Aia Engineering Ltd (AIAENG) Q2 FY23 Earnings Concall Transcript

Aia Engineering Ltd (NSE:AIAENG) Q2 FY23 Earnings Concall dated Nov. 14, 2022

Corporate Participants:

Kunal Shah — Executive Director, Corporate Affairs

Sanjay S. Majmudar — Independent Director

Analysts:

Ashutosh Tiwari — Equirus Capital — Analyst

Dhavan Shah — AlfAccurate Advisors — Analyst

Bhoomika Nair — DAM Capital — Analyst

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Pujan Shah — Congruence Advisers — Analyst

Gopal Nawandhar — SBI Life — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen, thank you for standing by. This is Michelle, the moderator of your call today. Welcome to the Post-Results Conference Call of AIA Engineering Limited. We have with us today the management team of AIA Engineering Limited. At this moment, all participants are in the listen-only mode. Later we will conduct a question-and-answer session at that time. [Operator Instructions]

I would now like to turn the conference over to AIA Engineering management team. Please go ahead, sir.

Kunal Shah — Executive Director, Corporate Affairs

Yeah, hi, thank you for the introduction. A very good evening to everyone. This is Kunal and I also have Sanjay bhai with me here. Pardon my voice today. And I think Sanjay bhai will do most of the talking. But we are very happy to report probably one of our best quarters ever in this quarter with 78,500 tons of sales, over a production of 80,000 tons, and that’s up from about 69,000 tons of sales second quarter last year, but also up from 68,000 tons sequentially from first quarter this year. And most of the pass-throughs, in terms of cost inflation, has now been factored in into these numbers with a weighted average realization for the quarter coming at about INR167. So that’s where a lot of these pass-through in terms of shipping cost, raw materials, has now been baked in these numbers and that has taken our numbers to INR1,300 crores at INR1,311.59 crores and which is up from about INR871 crores in the second quarter last year.

I think the rest of the numbers are broadly in line. Our raw material consumption now has reduced from the second quarter last year, largely reflecting the pass-throughs that have come in. Our EBITDA is at INR344 crores, which is about 25.9%. And profit after tax at INR244.81 crores, up from INR137.59 crores in the second quarter last year.

I think — just finishing off a few housekeeping numbers. Export benefits, we get drawback and that’s reflected in the other operating income for the second quarter, largely in line and a little higher than first quarter, reflecting the higher export. Treasury income is about INR29.72 crores, and then balance is foreign exchange adjustments, with a net other income in this year — in this quarter at INR32 crores, up from INR20 crores in the first quarter this year and INR35 crores — down from INR35.72 crores in the second quarter last year.

I think working capital has been largely in line. Our debtor days or our inventory days look a little lower than before. We try to not add to inventory, we’ve liquidated a bit. And higher revenue figures — from a tonnage standpoint it’s reduced a little because of the value of the goods, the number of days has reduced a bit. So our inventory days are down from 84 to 75. I think our guidance would be closer to 78, 80 going forward. And our receivable days are at about 64, but they will also be — they will normalize around 70, 72.

Mining has — most of the growth in this quarter has come from mining. We did about 54,000 tons in this quarter and almost closing at 100,000 tons for the half year, compared to 85,000 tons we did in first half last year. Non-mining has remained largely flat, from 44,000 half year last year to 46,500 half year this year. So from a half year number, we’ve grown from 129,000 tons to about 146,000 tons for H1 this year.

A few more — our net cash at the end of quarter is about INR2,050 crores, that’s net of some debt and some extra cash that we have. Gross cash is higher, but there’s also some debt, working capital against that. Net cash is at INR2,050 crores, and we probably expect that will stabilize with a lot of working capital deployment over last two years, given the inflation that kicked in and just a higher value of our working capital, of our stock. And I think all of that will also stabilize going forward.

There are three announcements that we’ve made this year. One was a supply arrangement that we’ve done with a company in Ahmedabad — based out of Ahmedabad, SAL Steel, and they are producers of ferrochromium. And it’s on a — it’s like a job work arrangement on a supply — commercially under a supplier agreement, and all it does is helps us with a diversified — locks in a supply chain for us. As you all know, ferrochrome is an important raw material. They have a plant in Gujarat and they are all set up for efficient logistics for ore from the east of India, as well as captive power plant, allowing for an efficient cost and conversion from ore to ferrochromium format. And this allows us comfort of having almost a captive arrangement for production to this extent. At the peak of this agreement, arrangement, we expect to get between 3,000 and 4,000 tons a month from them.

