Agarwal Industrial Corporation Ltd (AGARIND) Q3 FY23 Earnings Concall Transcript

Agarwal Industrial Corporation Ltd (NSE: AGARIND) Q3 FY23 Earnings Concall dated Feb. 13, 2023

Corporate Participants:

Vipin Agarwal — Chief Financial Officer

Analysts:

Astha Jain — Hem Securities Limited — Analyst

Keshav Kumar — RakSan Investors — Analyst

Bhomik Shah — Individual Investor — Analyst

Vivek — Macquarie Financial — Analyst

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Rahul Chandarana — Sunidhi Securities — Analyst

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Agarwal Industrial Corporation Limited Q3 and Nine Months Ended FY ’23 Earnings Conference Call hosted by Hem Securities. [Operator Instructions]

I now hand the conference over to Ms. Astha Jain, Senior Research Analyst from Hem Securities Limited. Thank you. And over to you, ma’am.

Astha Jain — Hem Securities Limited — Analyst

Thank you, Lisan. A very good evening, ladies and gentlemen. Thank you for joining the Agarwal Industrial Corporation Limited Q3 and nine months ended FY ’23 earning call. Joining us on the call today from the management team is Mr. Vipin Agarwal, Chief Financial Officer. We will commence the call with the opening thoughts from the management, post which we will open the forum for Q&A session, where the management will be glad to respond to any queries that you may have. At this point, I would like to add that some of the statements made or discussed on the conference call may be forward-looking in nature and the actual results may vary from these forward-looking statements.

I would now like to hand over the call to Mr. Vipin Agarwal to commence by sharing his thoughts on the performance, strategic progress made by the Company. Thank you. And over to you, sir.

Vipin Agarwal — Chief Financial Officer

Thank you very much, Astha ma’am. Good afternoon, all, and a very welcome — very welcome to everyone who has joined us today. I take the pleasure of welcoming you all to the Q3 FY ’23 earnings conference call of Agarwal Industrial Corporation Limited.

Let me start by giving you a brief overview of the Company’s business and will then take you through the financials, we’ll then be happy to take questions if you have any. Agarwal Industrial Corporation is an integrated infra-ancillary Company focused on a wide range of innovative bitumen products backed by our world-class logistics infrastructure, which comprises of eight large marine vessels, having total capacity of 49,000 metric tons, which are used in importing raw materials from oil-producing countries.

Company is having a fleet size of about 650 tankers of LPG and Bitumen and seven storage terminals onboarding bitumen, totaling to a capacity of 49,000 metric tons, having direct access to the shipping network located at Hazira Port, Mumbai Port, Dighi Port, Karwar Port, Mangalore Port and Haldia Port, and Vadodara is in our in-line location where the imported product is being stored. We along with our subsidiaries have six manufacturing plants located at Taloja, Vadodara, Belgaum, Hyderabad, Kochi and Guwahati.

In the Budget 2023, Road Ministry has given a 33% hike in allocation to INR2.7 lakh crores for the financial year ’23-’24 to help the ministry meet the 25,000 kilometer road development target announced in the 2023 budget. This urban phase is creating a huge demand for raw materials, thereby, our responsibilities of catering bitumen has further increased.

Going to the financial results reported starting with our consolidated quarter highlights of Q3 FY ’23. The Company’s revenue has grown, growth of 45.42% in Q3 FY ’23 at INR553.90 crores compared to INR380.90 crores in Q3 FY ’22. The Company reported EBIDTA [Phonetic] of INR39.80 crores in Q3 FY ’23 versus INR33.40 crores in Q3 FY ’22, a growth of 19.18%. Company’s PAT has improved by 22.37% from INR20.60 crores in Q3 FY ’22 to INR25.21 crores in Q3 FY ’23. The Company’s revenue has seen a growth of 43.71% in nine months of FY ’23 at INR1,363.90 crores versus INR949.08 crores in nine months FY ’22.

We have reported a EBIDTA of INR101.37 crores in nine months FY ’23, a growth of 40.95% versus INR71.92 crores in nine months FY ’22. The company has reported PAT of INR63.96 crores in nine months FY ’23, a growth of 60.08% versus INR39.95 crores in nine months FY ’22. Further, I would like to add the demand trend continues to be in favor across the industry, which is quite beneficial for us. Our customer understand and appreciate the Company’s execution abilities, which constantly results in the financial growth of the Company’s market share. We continue to demonstrate profitable performance in long-term to the relentless focus on leveraging our two decades of experience in bitumen and logistics.

With this, I would like to conclude my remarks and would now request the moderator to open the forum for questions from the participants. Thank you so much.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi, good afternoon. Sir, though you clarified in the past about new sizable bitumen capacities coming up in India, but just for the sake of reputation, I would put the question a bit differently. So the overall refining capacity is expected to give about 20% in next three years and developed by 2030, at least as per the plans. So does it not mean that the…

Vipin Agarwal — Chief Financial Officer

Can you please repeat again, please?

