AIA Engineering Limited (NSE: AIAENG) Q4 2025 Earnings Call dated May. 23, 2025
Corporate Participants:
Kunal Shah — Executive Director
Sanjay Majmudar — non executive director
Analysts:
Unidentified Participant
Bhavin Vithlani — Analyst
Presentation:
Operator
Ladies and gentlemen, you have been connected to AI Engineering Limited Conference Call. Call will begin shortly. Please stay connected. Ladies and gentlemen, you have been connected to AI Engineering Limited conference call. Call again shortly. Please stay connected ladies and gentlemen, good day and welcome to the Q4 FY ’25 AIA Engineering Limited Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistant during the conference call, please signal an operator by pressing star then CEO on dashtone phone. Please note that this conference is being recorded. I now hand the conference over to the management of AIA Engineering. Thank you, and over to you, sir.
Kunal Shah — Executive Director
Thank you. Yes, thank you so much operator, we can start the call. A very good evening to everyone and thank you for joining the call. I have Sanjay by. This is Kunal. That is Sanjay and I who are going to interface with you today for the post quarterly results for AI Engineering for 4th-quarter for fiscal year ’24-’25. I think the year has been pretty dramatic in terms of a lot of global upheaval. You’ve got macro events from wars to shipping issues, to geopolitical issues, to the tariff you know, measures that have been put along and a lot of assumptions that generally we apply when we are doing long-range planning, I think stand-in question. And with that, we are happy to take the call. Our business has seen some of adjustment in these macro events which are applicable to us And we’ve shared commentary on our worldview on it. I will do a quick summary of numbers and then I’ll have Sunjaby share a business update and then we can get on to Q&A. But broadly, none of our macro directions, conversations change. I think we remain confident about the power of the solution that we have and the disproportionate consequence it will have — it has for our customers. There are challenges in terms of the conversion — the whole conversion project that we have, which is from going from to chrome and the mill liner and all of that. But all of these are just the learning parts of this whole growth journey where every country is different, every culture has its own way of going about risk or governance or change management, implications on cost, starting costs, all of that. And I think each day there is learning and all feeding into something that we believe are further deeper moats into the business. So with that caveat, let me do a quick summary of the financials and I’m sure. We sold 68,741 tonnes this quarter and that brought our full-year sales to 255,000 tonnes, which translates up to INR4,200 crores of sales and INR1,141 crores for the quarter, 4,200 crore for the whole year and 1,141 for this quarter, translating into EBITDA of INR399.52 crores and PBT of INR363 and profit-after-tax of INR285 crores. Taking the profit for the whole year or EBITDA for the whole year at INR1492 and profit-after-tax at INR1,060 crores. Our other income reflecting largely the drawback and the road, the small amount that is available, that reflects the other operating income. The non-operating bit has our treasury and some bit of foreign-exchange gain coming from the weakening of the Indian rupee. So the total other income, including the operating — non-operating bits being at INR92 crores for the quarter. Our working capital continues in sync, no dramatic changes there. Revenue is — the tonnages are mostly comparable between second and third quarters, that’s why third and 4th-quarter. We did about 66,000 in the 3rd-quarter and 68 odd 1,000 tons in the 4th-quarter. So generally comparable between third and the 4th-quarter. Current capacity, just to reaffirm stands at 460,000 tonnes and we’ve announced plants at two locations, one in China and one in Ghana. We’re looking at 50,000 tonnes each. Both these are new locations for us. We are excited about the strategic intent behind doing it and we are working — both projects are at different stages in terms of from conceptualization to land acquisition to all sorts of approvals. I think the China plant it should be up and about in some form, hopefully next 12 months. And as we go-ahead, because it’s our first time, we don’t want to put firm dates because there are a lot of learnings that are built into that. And the Ghana plants in next 12 months, we where in the next three or four quarters, a lot of that approval work is — will be done and then go into the