So at which time, it will be about 50%, 60% of our requirement between this year and next, maybe a little more. But again, that will be determined by a host of factors. But we’ve had a lot of questions asking us more about it, but it’s actually a simple — they needed cash infusion in that business to stabilize their operations and they get visibility on sales of their product, while we get almost a captive producer. And this being a critical strategic raw material, we just felt more comfortable having a partner who is doing it for us. We’ve extended INR125 crore secured loan to them at a 10.5% yield. So to that extent, we are well protected, not just on the coupon on that, but also on the security against those assets, and it will be more than adequately compensated in terms of the supply arrangement that we’re looking at.

In addition to that, we’re very, very excited about the mill lining plant that we commissioned after the close of the quarter. It’s a fully automated plant or significantly automated plant for the casting. As far as castings, which is other than grinding media production, I think one of its — one of the best type of plant in the world for these type of castings, which are large custom-made. These are not repetitive parts, these are custom-made to our application designs that we curate for the customer and we are very hopeful that we’ll be fully utilizing this plant over the next three to four years.

We welcome all of you to come visit Ahmedabad and have a look at the plant whenever you come to this side. Also, there was — we disclosed about Canadian Border Service doing an assessment on the duties that they had assessed last year in 2020 — end of 2020. And this assessment gets triggered when costs change materially. It is on their prerogative. And because raw material cost and other costs have changed significantly from the time that this was last assessed, this is an administrative procedure to go revisit and assess that structure. So we’ll be fully cooperating with that. We will not be able to share more information except that the materiality of this market today is that we’ve done about 3,000 tons first half of this year, maybe we’ll do 5,000, 6,000 tons full year.

So to that extent, we are in the market, we may not, it’s a sub-judice matter again. It’s business as usual for us. Duties may change, may get — maybe in a little different format, but we — our business model is far above and beyond that. So we will not be able to take more questions on what it means beyond that it’s a regular assessment, and there may be more such as costs change. And that’s something that, as a business — as a company, we’ll be well organized to support and gear up for.

From a CapEx standpoint, total this year and next will be about INR480 crores to INR500 crores. Half of that comes from a grinding media plant, about INR250 crores. There’s about a INR20 crore spend on the liner plant, which is — which happened this year. There is another INR50 crores that we plan to spend on the liner plant for supporting infrastructure. We need pattern storage, et cetera. We are investing about INR60 crores for captive power and about — between INR70 crores to INR100 crores on balancing other infrastructure support in next two years. So broadly, we’ve got a CapEx plan of INR480 crores to INR500 crores in this year and next. We’ve done about INR112 crores in September this year, and the plan is to do another INR160 crores, INR170 crores for the rest of the year or some may spill-over to the next year. Broadly next — one-and-a-half, six to seven quarters going forward and two quarters past, over that two-year period starting April ’23 till March — between March and June ’24, we’ll do about INR500 crores of overall CapEx.

I think with that said, I’ll have Sanjay Bhai just give you a brief about the markets and what we’re seeing going forward, but it looks like that ferrochrome scrap are at the peak pricing. Ferrochrome seen some downward adjustment over last two — one quarter, but it’s anybody’s guess which way it will go. Scraps still continues near the peak it reached sometime back. Shipping costs are volatile, but clearly trending downwards. So I think that’s a good sign for us that finally these costs look to be stabilized, although they seem to go higher from here, but it’s too early to say that it’s going one way or the other. So I think we are on a watch and stay and play mode and be ready to absorb and adapt as costs and the situation changes.

I think most of the COVID restrictions around travel have gone. I think our people are traveling all over the place, trying to go to gear back up for the whole strategy that we are trying to lay out. And between mining liners and grinding media, we hope to add 30,000 tons at least going forward. We may not be able to guide on exact numbers on how far right that number looks like, as you are aware.

One last point before I hand over to Sanjay Bhai is that these — as costs will ease down, there will be a pass back on those costs. So I mean, long-term margin guidance, we may not, again, unfortunately be able to offer beyond 2022 operating margins. So please do bear with us on that. There’ll be quarters where we’ll do better and we aspire to do better, but there are too many variables, as you all know, that we work with, and it’s difficult for us to exactly pinpoint where those margins will ultimately reside.

Okay, I’ll just hand over to Sanjay Bhai and then we’ll go on to Q&A.