Keshav Kumar — RakSan Investors — Analyst

Yeah. So sir, the Indian refining capacity is expected…

Vipin Agarwal — Chief Financial Officer

I think your mobile is close to your phone…

Keshav Kumar — RakSan Investors — Analyst

Is it better now, sir?

Operator

Sorry to interrupt, members of [Phonetic] the management team.

Vipin Agarwal — Chief Financial Officer

Hello?

Operator

Hello?

Vipin Agarwal — Chief Financial Officer

Yeah.

Operator

Sir, the disturbance is from the management’s line.

Vipin Agarwal — Chief Financial Officer

There is some disturbance.

Operator

Sir, give me a minute, I’m sorting the disturbance. Ladies and gentlemen, please stay connected while we reconnect the management. Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.

Keshav Kumar — RakSan Investors — Analyst

Am I audible now, sir?

Vipin Agarwal — Chief Financial Officer

Yeah.

Keshav Kumar — RakSan Investors — Analyst

Yeah. So sir, the domestic refining capacity is expected to go up by 20% in next three years and 50% by 2030. So does it not mean that the domestic bitumen production should also go up commensurately or that’s not the way to look at it?

Vipin Agarwal — Chief Financial Officer

Yeah, thank you for your question. No, there is absolutely no chance of any bitumen production going up by a significant level at all in the next three years. All the — maybe refining other products like petrol, diesel or other — maybe petroleum products may go up, but as far as bitumen is concerned, there is no capacity increase going to happen in next three years as per the information available.

Keshav Kumar — RakSan Investors — Analyst

Sure. Thank you, sir. Thank you.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. The next question is from the line of Bhomik Shah, an Individual Investor. Please go ahead.

Bhomik Shah — Individual Investor — Analyst

Hello?

Vipin Agarwal — Chief Financial Officer

Yeah, good afternoon.

Bhomik Shah — Individual Investor — Analyst

Hi, good afternoon. Yeah, my question is actually, I think in this three year’s budget, we can clearly see the trend of government actually, which is giving the more impetus to infrastructure actually, which is I think beneficial for our Company.

Vipin Agarwal — Chief Financial Officer

Yeah.

Bhomik Shah — Individual Investor — Analyst

So is there any like I have been in your con calls many times. So management has been guiding that 20% volume growth will be looking out year-on year actually, that is what we get. So is there any chance that in the next year, next financial year, we may see a higher volume of our volume growth actually compared to the previous financial years looking to the impact of the government on the infrastructure? Is there any look out for this from our side? And my one more question is that in the last one or two con calls, I think we were told that I think we are having the superior network in South, East and West compared to the North actually. So are we capitalizing anything to have more actually focus on the North area, I think there is also a lot of construction works going on actually there?

Vipin Agarwal — Chief Financial Officer

Thank you so much. Thank you so much. To answer your first call, we have been growing at 20% volume every year. So if last year we had close near 4 lakh tons and if we are closing somewhere around 480,000 tons this year, so next year, we preferably we will be trying to close somewhere between 550,000 tons to 600,000 tons, which is anyways a production capacity of one of the refineries if you say in Mumbai. It’s a huge quantity and for any increasing in target, we also request basic other facilities like logistics, we are focusing. That’s the reason we have been focusing on increasing the vessel that would help us in getting the same in-line to bring more products at Indian ports.

Bhomik Shah — Individual Investor — Analyst

Correct, correct.

Vipin Agarwal — Chief Financial Officer

And your second point was about infrastructure, the government…

Bhomik Shah — Individual Investor — Analyst

Connecting into North region actually?

Vipin Agarwal — Chief Financial Officer

Yeah, North, North, yeah. So yeah, we have got an approval from the government of Rajasthan to supply our product first to the government of Rajasthan. So this is one step towards — catering towards the North side, and we are focusing ahead from Rajasthan towards J&K and other parts of the North, which is already in focus.

Bhomik Shah — Individual Investor — Analyst

Okay, okay, good to know that actually. My one more question is that actually…

Vipin Agarwal — Chief Financial Officer

Yeah.

Bhomik Shah — Individual Investor — Analyst

One more question is that I just wanted to understand the payment cycle of our product actually, I think regarding the raw materials which we buy from the Gulf countries for importing the raw materials and all, right. So how is the payment cycle for that? And the finished product, which we supply to the contractors and all, all the refineries, how is — from where we get the payment actually, how is the payment cycle, in how many days we get our cash back into our books?