execution and then the commissioning. So allow us maybe two more quarters to give a little better sense on what’s happening with those projects. Outside of these two projects, are we looking at about INR120 crores, INR130 crores of capex, which is largely some amount of renewable power, a balance capex for work that we’ve done in our plants in India, some amount of maintenance capex and some lands. These are all you know, all can be rolled up as a maintenance capex for this year. So around INR100 crores INR120 crores, INR130 crores for that and plus we will be spending over next two, 2.5 years on the two plants in one in China and one in Khana. So that apart one macro development before Sanjabi talks about our business is around our — around the anti-dumping bit and so more specifically about the anti-dumping bit in the US and the larger duty tariffs that have been applied by US on many products across the world. So our lawyers have advised us to, you know, be a be little muted about what’s happening, how it’s going because some of these are — in some jurisdictions just defending our positions. And a lot of what we say here is actually being used as transcripts as inputs. And so which is where all we will say right now is that — so for US, there is a dumping duty now applicable at 9.6%, including CVD, including CVD, that the ADD and a CVD are both put together at 9.5%, 9% plus and there is a tariff — our product falls under the Section 2, 32 tariff. So there is a duty that’s under that. As we speak, our business continues, our customers are paying their duty like a lot of US companies are for a lot of products. I know there’ll be lots of questions. We have very few answers. We can’t crystal gaze into what’s happening because there is a lot of policy shift in regards to the US. As I understand, India is an active bilateral conversation and we are hoping that we get back to business-as-usual or a duty structure that allows long-term contracts. So we will not be able to speak more than this. But as we speak, our business continues, the customers are paying the extra duty cost. So there is — there is — we don’t currently have a material change in our US exposure as far as sales are concerned. Of course, there is routine plus and minus that happens. This may change going-forward. But as it stands right now, it looks okay and there is no basis for us to say and what will be the impact in three or four quarters. So I would like with everything else, please allow for the first — for the — for the duty, the tariff structures to stabilize once the 90-day hire test goes, the bilateral tax comes in-place. So maybe a quarter or two allow us the liberty to deal with it in best possible means. As far as the duty protection structures and the rest of the world is concerned, you’ve seen the protectionist measures in — broadly are you know coming in our favor. It may come in at a certain level, but a lot of these countries realize that the dumping — the nature of a dumping duty is when a company tries to sell below cost, below a fair price, et-cetera. And our margins do not suggest we are engaging in that kind of competitive behavior. So they — but obviously there is — there is a local manufacturer and it says and they will do what they need to protect their business. And we have to do what we have to do. So in Brazil, we have seen that the — what used to be 12% plus anti-dumping has been terminated, one of the rare cases in Brazil where our beauty got terminated. That’s a strong indication of our pricing practices, right? One may optically present it whichever way one wishes to, but in terms of our competition, but the reality is we are putting up — we are not giving up an inch, we are making sure fair, fair and accurate presentation is done for our situation and we are here for the long-haul. Maybe things change for a year or two or three. But even if it means an inch, we are putting in all our efforts. So some of that success that we are proud of is that the dumping duty rightfully got terminated because there wasn’t a fair case for it and the CVD portion, which is at 6% plus, it’s in the process of being revisited. We’ll have the outcome of that soon. But we would like to assure everyone on this call that as far as AI is concerned and with margins that are already publicly available, dumping is a far away as far as our pricing practices are concerned, right? So there is a lot of other geopolitical and other considerations and which we are learning to navigate as we move forward, becoming sharper as far as navigating that condition is concerned. Okay. So with that said, I will have request Sanjaby to share his bit and we go on to Q&A.
