or that to refrain from giving further orders? What was the situation?

See, several things happened together. One was huge investments of about INR 130 crores, INR 140 crores done at that time in FY '11, FY '12, FY '13, A. B, severe recession in the end user industries we were catering then. So with that, it resulted into lower orders. So lower orders are very high breakeven points, huge liability of people, huge debt, huge interest payment. And the company wasn't broad-based like what we are today. So all this affected us, and we got out of it and the past is left behind. And we will strive to perform what we are envisaging further making the company risk-free, broad base the company, keep doing it more and more. So that's the plan.

Okay. Understood. So one more question around those lines. Like over time, you told you've improved quality [indiscernible] and improved all those factors. Our rejection rate, I think, you mentioned in one of the annual report in 2017 was around 10%. Does the same level remain now or with the efforts we've put into improving production practices, has it reduced further?

Sir, we were never at 10%. I don't think I would have ever said at 10%. At 10% rejection, no company will survive.

But you've mentioned in the 2017 annual report.

So 2017, you said?

Yes, 2017.

So we'll check on that. It's about 7 years, I don't remember now. But anyway, our customer rejects are less than 0.25%. Internal rejections are anywhere from 3% to 3.5%. And these are the levels one has to maintain to be globally competitive, and we will check on this 2017 annual report. And if you can give your e-mail ID and your name to Orient Capital, we'll also respond to you.

If you don't mind, I have one more question. In your annual report, you mentioned that for replacement parts, you wanted to put another greenfield facility. So what is the reason for having a new facility than like expanding the existing ones to serve the replacement market? And one more along the lines of replacement market, like, have we not been putting efforts into finding replacement market -- like products for replacement market or like if we are not serving them, who are serving them at the moment? And how is the competition from that side?

See, the parts for the replacement market can be made in the existing facility, right? But the replacement market is very competitive. The layout and the facilities have to be slightly different if you want to be globally competitive for replacement parts. So we are talking to a few big companies for a long-term contract. And if that fructifies, we will put up a dedicated facility for this replacement part, though as I said, we can make in the existing company. But once you want to be globally competitive, you might need to have a dedicated facility.

But like this -- like we had like 1% replacement revenue contribution, like, 4, 5 years ago, 1%. And it has remained from that 1% and it has, I think, dropped down to 0 at the moment. So, like, have you stopped -- at the moment did we stop completely focusing on it till we put up the new facility? Or what has happened for that?

No, at the moment, we do cater to replacement market through our existing OEM customers. In the past, we used to do that 1% directly. So in fact, we may be doing close to 10% of the sales in the replacement market, but it goes through our OEM customers. But what we intent do is significant increase than what we are doing now. The intention is to make the company -- further derisk the company.

But the thing is -- so what is the primary -- like who are the primary competitors, like, is it China, or it Europe for replacement market? Like, was it India itself?

The industry where we are focusing now for the replacement market, I think, China is the dominant supplier. And -- but once again, we have selected a product mix where competition to an extent is a little less. So, in general, China is a dominant supplier, but we have our own space, we have targeted certain products. And we intend to -- and we are working on that.

But the thing is you just told the cost -- can I come -- is it done or shall I complete my question?

Yes, please go ahead.

So I'm curious like you've mentioned that in the replacement market, the competitor forces are much higher than the OEM, direct -- the first time OEM market. So I'm curious, like, if there is higher competition, the margins will obviously reduced. You have been guiding to us that the margins are going to remain at 20%, 22%, which is very high to begin with. Upgrade in casting that's very high. The thing is with our product mix, it skewed towards replacement as we keep putting more efforts. Are you expecting a drop in EBITDA margin, the guidance from 22% to a little lower? Or how is it going to be?

No, sir. Our focus will be always, whether it is x products, y products or z products, it will be 21%, 22%. We do not want to do business below that.

[Operator Instructions] The next question is from the line of Shikha Mehta from Time & Tide Advisors.

I just have a few questions. I'm not aware if someone already asked this, this what is our capacity?

The capacity utilization for the current year FY '25 will be about 43%, 44%.

And if I'm not wrong, you are targeting next year to be closer to 75%, right?

I think, there is a guidance given on the -- in the company's website also, a macro plan what we plan to do. And if I remember correctly, we will reach 75%, somewhere in the middle of FY '27.

FY '27. Okay. So post that we will be looking to add our new capacity?

Yes, somewhere around that area. Once we see a clear visibility that we are getting to 75%, we may do it beforehand also. But as a policy, we really don't trigger this high CapEx in anticipation of something good likely to happen. Once we see this visibility, we will trigger this.

Understood. And sir, again, since a lot of our revenues are currently dependent on the mining industry, I just wanted to pick your brains a bit to understand what you think about the industry as a whole because over the last few months and almost year actually, more mines have been being awarded domestically. So are we seeing any pickup in the industry as a whole or not yet?

See, these industries, once the mines are awarded, these are industries which have a very long gestation period. Our customers are also quite upbeat on allotment of mines not only in India, but across the world. But from this to change into a good business situation, it takes anywhere from 1 to 2 years' time. So we see maybe from third quarter onwards mining and earthmoving industry also likely to do well. And also the other industries also.