Vipin Agarwal — Chief Financial Officer

If you see the balance sheet of the Company, we have focused and changed a little bit off in the last three years, four years, wherein we are focusing more on cash-and-carry basis. For the volumes that we are getting additional volumes apart from the regular clients that we have, the main benefit is always coming from the client is direct customers that we have because there we don’t have to and we don’t end up paying a higher discount, wherein if you are selling to other customers where the margins are low. So we are keeping a mix-and-match of both, wherein the payment cycle is reduced to about less than 20 days, 25 days now. And…

Bhomik Shah — Individual Investor — Analyst

Okay. So within 20 days, 25 days, we can receive our payments actually?

Vipin Agarwal — Chief Financial Officer

Yes, yes, yes. If you see overall turnover of the Company against the payment cycle, it is about 20 days, 25 days now, maybe 30 days if you divide exactly, but more or less is in line with much better than what it was in previous few years. And supply part as you have — the question that you have asked, we are making the payment upfront when the vessel is arriving into Indian ports.

Bhomik Shah — Individual Investor — Analyst

Okay, okay, okay, understood, understood.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Bhomik Shah — Individual Investor — Analyst

Yeah, yeah.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vivek from Macquarie Financial. Please go ahead.

Vivek — Macquarie Financial — Analyst

Yes. Can you hear me, sir? Am I audible?

Vipin Agarwal — Chief Financial Officer

Yeah, very much. Good afternoon.

Vivek — Macquarie Financial — Analyst

Good afternoon, sir. Congratulations on the good set of numbers.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Vivek — Macquarie Financial — Analyst

Sir, I would like to understand the details on the volumes, which we have cracked in terms of tons for the quarter as well as for nine months?

Vipin Agarwal — Chief Financial Officer

In the Q3 ’21, we had done about 87,000 tons to 88,000 tons against which this year, we have done about 114,000 tons, almost a increase of about 26,000 TMT [Phonetic] to 27,000 TMT [Phonetic]. And the nine months, if you have — we have achieved a growth of about 13% in the first nine months of this year.

Vivek — Macquarie Financial — Analyst

Okay, sir, thanks.

Vipin Agarwal — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Anupam from Lucky Investment Managers Private Limited. Please go ahead. Anupam, your line is in the talk mode. Please go ahead.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Hello?

Operator

Yes, sir, please proceed.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Yes, hi. This is Pritesh. Just wanted to check on few things.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

One, when I look at your numbers and I try to understand from the EBITDA per ton perspective. So we tend to make a certain EBITDA per ton based on the standalone, which is the import of the bitumen. And then when we make a certain number from the logistics part of the business by having our own shipping, which comes on consolidation. Now if you could tell us some total for a per ton of bitumen that we would import and try to use our logistics for distribution, imports, vessel plus distribution, what kind of EBITDA per ton ideally we should be making? That’s the first question. Second, we had certain ships in our system and then we added these two ships. I think we’re at six ships and then we took it to eight ships, if I’m not wrong.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

When we had these six ships until December ’22, how much of the bitumen was being imported via our own ships and how much of third-party we were deploying, if that could help — if you could share that? It will also help us understand that eventually when you go 100% on our logistics, what kind of EBITDA per ton we will have because that will fully capture the logistics that we would deploy? So some of these parts if you could explain us because looking at percentage margin might be a misnomer, if I’m not wrong.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

And if you could help these queries?

Vipin Agarwal — Chief Financial Officer

Yeah, thank you so much for your question. Firstly on the vessel part that you have highlighted, I would like to add here is that we — whatever vessels are coming into India, we are giving it to third-parties. All our vessels are being given to third-parties, which may result in transporting the product to even our own locations in India, but all our vessels as a subsidiary is an individual entity in the Gulf countries, they are running independently and they are offering the vessels solely to third-parties on the basis of market rate. So whatever vessels we are getting into India from third-party or our own vessels to third-party, the freight remains the same. So there is no differentiation between the vessels that are — we are taking from any other suppliers or our own vessels in UAE. So…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

That’s okay. That’s the route, you might deploy your own and you might make someone else’s.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

That depends on the route and availability, wherever it is, But you are putting vessels because you want to have your own logistics, right, and want to earn that much more profit by having your own logistics? So — yeah.

Vipin Agarwal — Chief Financial Officer

Yes, yes, yes, yes. Because all those operations are in the UAE entirely, wherein the UAE supplier, who is looking for vessels is being offered our vessels in UAE.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Perfect. So how much — so let’s say by deploying six vessels now, how much of the volumes have moved to pseudo [Phonetic] our logistics, whether you use your own vessel or someone?

Vipin Agarwal — Chief Financial Officer

Close to about — on a month-on-month basis, we are importing about 20 TMT from our own vessels. And sometimes, if the vessel is going towards East, it hasn’t come down, because the turnaround of the East region is only once in a month.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So in the — so, let’s say, in the 280,000 tons that we…

Vipin Agarwal — Chief Financial Officer

We have done in the first nine months, I think about 25% — yeah, about 20%, 25% volume is through our own vessels because we require back-to-back product sometimes and most of the times in the season. So our six vessels is of course sort of bringing the product into Indian ports.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So six vessels is still 25% of your own output, 75% is still via…

Vipin Agarwal — Chief Financial Officer

20%, 25%, yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Sorry?