Sanjay Majmudar — non executive director
Thanks, Sunal, and good evening to all of you. So as Kunal explained quite a bit, and I’m happy to say that as we had anticipated that we should definitely do around 250,000 tonnes of sales this year, we have done about 255,000 tonnes as clearly indicated and guided over our Q3 call. A little more heartening and gratifying fact is that while there is a top-line degrowth of about 14% as compared to last year, the profit degrowth is only about 6.5%, which means our margins have not only remained intact, but rather they are a little bit improved and they are remaining quite robust with the reported EBITDA of about, 34% 35% and if you knock-off the other income, treasury income part, we are still at about 28%, so that is very gratifying. Another aspect I want to highlight is that this is indeed a year where We have actually put ourselves into a very different strategic mindset. The long-term philosophy and the long-term opportunity remains absolutely intact in terms of 1.5 million ton opportunity. What we have done is we have revisited the drawing book and now we are at a stage where we have already started implementing our new strategy of spreading our wings and also simultaneously from India working on all those opportunities which are there in Latin-America, in Africa, in in lot of other parts of the world with a very clear shift on grinding efficiencies or the kind of solutions which we believe nobody else in the world is capable of offering. But as Kunal said, these are the years of — these are the times of extreme volatility. We are implementing as we speak, apart from the new locations where we have started our work, quite a few other opportunities, contracts, projects on which we are working and we should be in a position to come back with a more firm indication about how the current year will look like. But at this point in time, we believe that we don’t want to give any guidance about the volume growth for at least this year with a clear indication that our endeavor is to definitely achieve a reasonable level of growth, but I think it’s a bit early for us to give you or quantify the same with any clarity at this point in time. On the capex side, Kunal has already explained, the progress on both the locations is reasonably good and we expect China to be on-ground and start getting at least the first phase operational by the end of this fiscal, that is our target as we speak. And the — over next few quarters, we should be able to share some good further developments with you. With this, I request the moderator to open the house for the Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R in one on the touchtone telephone. If you wish to remove yourself from question queue, you may press R in two. Participants are requested to use handsets for asking your question. Thank you. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Humika from DAM Capital. Please go-ahead,
Unidentified Participant
Hi. Yes, good evening,. Good evening,. Sir, my first question is on the US anti-dumping duty, which has been. So the total duty is 9.16. Is there anything apart from that in terms of base duties or anything else?
Kunal Shah
Yeah. So there is a overall duty that comp has applied, right? There’s a baseline duty, there is a section, there are several things going on. There is a duty on aluminum and steel, which is a different chapter. So there is a base duty that is there. Under the application. Yeah.
Unidentified Participant
Absolutely. Yeah, yeah. Okay. And so post this tariff, post the duty which came up and the tariffs which came up, one is, can you outline — call-out what was FY ’25 sales to the US geography in million tons and how are we seeing — I know you said that there hasn’t been any drop-in volume so-far, but if you can just get the FY ’25 volume numbers for US geography.
Kunal Shah
I — Bhoomikar, there is like I said, there is a — there is a lot more curiosity besides the investment fraternity about this information. US is an important market, but it is not — it is less than, I would say 8%, 10% of the total volume broadly I’m saying, okay? So the materiality is there or not there, right, either whichever way you look at it. And for now, the nature of the product is such that there is capability that is extended capacity, there are several things linked to it, right? So I mean in — except for one or two other countries where we’ve seen a different buying behavior in US is a little different from that standpoint. Like I said, today the business continues — if it’s continued today, we look — we have visibility for a quarter or two ahead because everyone in the US forget a buyer of high chrome graining or liners or other products. Even someone importing grains has a confusion on what’s going to happen. So that’s what I said that rather than nitpicking and unpacking what’s happening, just let this ride out next two quarters and we’ll get exact clarity on what it is. It will be a little bit more imaginative and speculative on left or right and trying to unpack it into smaller numbers. As long as business continues, we should be okay for now, right?
Sanjay Majmudar
And as we just said, our endeavor is to ensure our teams, everyone, we ensure that, I mean, there is nothing materially lost in US. We still continue with more or less the same volumes
Operator
We’ll move to the next. The next question is from the line of Chirag from Centrum Broking. Please go-ahead.
Unidentified Participant
Yeah. Hi, thanks for the opportunity. Sir, some updates. So last quarter, you had mentioned that we are working on some couple of large mines and possibly if we can convert, there could be a, 30,000, 40,000 metric ton addition. So any update on that front, sir?
Kunal Shah
We are working on several mines and our endeavor continues.
Unidentified Participant
So okay. So see, in last quarter, we had mentioned that on the revised base of FY ’25, we could again start looking at 25,000 to 30,000 metric ton addition per annum. And now in the opening remarks, you mentioned that you would not like to give any volume outlook for FY ’26. So is it just a US uncertainty or do you still see the momentum of conversion from force to in media not recovering that fast?
Kunal Shah
And sir, I would not want to pinpoint any particular reason, but one, let me assure you one thing that we are not going back on that target. That is point number-one. But what we thought that as we speak as compared to last quarter, again, so many things have happened in this world and things continue to happen. You agree with me?
Unidentified Participant
Correct,
Kunal Shah
Correct. So while we are working on several fronts and our endeavor is to ensure that our medium to long-term growth strategies remain intact and we become a predominant player in this industry. We felt that let us wait for a quarter or two and see how few things are unfolding without — before giving a specific growth target. But I’m very clear, I’m not going back on what I said last quarter. Okay. And that’s happening. Any other inference?