And sir, again to understand this a bit better. One would assume that if mining picks up as an industry, our company should do substantially better than what we are guiding, right? So would that be a fair judgment to make? Or do you think that's not how it works?

See, why we're saying that the third quarter onwards, we should start seeing an uptrend for a couple of reasons. One is the excess inventory in the supply chain, right from our customers, the dealers or everywhere. That is almost at the end of liquidation. There is a little slowdown from last quarter onwards, which is also likely to end, hopefully, at the end of second quarter. And -- as per the information from our customers, they see an uptrend rapidly from the third quarter. So there are every positive factors and we believe that our second quarter might be the lowest in the coming times.

Sure. Sir, I completely agree with what you are saying. I just believe that may be our guidance given how the industry is going to pick up, might be a little on the more conservative side. Is that correct to assume?

I would not say it's a conservative side. I mean, it's a -- see because these are all predictions are based on information from customers, information from the world market. And -- so I wouldn't say either it is optimistic or pessimistic or conservative something like that. At least I would say these are fair judgments.

Understood. And sir, apart from the potential...

Ms. Shikha, sorry to interrupt. Yes, you are audible, but sorry to interrupt. We would request you to enter the queue for your follow-up question.

I just have a small question. If I can just complete it. It won't take more than a minute.

It's okay. Please complete your question.

Sir, we spoke about our new defense part, which we are currently developing. And apart from this, we also have the [ Arjun tank ], Track Pad, which we've developed historically. Is anything else in the pipeline currently from the defense point of view?

No madam. There's nothing else in the pipeline. We are just hoping to get this hopefully to bid on the new tender, which is likely to come. But there are no other parts, which we can say that it's in pipeline or so.

[Operator Instructions] The next question is from the line of [ Nishit Jain ] from S&J Investments.

May I know the current order book for FY '25?

About INR 65 crores.

Okay. And out of this, how much can we expect from exports?

Roughly, about maybe 50% to 53%, maybe exports, balance will be India.

The next question is from the line of Nirvana Laha from Badrinath Holdings.

Sir, you've mentioned that for the last few quarters, your demand has been depressed because of destocking at your customer's end. So just wanted more understanding on that. So are our products like need to order? Or are they make to stock because destocking generally happens when the product is standardized. I thought in heavy industrial castings you would be making more make-to-order kind of products. So just wanted some clarity like where did we see the destocking and about it.

See our products, 100% are make to order, a. B, the same products which are -- these are used in new equipment business also and these products are used for maintenance also. So there were excess inventories built in FY '24 at the customer end and also at dealer's end. So at some point, probably when people realize that, okay, they have excess inventories, they will start destocking. So the destocking happens at the customer end also and at the dealer's end also. Whatever is going for maintenance purposes, which goes to [ business there ]. They also started destocking. So though we have special make-to-order products, but destocking happens there also.

Okay, sir. Which industry, did we see the destocking happening? In the earthmoving industry or like across the industry?

Of course, a significant portion happened from mining, earthmoving and construction, but also others also. We kept hearing on this for about 3, 4 quarters, like, this is what is happening. So which we now get an indication that this is almost over now. And that's the reason we are predicting improved results from Q3 onwards.

Sir, if I look at your past history, you explained very nicely like in 2013, what the issue was for the next 4, 5 years. But there was another phase from like 2020 onwards where our revenues dipped quite a lot. So what happened in that case? And was that a result of cyclicity in our demand? And as you've said that you've diversified now, so are we unlikely to see that kind of a dip going forward in our journey?

See, if you see FY '20 and FY '21, these were COVID years, okay. If you delete these 2 years from the excel sheet, you will see steady and moderation growth -- moderate growth from FY '17 onwards still today. So those -- these were because of COVID.

Okay, sir. Final question, sir, from my side. So you said that you are at around 42%, 43% utilization now. And by FY '26 or mid of FY '27, you hope to be at 75%. So that looks like a 30% kind of annual growth on volume. So my question is, historically, we have not seen such strong growth. So is this something that we have strong visibility on? And second is, along with volumes, do we expect that realizations will also continue at the same kind of level over the next 2, 3 years for this growth?

See, when I say middle of FY 2027, we'll be talking about almost 2.5 years. So that 30% growth you need to distribute between 2 years. Once you do that, it becomes 15% which is a normal growth. So there's every possibility that this can happen. B, question on the margins. As I said, we have a policy that we will work and aim at 21%, 22% margin. We don't to work below this. We would -- we will not be in a hurry to spin the capacities. And so we will do -- we'll work on top line, but we'll equally give a lot of importance to bottom line also.

In the interest of time, this was the last question for today's conference call. I would now like to hand the conference over to Mr. Chetan Tamboli sir, for closing comments.

Thank you all for joining this first quarter investors call. We deeply appreciate your participation. Thank you for asking very, very good and relevant questions. Feel free to reach out to us directly or through Orient Capital, who are our advisers. And we look forward connecting with you again in the next quarter. Thank you. Thank you very much.

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