Vipin Agarwal — Chief Financial Officer

Our range — to give a range, it would be about 20%, 25% of the volumes that we have done.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So whatever EBITDA that we see today, EBITDA per ton that we see today is based on 25% of your output on your own vessels, right?

Vipin Agarwal — Chief Financial Officer

Yes, you can say that, which are hopefully deployed through third-parties through our UAE entirely individually. There is no connection between the two in terms of running of the two entities.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

No, sir, so one is — so I’ll try to frame it differently. One is you might have given there and you are using someone else’s here, that’s different. You have created this capacity ideally to use to make sure that the logistics profit comes to you, right?

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

You gave there, you took here, you would do to the extent of the volumes that you have, right? You will do this business to the extent of volumes that you have or you will do this business more than the volumes that you have?

Vipin Agarwal — Chief Financial Officer

To the tune of volumes that we have.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

We have, right? So based on that today, is it that out of 280,000 tons, only 25% of the volumes is on your own vessels?

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Forget that you are using your own and/or are using UAE’s?

Vipin Agarwal — Chief Financial Officer

We are doing about 25% — approximately 25% from our vessels.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Forever. So this profitability that we see today in per ton basis is subject to that much volume. When you keep on adding ships, you will try and capture the shipping profits?

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Right, you will capture the logistics profits, right?

Vipin Agarwal — Chief Financial Officer

Yes, very much.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Right. So in a ideal scenario for the per ton of bitumen that you import, ship and distribute, import, ship and distribute, ideally what should be your per ton profitability eventually when everything moves to your own shipping?

Vipin Agarwal — Chief Financial Officer

To answer that question, we have not seen 100% switching to our own vessels because some of the vessels are even deployed for others on TC basis as well in the last quarter due to better revenue or better optimization of the vessels in terms of profitable — making it profitable. And in India, whatever product we are selling, we have an absolute number — we have — to sell a particular product, we have defined a particular amount, so below which we do not sell.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

No, sir, then this means that you will deploy vessels more than your requirement? One day…

Vipin Agarwal — Chief Financial Officer

It depends upon the management call if we are having any — see, the logistics part that you’re talking about shipping is not 100% that it has to be deployed to our own uses in India. It is used for better and optimum utilization of the vessels to making it to make it profitable.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Okay, sir. What is the per ton profitability of bitumen for import, distribution and logistics, import, logistics and distribution, what is, is it INR4 a kg, it is INR2 a kg, it is INR1 a kg because your standalone reflects pure trading profits, right? You would buy bitumen…

Vipin Agarwal — Chief Financial Officer

Profit is also there, some logistics as well.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Yeah. So I’m just trying to understand your standalone is your pure trading profits or…

Vipin Agarwal — Chief Financial Officer

I have — in the volumes for this quarter, I think we can divide that if you…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Yeah, yeah, I know, I know. So that number — yeah, so that number is about INR1,500 a ton to INR1,700 a ton…

Vipin Agarwal — Chief Financial Officer

That will answer your question, sir.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Then you will add another profitability which comes from your own logistics, right?

Vipin Agarwal — Chief Financial Officer

Yes.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So that number works out to another INR2,000 a ton.

Vipin Agarwal — Chief Financial Officer

I have not calculated, but maybe if you have calculated, I think you may be right.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

No, no, sorry. I’m looking for that calculation from your end and for us to understand, for everyone to understand. So your model…

Vipin Agarwal — Chief Financial Officer

You come back to it in the way, I will tell the exact calculations if you require for that.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Okay. But is this much we should take home that only one-fourth of your volume is on six vessels?

Vipin Agarwal — Chief Financial Officer

Yes.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

That is correct, right?

Vipin Agarwal — Chief Financial Officer

Yeah, yeah, because…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Forget is that you have given in UAE and you have else — using someone else’s?

Vipin Agarwal — Chief Financial Officer

To understand for you better, we are giving the vessels to third-parties, wherein we get higher and profitable revenues as well. So instead of using our — the vessels to India, we have sent the vessels even to other countries.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Sir, I understand that part.

Vipin Agarwal — Chief Financial Officer

Revenue is more, the profitability is more and using all the third-party vessels from outsourcing to — for India.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Sir, I understand that, wherever, whichever is a convenient vessel, you’ll take that. And wherever it is give — is convenient to give away, you’ll give away. But some total are you using your requirement is X and you’re using one-third of that X?

Vipin Agarwal — Chief Financial Officer

Yeah, I said 25%.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Right? At least that assessment we can make, right?