Unidentified Participant
Okay. And sir, last question on our middle liner business, sir. So just wanted to know-how in FY ’25 that business and the outlook for the next one to two years. And any change in strategy in terms of ramping-up of that business?
Kunal Shah
No, I think it has been doing very well, lot of focus, lot of investment is going-in that business and we remain very bullish on that. Okay. As you have already made some further expansions in that particular business and investment in that facility. So we are working very hard on approaching this business on multiple fronts. As we speak, we have also increased our stake in that Australian company to 59%.
Unidentified Participant
Correct. So the health and business has started contributing in double-digits to our total annual volumes. Is it possible to share any volume broad ballpark outlook for the
Kunal Shah
Share specific volumes, but of course, it is double-digit. Of course.
Unidentified Participant
Okay. And that business is currently outgrowing the grinding media business in terms of volume growth?
Kunal Shah
No, no, no. So listen, grinding media still becomes a predominant volume driver. It can’t outgrow the grinding volume is around 19%. Yeah, it is growing. It is growing.
Unidentified Participant
Yeah. Okay. Okay, sir. Thank you. Thank you.
Operator
Thank you. A reminder to all participants you may best are and one to ask questions. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go-ahead.
Bhavin Vithlani
Good evening, gentlemen. So could you outline the — could you outline the thought process of investments in China and Ghana, because this is pivoting from a strategy of being in India in a single-location?
Kunal Shah
Well, so idea was Was that we have seen last three years we’ve made a — we further our solutions in terms of the ability of our consequences. We’ve been hamstrung by a few things. One of the things has been freight, right? There’s a large implication on the transit time. For example, when you’re going to South America, it’s almost an 80-day, 90-day transit time. On-top of that with the whole Bread thing that’s been on for last two years in-between the China, US container thing, there is a little bit of freight anxiety that sometimes customers express saying the freight is going on from 1x to 3x, containers are unavailable at times or the shipping time that it takes, what-if there is a global event and where supply does not come in. So these are just conversations, these are not showstoppers, but these were regularly coming up to us. So there are — we have taken-up — we are trying to do things to see how can we fasten or fasten our acceptance with the customer, right? So we are making small bets. We are not going with a whole monolithic plant. We’re going to do it in a modular fashion. We’re going to do with a small capacity, see how that goes. So it is our attempt to see. So for our plant in China, for example, our transit times are half to everywhere in the world than what it is from India. Okay. And these are — and most of our customers are mining customers where China already has a — as a shipping corridor setup, right? So these are efficient shipping like corridors to brom at a — at a cost that is generally half than what we see from India and half the shipping time. So that was one of the considerations to say, what else can we do so that our fortunes are not linked to this one variable that has been which we thought after COVID, so two years of freight issues post COVID and we saw about a year that things normalized. Again, when what happened with the Red Sea issues, the freight volatility came in. So this is one of our attempts to say making a small bet to see whether it changes the whole approach and the game to say now I’ve got a capacity which can deliver and offer a better supply-chain visibility, predictability, cost from a shipping standpoint, et-cetera. I think it is only from that standpoint. India continues to be the location. So if this is for our ability to break into a customer, give them the comfort, we’ll see what happens from there, correct? The idea is that I’ve got a super normal solution, which can bring all these benefits to the customer and it’s taking a little more time. Could this be weighing on the customers’ mind, would this help facilitate a faster, quicker conversion? This is our attempt to in that direction and we are not betting the house for it. So that is the context.
Bhavin Vithlani
I’m sorry to harp your you mean where when I look-through the — this investment decision, it is in a country which has little or probably no respect for IP
Kunal Shah
I don’t think there is a debate on this beyond this. This is our strategic. This is what we are moving forward with.
Bhavin Vithlani
Taking a small job.
Kunal Shah
I think it will be not a good use of everyone’s time to now discuss a personal view. There is a — and I would love to take this offline and I’m very happy to share and we can go through this one-on-one after that.
Bhavin Vithlani
Fine. And the second thing is, if you could just help us understand how are these the realization different for grinding media and mill liners. If you could give us a little ballpark in terms of indication that would be helpful for that.