Sanjay S. Majmudar — Independent Director

Thanks, Kunal, and good evening to all of you. So as we can all see, it was a fairly satisfactory quarter both in terms of the volume growth as well as the overall margins. But as Kunal has cautioned, yes, going forward, we believe that the peak level pricing has already reached. So probably, there could be a little bit of softening of the raw material prices, freight has already gone down, started going down. So we believe that, going forward, we should be able to — we might see a little bit of declines in terms of average realizations. Though, it is a bit difficult for us right now to predict exactly how much it will be, I think the average price realization in first six months is around INR162 a kilo in terms of sales, which could be regarded to be, I think, peak, and it may go down a little bit. But as we have always maintained, it is our endeavor to ensure that the margins are protected and our absolute margins will be protected.

Possibility that while there could be a little bit of downward trend on the realization, margins will be maintained, so we’ll see margins in percentage terms also should be maintained. But current level of operating profit margins are at around 23%, 24%, and we are quite happy about it. Overall, the volume growth has started to kick in, as it is evident from the six months numbers. We believe that we should be on track. We are on track we feel that for about 30,000 to 35,000 tons comfortably per year. Overall traction is appearing to be good. Although geopolitical issues are there, but so far, I think we have circumvented them and we should be able to go ahead. And as Kunal explained this, Canadian authorities investigation is more procedural rather than anything further to be read into it, and we will keep all of you posted as we cross the bridges. So broadly, we are quite on track. We are very comfortable. I think with this, let’s have the Q&A, moderator. Thank you so much.

Questions and Answers:

Operator

Thank you very much, sir. We will begin the question-and-answer session now. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. [Operator Instructions] We have the first question from the line of Ashutosh Tiwari from Equirus Capital. Please go ahead.

Ashutosh Tiwari — Equirus Capital — Analyst

Yeah, hi, Kunal and Sanjay Bhai, congratulations on very strong numbers.

Sanjay S. Majmudar — Independent Director

Thank you.

Ashutosh Tiwari — Equirus Capital — Analyst

Firstly, on the volume side, we almost had done almost one lakh tons in the first half in mining. So is the growth driven by new mine additions or ramp-up at the older mines only, how should one look at it?

Kunal Shah — Executive Director, Corporate Affairs

This is new mines. The growth coming from new mines.

Ashutosh Tiwari — Equirus Capital — Analyst

And any particular minerals is doing very well — or any other, let’s say, gold or copper or something, which is doing very well for us in the first half?

Kunal Shah — Executive Director, Corporate Affairs

15,000, and this growth is not that large to really draw patterns from, but clearly, gold and copper remain metal of interest.

Ashutosh Tiwari — Equirus Capital — Analyst

Gold?

Kunal Shah — Executive Director, Corporate Affairs

Copper and gold, both.

Ashutosh Tiwari — Equirus Capital — Analyst

Okay, okay, okay, okay. So finally, I think now that probably we’ve done 146,000 tons in the first half, we’re probably are on track of delivering 30,000 tons incremental in this year, right?

Kunal Shah — Executive Director, Corporate Affairs

Yeah, yeah.

Ashutosh Tiwari — Equirus Capital — Analyst

And you obviously mentioned — so like realizations have gone up because of this whole commodity pass-on and plus shipping costs as well, but is there a benefit in this quarter that probably costs has started coming down and probably the pass-through happens with a lag, so that’s why we probably had higher margin in the current quarter, is that–?

Kunal Shah — Executive Director, Corporate Affairs

Absolutely. Absolutely, you are right. And so ferrochrome is — these are — a lot of these are formula-driven, and which is where I was saying that as cost reduce, there will be a downward adjustment, which we’ll see in the next quarter.

Ashutosh Tiwari — Equirus Capital — Analyst

Okay, okay. And on the liner side, we expect major volume to kick in from next year only, because just the plant is commissioned, so it’ll probably take some time to go to customers and showcase them and all those things will happen. So —

Kunal Shah — Executive Director, Corporate Affairs

No, no, we have orders, but execution — see, what happens in mill liners is, once you get the order, there is a design phase, there’s pattern making approvals. So with that lag, you will see volume coming in next year. I think order — from an order standpoint, we are actually seeing growth. We’ve seen growth. And we’ve taken orders in anticipation because the plant is commissioned, right?