Vipin Agarwal — Chief Financial Officer

Yeah, you can make that assessment.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So every time that you add a vessel, your profitability will improve, right? Because today, only 25% of your volumes are a function of your six assets. Tomorrow, if it moves to — you take another two assets…

Vipin Agarwal — Chief Financial Officer

There are vessels which are not for bitumen as well. So those are deployed purely for other products.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So there are vessels not meant for bitumen?

Vipin Agarwal — Chief Financial Officer

Yeah, which is yet to be made into bitumen.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So they will eventually be made into bitumen?

Vipin Agarwal — Chief Financial Officer

Yeah, yeah, because it depends. Yes, it will eventually be made into bitumen, yes.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Right? So every time when we progress in our Company, instead of 25% of your bitumen on your own logistics, it will move to 30%, 35%, 40%, 45%, whatever be the number?

Vipin Agarwal — Chief Financial Officer

That’s the reason we are adding more vessels, so that…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Right. And that’s the reason you are adding more vessels. So it will bring you more profitability per ton of bitumen that you — per on of bitumen business that you do, right?

Vipin Agarwal — Chief Financial Officer

Consol basis, yes.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Consol basis, it will bring per ton. So what is that per ton number?

Vipin Agarwal — Chief Financial Officer

They can already be seen in the nine months results that we have published.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So sir, then I’ll ask this way, from today to FY ’25 or let’s say from ’23 to ’25, how many vessels will be see? So six vessels number will move to what number? And this 25% number…

Vipin Agarwal — Chief Financial Officer

Because…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Sir, the answer — let me ask the question, sir. And this 25% will move to what number?

Vipin Agarwal — Chief Financial Officer

Shall I answer?

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Yeah.

Vipin Agarwal — Chief Financial Officer

Yeah. Firstly, it is all an opportunity cost if you see some vessels at attractive price and good, what do you say, decision to add any volumes, yes, that will be taken. And it comes as and when basis, it is not pre decided that we would be going for this vessel or not, it is all purely an opportunity when we get, we try to encash on it. And yes, once we have more vessels, we will definitely — the volume of this percentage will increase to be 35%, 40% as well.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

And what will be the per ton profitability at that time?

Vipin Agarwal — Chief Financial Officer

Very difficult to answer. It is a very futuristic answer. So it’s very difficult. But, yes, definitely, it will be in line with what we have today.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Okay. And how much volume growth do you anticipate this year? You have done about 200…

Vipin Agarwal — Chief Financial Officer

20% [Phonetic].

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

So you will still be able to do 5 lakh tons next in FY ’23?

Vipin Agarwal — Chief Financial Officer

We are targeting that, yes, we should be…

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Because that means that the last quarter has to be a plus 2 lakh ton number. Is it doable?

Vipin Agarwal — Chief Financial Officer

We will know after this quarter, sir.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Okay, sir.

Vipin Agarwal — Chief Financial Officer

Very much doable.

Pritesh Chheda — Lucky Investment Managers Private Limited — Analyst

Yeah, okay, sir.

Operator

Thank you. The next question is from the line of Rahul Chandarana [Phonetic] from Sunidhi Securities. Please go ahead.

Rahul Chandarana — Sunidhi Securities — Analyst

Yeah, this is again a follow-u to the previous question. So I want to just like in the business model that you use the ships mainly for charting and not for the related process of bitumen, but even though you do the capex, so more of it is into the usage of earnings of freight income. So I wanted to get the guidance like, okay, you are buying number of ships or something like that.

So as you provide us the number of — as you provide us with the number of bitumen trading, so can you give us a guidance for the ship charting as well? Because I’m getting just a vague number, number of ships of certain parameters through which we can forecast the future revenue number for the ship charting, because your — this thing is not still fixed, right, 25% of the ships you use it for your own bitumen thing and then you are targeting to 40%, and then what will be the proportion, like by what factors will you make it 40 percentage?

Vipin Agarwal — Chief Financial Officer

All our vessels are capable of supplying bitumen, but it is only a question of where it used to be deployed as of now in terms of optimum utilization of the vessels. There we are taking a call whether we should be bringing bitumen into India or keep the vessel to supply some other products for some other reasons. There we — it is all about optimum utilization of the vessels, but all our vessels are capable of utilizing in bitumen.

Rahul Chandarana — Sunidhi Securities — Analyst

So if I assume that 25% of the shipping portfolio when you bring the bitumen from the front to the Indian ports, then it goes return empty-handed, right?

Vipin Agarwal — Chief Financial Officer

Yeah, yeah, it would go empty, yes. Yeah.

Rahul Chandarana — Sunidhi Securities — Analyst

So the rest, so the 75 percentage, so a certain metrics or something like every shipping company also tells that there is a certain volume which they do. So it’s not difficult for you or the company to provide such number if I guess?