Kunal Shah
So realization for — so the way we look at it is we’ve got grinding media is one category of products and non-grinding media is another category, right? So mill liners are part of the non-grinding media category. We’ve got vertical mill parts, we do quarry parts, we do castings for cement mills, right? So there is about a, 12 13 suite of products that we do under the non-grinding medium. That overall is about 30% of the volume, broadly I’m saying, you know, 25% by volume comes over there. The cost of making these parts is also very different. So if I would — if you ask me about the margin, by both categories are comparable. But if you ask me about my realization, my non-grinding media could be from INR100, INR30, INR140, it can go right up to INR230 to INR50, okay. So now the weighted-average now keeps changing depending on what I’ve done more, what has required machining, what is a 25% chrome versus 11%, 12% chrome.
There’s a — all those variables come in, where do I need much heavier patterns versus smaller, easier patterns, right? There’s a whole cost investment that goes into the costing and the pricing part of it. Some parts take-up to four months from the receipt of the order, our design itself takes a month, our pattern making takes another month and a half to — then there is production, sample casting, post-production there is a month-long machining exercise. It’s almost a five, six months start to finish. So and the pricing then is commensurate with that. All that cost that get applied, applied accrued for that product and hence from a margin standpoint, largely may not be very different. But from a cost and hence the selling price, there is a little bit — you know, there is a level of where it’s not comparable. These products are strictly not comparable. But I would say between INR140, INR50, they go right up to INR250. I’m saying realization per kilo.
Bhavin Vithlani
Right. Just last question. About a year back or so, so we had green shoots from getting into the South America territory, especially Chile and that’s an area considering the production of copper that country has and our sales. We were significantly under-indexed. So if you could give us some color on where we are because that is a geography which can give a significant volume delta.
Kunal Shah
That could be a material game-changer for us. And it will be — it will be — it will sound repetitive to say that, but we are very hopeful that we get a breakthrough soon, but we’ll just have to wait for it, right? It’s been a — it’s been a long chase and effort. We’ve gone through quite a bit of macro events in-between. We hope that we are building on that momentum and I’m hoping in next two quarters, there is some breakthrough that we would get to share. But we’ve been in that a quarter away and not crossed the line at least three times in last maybe one and a half years. So with that caveat, I’m hoping that we have something good to share soon.
Bhavin Vithlani
Sure. Just one more question I had because I remember we speaking about there are certain customers which had to do inventory correction due to internal challenges. Could you just give us an update on, I mean what kind — what percentage of volume would have been lost because of that and where are we in that
Kunal Shah
We lost about IN8,000 to 10,000 with one-two customers, two or three customers last year over 12 months. So rolling basis that volume should come back. I think the one which was a larger customer, I think is in another next 1/4 gets back to original consumption pattern. I think that’s 1/4 away. The other two, I mean that will — either are in the process. I think, let’s say now in a quarter’s time, at least that volume on a rolling 12-month basis we are hopeful would will reset about 8,000 to 10,000 tonnes.
Bhavin Vithlani
Okay. So is it fair to say that the drop-in the volume that we have seen is none of the cases where we have lost a customer, it’s mainly to do with the idiosyncrasies of the customers and their inventory issues, et-cetera.
Kunal Shah
So that was one part of it. We did lose volume. I think we did lose volume to the competition, I think for one large customer that went back, that went to you know, the competition. But I think other than that, nothing has changed in that — and that was a rare event over the last 20 years that we’ve been competing with maybe five handful events with customers that’s where it is. And some part of that may be linked to the duty structures and the uncertainty and all of that. So we are hopeful that we can correct that. Hopefully, we can correct that event also.
Bhavin Vithlani
Okay. Thank you so much for taking my questions.
Kunal Shah
And I will — we can speak offline for the whole — once more on the logic about this China.
Bhavin Vithlani
Yeah sure.
Operator
Okay. Thank you. A reminder to all participants, you may press star and one to ask question participants were press char and one to ask question, I think if this is done, we can wind this up. Okay. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Kunal Shah
Over to you, sir. Thank you. Thanks everyone for staying on the call and hearing us. And as usual, Sanjay and I continue to remain available for any questions offline. Thank you.
Sanjay Majmudar
Thank you very much. Have a good evening.
Operator
Thank you. On behalf of AIA Engineering Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you