Vipin Agarwal — Chief Financial Officer

I didn’t get your question. Can you please repeat again once again?

Rahul Chandarana — Sunidhi Securities — Analyst

Yeah, yeah. See, I’m telling you that 25% is used for bitumen, we take that particular as agreed, then the rest of the 75%, I wanted a certain volume numbers, so that we can take the guidance like this is your, the realization or this is the volume game which you are playing with the number of ships you have. So there would be certain metrics in your business model, which you will be catering to?

Vipin Agarwal — Chief Financial Officer

See, but I didn’t just still understand what the exact question is. You want us to…

Rahul Chandarana — Sunidhi Securities — Analyst

For example, you have…

Vipin Agarwal — Chief Financial Officer

[Speech Overlap] the uses of optimum utilization of these vessels for us or the other 75% that we are doing.

Rahul Chandarana — Sunidhi Securities — Analyst

No for the charting, which you are doing, right, you are giving a revenue number of, say, this quarter, you gave a revenue of INR10 crores, okay, INR10 crores to INR11 crores. So that would be on certain volumes, right, certain tonnage or something like that…

Vipin Agarwal — Chief Financial Officer

See, shipping is always under voyage, it cannot be compared with any tonnage.

Rahul Chandarana — Sunidhi Securities — Analyst

So you can provide that number, if possible, like number of voyages or…

Vipin Agarwal — Chief Financial Officer

That is what I answered, sir. Because whatever vessels we are adding irrespective of the capacity, they are put in use for optimum utilization. So you cannot divide, see, a bigger vessel by 4 metric ton [Phonetic] because it will not give you the same numbers maybe compared to the smaller vessels.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay, so this 11 [Phonetic] number is optimum utilization of 75%, we can take that as a understanding?

Vipin Agarwal — Chief Financial Officer

Yes. You can take it that as a gap to increase or maybe the fleet of the vessels to increase the percentage of volume that we are importing in from through the own vessels from UAE.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay. And the previous question you guided that this will lead to an optimum level of 40% for the own bitumen trading. So even though the rates are not sustainable, rates are higher by taking your own vessels and bringing the bitumen over here, then do we’ll keep this percentage or it will vary, like what will be the metrics for that particular — for the own bitumen? It will be gradually going to 40% by FY ’25 or you’ll still remain 25%, you can give guidance if possible?

Vipin Agarwal — Chief Financial Officer

As informed, we are trying to improve, but it is all depending upon what opportunities we get in UAE. If we get good opportunities running the vessels and with the other parties, yes, the Company is always happy to take third-party vessels for India and deploy the vessels in into different regions. So it is all of opportunity and the — what is this profitable call depending upon the rates available in the market at a particular time.

Rahul Chandarana — Sunidhi Securities — Analyst

Have you seen more margin accretion from charting business rather than bringing the bitumen in your own vessel, if I’m not wrong, because we have seen your…

Vipin Agarwal — Chief Financial Officer

Sometimes, you get better margins, yes, sometimes you get better margins from supplying the cargo or maybe vessels to some other countries, we get better margins, yes.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay. Yeah. Thank you.

Vipin Agarwal — Chief Financial Officer

I hope I answered your question.

Rahul Chandarana — Sunidhi Securities — Analyst

Yeah, better.

Vipin Agarwal — Chief Financial Officer

Yeah. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

So sir, building on the previous two participants, in the previous call, you said that the bitumen vessel charter rates are usually stable. And we are doing — you mentioned right now that we are doing a lot of third-party chartering, and we aren’t saying that we want to be completely self-reliant volume — volumes self-reliant on our own fleet. But with this increasing share in vessel tons capacity on a consol level by adding more ships, we have an increasing assurance of the ability to commit higher volumes. Is that correct? I mean is the vessel addition rather a step to help us gain margin shares?

Vipin Agarwal — Chief Financial Officer

Higher volumes had nothing to do with the capacity of own vessel utilization or any third-party. Higher volumes, we get, it is irrespective of vessels we have or not.

Keshav Kumar — RakSan Investors — Analyst

Okay. So the vessel reduction…

Vipin Agarwal — Chief Financial Officer

First — I think I’ll just answer the first question, part of your question, though it is not complete as of now. The — as said, the freight are constant in the regions that we are doing. But I also said that it is all about opportunity. Sometimes we are getting a good margins and a good PAT, wherein that’s the reason we are sometimes offering the vessel to another party for particular regions, cargo.

Keshav Kumar — RakSan Investors — Analyst

Okay, sure. Thank you.

Vipin Agarwal — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Ayush Vimal [Phonetic] from KLBU [Phonetic] Capital. Please go ahead.

Unidentified Participant — — Analyst

Yeah, good evening. Thanks for taking my question. I had a question on the usage of bitumen in the future. So recently, the BMC had come out of with a contract for concretization of 400 kilometers of road. And given cement is cheaper from a lifecycle cost perspective, when we compare it to bitumen, that is water and fuel and other weather conditions, it’s not required to be imported and limestone deposits are domestically available and it’s also considered to be greener given the mileage is higher and it’s less polluting. I wanted to know how do you see it emerging as a credible alternative to bitumen in the years to come.

Vipin Agarwal — Chief Financial Officer

And sir, what is the BMC contract?

Unidentified Participant — — Analyst

Those BMC contracts that you’ve given for concretization of roads in Mumbai, this was about a INR6,000 crore contract. So…

Vipin Agarwal — Chief Financial Officer

Yet to be given.

Unidentified Participant — — Analyst

So I wanted to — yeah, it was — it’s being discussed, a couple of issues around it. So how do you see cement emerging as a credible alternative to bitumen for future growth?

Vipin Agarwal — Chief Financial Officer

See, this concretization is having no impact on the business that we are doing because this is only a in-line city roads, wherein it’ hardly affects the product that we are dealing in.

Unidentified Participant — — Analyst

Okay. And in terms of MSA contracts for road construction, national highway construction, you continue to see the use of bitumen there or you see the role of cement…

Vipin Agarwal — Chief Financial Officer

If you see the budget also, there is — or even the new tenders that being — that are being awarded. There is absolutely no question of, what do you say, cement being used at all. All the new road tenders that have been allotted or under execution or under implementations are bitumen, bitumen portion only, because as informed earlier also, the cement road is not being taken up by the MSA as of now.

Unidentified Participant — — Analyst

What is the qualitative characteristics because of which bitumen scores the bulk cement because you see the…

Vipin Agarwal — Chief Financial Officer

The safety is the most important. I guess.

Unidentified Participant — — Analyst

Okay, so bitumen roads tend to be safer as what you say

Vipin Agarwal — Chief Financial Officer

If you are going on bitumen road and a cement road, bitumen will always give you a smooth ride, whereas concrete will not give you a smooth ride.

Unidentified Participant — — Analyst

Okay. And also another question I had was, recently, the Minister of Road in a recent interview said that they were actually taking — procuring bitumen, bio bitumen from rice straw, and they’re also using rubberized tires to make bitumen and which is being laid in the Dholera-Ahmedabad Express Highway. So, your view on these materials gradually become alternative to bitumen not maybe recently, but from a long-term perspective?

Vipin Agarwal — Chief Financial Officer

Maybe they are all trial — this is all trial as of now. But even if that would also require bitumen in portion, it will not be — it is not 100% bitumen, but yes, it is under trial, and still the bitumen — it is only addition of some other product to bitumen. It’s not 100% subsidy of bitumen.

Unidentified Participant — — Analyst

Okay. From a global perspective in other countries, how do you see this trend emerging? Do you see bitumen still getting used or do you see alternatives emerging in other parts of the world?

Vipin Agarwal — Chief Financial Officer

Yeah, there may be alternative but it will not be around bitumen only, it cannot be anything differently than bitumen.

Unidentified Participant — — Analyst

Okay. So bitumen roads tend to be as much as in the U.S. and Europe…

Vipin Agarwal — Chief Financial Officer

Yes, yes, yes, very much, very much.

Unidentified Participant — — Analyst

Okay, okay, that’s it from my side. Thank you.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. The next question is from the line of Rahul Chandarana from Sunidhi Securities. Please go ahead.

Rahul Chandarana — Sunidhi Securities — Analyst

Hello, sir. Who are your major clients, so when you supply bitumen, and what percentage…

Operator

Sorry to interrupt. Mr. Rahul, we not able to hear you clearly.

Rahul Chandarana — Sunidhi Securities — Analyst

I’m asking that who are your major clients and what percentage makes your top 5, top 10 clients, can you give the guidance?

Vipin Agarwal — Chief Financial Officer

I think it’s not audible, sir. Can you be loud again, please?

Rahul Chandarana — Sunidhi Securities — Analyst

I’m telling you that who are your major clients and what percentage do they make of the total orders?

Vipin Agarwal — Chief Financial Officer

Well, we have mix and match in all the road contractors, road contractors, medium size, small, all are our customers, NHAI customers, PWD, all the road contractors are our customers. And it is not that we are focusing on a few big companies, no. We are distributed along a set of customers wherein all the sales are happening.

Rahul Chandarana — Sunidhi Securities — Analyst

And what percentage would be the government contracts in this?

Vipin Agarwal — Chief Financial Officer

All the road contracts are somehow the government department only, there is no private use of bitumen as such, very small percentage that maybe some industries laying it for internal purpose, but that would be a very small part. All the road contracts in the Indian road network is being awarded by some government bodies.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay. And what is the visibility, like do they give long-term contracts or it’s adjusted?

Vipin Agarwal — Chief Financial Officer

See, they give a road, particular kilometer road contract wherein the maintenance is also nowadays on the contactors for particular periods depending upon the tenders.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay. And last question is, what are your prospects in the East and the Northern side? Northern side, you told that you’ve got the Rajasthan.

Vipin Agarwal — Chief Financial Officer

We’re already there in Guwahati, and ties are already happening in the Eastern region already.

Rahul Chandarana — Sunidhi Securities — Analyst

So you don’t need any other capex other than your shipping because you have all-round…

Vipin Agarwal — Chief Financial Officer

Not much. I said this in the earlier call, Haldia, the location wise, the import facilities that we are already having is capable of handling even increased volumes that we are targeting in the coming few years.

Rahul Chandarana — Sunidhi Securities — Analyst

Okay, okay, thank you.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. The next question is from the line of Pritesh from Lucky Investment Managers. Please go ahead.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Hello?

Operator

Yes, Mr. Pritesh, please proceed with your question.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Yeah, hi, good afternoon. This is Anupam here. So my first question is to understand how the market is shaping with respect to PSU capacity and with respect to private and bulk capacities?

Vipin Agarwal — Chief Financial Officer

Okay. That’s the question or you have any more questions?

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Yeah. So secondly I restrict to your earlier con call commentary wherein you mentioned that in the next two years we’re looking to add vessels from now 8 to 13 [Phonetic]. And now in this call you are alluding to the fact that we will kind of hinting to the fact that we are still evaluating adding vessels and — so just trying to bridge the gap between the two comments?

Vipin Agarwal — Chief Financial Officer

Thank you so much. But I don’t remember I have said anytime from 8 vessels to 30 vessels as far as I know.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Not 30 vessels, 13 vessels, sir.

Vipin Agarwal — Chief Financial Officer

There also I mentioned it is all depending upon opportunity costs or opportunity that would be coming around the Company and this is what I mentioned right now also, it all depends upon the opportunities that the companies will be getting in terms of getting any vessels. This is what I said last time also, and this is again what I said today.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

All right. So how should we look at capex, sir? I mean is one vessel to two vessels going to be added every year, INR50 crore per vessel or is it going to be any different?

Vipin Agarwal — Chief Financial Officer

It depends upon the size of the vessel also. And since the market is on the high side, the prices on the vessels have gone up. So maybe in terms of capex, it may go up, but it all depends, again, I’m saying, if we are getting any vessels at a very attractive price, which makes sense for us to buy, it would be a management call on that. And we are definitely looking to add more vessels, but it all — it will be all upon the opportunity that we’ll be getting.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

So when you say attractive price, is it INR50 crore for a 10,000 ton vessel or isn’t that attractive?

Vipin Agarwal — Chief Financial Officer

Yeah, for today’s market, yes. For a vessel of that size, INR50 crores is a decent amount.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Understood. And sir, my first question on the PSU capacity addition by oil manufacturing companies?

Vipin Agarwal — Chief Financial Officer

[Speech Overlap] PSU in terms of higher quantity, but maybe a few 100,000 tons here or there, but low PSUs are focusing on increasing the production capacities on in terms of bitumen.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

So the bulk — so the market that we operate in which is private and bulk, we’re at 25% of the market. So have you seen any sort of market share decline in this quarter?

Vipin Agarwal — Chief Financial Officer

No, no, no. If you can go on the Google also, you will get the figures. We are the market leaders from last so many years and we are still the market leaders in bitumen private sector.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Understood. Right, sir. Sir, last question on the debt, how — what is the debt profile currently on as of December?

Vipin Agarwal — Chief Financial Officer

Debt, we have not taken any additional working capital even in this last quarter. So we are still the same last two years.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

And long-term debt, sir?

Vipin Agarwal — Chief Financial Officer

Long-term debt is, we have added about $7 million in the current quarter.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

$7 million.

Vipin Agarwal — Chief Financial Officer

Yeah.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Okay. And what is the absolute amount as of December debt figure?

Vipin Agarwal — Chief Financial Officer

It’s about INR60 crores to be — debt could have about INR60 crores.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

INR60 crores. That’s…

Vipin Agarwal — Chief Financial Officer

Yes.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Sorry.

Vipin Agarwal — Chief Financial Officer

It is purely for capex.

Anupam Agarwal — Lucky Investment Managers Private Limited — Analyst

Understood. That’s it from my side. Thank you so much.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Astha Jain for closing comments. Astha, please proceed.

Astha Jain — Hem Securities Limited — Analyst

Thank you, Lisan. On behalf of Hem Securities Limited, I think Agarwal Industrial Corporation Limited team for giving the time we spent on this call and responding all the queries in a detailed way. I would also like to thank all the participants for joining this call. Now I would like to hand over the call to Lisan for the closing remarks.

Operator

[Operator Closing Remarks]