Ashutosh Tiwari — Equirus Capital — Analyst

Okay

Kunal Shah — Executive Director, Corporate Affairs

[Indecipherable] happen next year onwards. So I think we are on track to add at least 10,000 tons per year starting this year, invoicing maybe a little lower.

Ashutosh Tiwari — Equirus Capital — Analyst

You’re saying 10,000 tons incremental volume [Indecipherable] this year?

Kunal Shah — Executive Director, Corporate Affairs

Yeah, yeah

Ashutosh Tiwari — Equirus Capital — Analyst

Okay. And then probably, like I said, [Speech Overlap]

Kunal Shah — Executive Director, Corporate Affairs

Three, four years, it’s fully utilized. I don’t think that’s looks too much of a challenge as of now.

Ashutosh Tiwari — Equirus Capital — Analyst

Okay, okay, okay. And this is also a mix of domestic as well as export customers?

Kunal Shah — Executive Director, Corporate Affairs

Largely export.

Ashutosh Tiwari — Equirus Capital — Analyst

Largely export, okay.

Kunal Shah — Executive Director, Corporate Affairs

Yeah.

Ashutosh Tiwari — Equirus Capital — Analyst

And lastly, on the USD, INR realization side, how much we did for the quarter?

Kunal Shah — Executive Director, Corporate Affairs

Realization, just one second. 81.3.

Ashutosh Tiwari — Equirus Capital — Analyst

Okay, okay. Okay, thank you. That’s all from my side.

Kunal Shah — Executive Director, Corporate Affairs

Thanks, Ashutosh.

Sanjay S. Majmudar — Independent Director

Thanks, Ashutosh

Operator

Thank you. We have the next question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.

Dhavan Shah — AlfAccurate Advisors — Analyst

Yeah, hi, sir. Just couple of clarifications from the last question. You said the mill lining volume will be 10,000 metric tons this year?

Kunal Shah — Executive Director, Corporate Affairs

No, no, no. Orders will be 10,000 tons, billing maybe — invoicing. We are just trying to give him an answer directionally that he asked a question that because the mill got started now you will go out and take orders, I said, we’ve already started to get orders of more than 10,000 tons, invoicing may not happen this year, some of it will spill into the next year.

Sanjay S. Majmudar — Independent Director

So Dhavan, just to elaborate, we are already selling mill liner. Now we have shifted to this dedicated plant and volumes should go up. It will be definitely higher than annual what we did last year. Exact number may be difficult, but definitely higher than what we did last year.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. So I think on an average annually, we are already selling 10,000 to 12,000 metric ton, right?

Sanjay S. Majmudar — Independent Director

Exactly.

Kunal Shah — Executive Director, Corporate Affairs

We are selling 18,000 tons mill liners last year. About 18,000 tons last year.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. 18,000 tons —

Kunal Shah — Executive Director, Corporate Affairs

Mining — these are mining mill liners that is over and above cement mill liners.

Dhavan Shah — AlfAccurate Advisors — Analyst

Correct, correct. Mining mill liners, right?

Kunal Shah — Executive Director, Corporate Affairs

Yeah.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. So when you say cement mill liner, this is 18,000 plus you would be selling whatever will be the cement mill liners, correct?

Kunal Shah — Executive Director, Corporate Affairs

Correct.

Dhavan Shah — AlfAccurate Advisors — Analyst

So that would be another 5,000, sir?

Kunal Shah — Executive Director, Corporate Affairs

Sorry?

Dhavan Shah — AlfAccurate Advisors — Analyst

That would be how much? That cement mill liner would be how much?

Kunal Shah — Executive Director, Corporate Affairs

I don’t think — we’re not — the idea of sharing these liner tonnage is only to give a perspective that we set up a plant and just for comfort that product will be fully utilized. As a practice, not sharing segmental product-wise data. It does not add to the overall understanding for the business, right? It just becomes a —

Dhavan Shah — AlfAccurate Advisors — Analyst

I got it. So sir, basically, I think now the total capacity is 50,000 metric ton, total?

Kunal Shah — Executive Director, Corporate Affairs

For mill liners, yes

Dhavan Shah — AlfAccurate Advisors — Analyst

So basically then we are already doing more than 18,000 —

Kunal Shah — Executive Director, Corporate Affairs

No, no. The total capacity will be about 67,000, We’ve got existing casting plants where also we can make some quantities, no? This is a new —

Sanjay S. Majmudar — Independent Director

So Dhavan, let me summarize this. We have a dedicated plant for mining mill liners for about 50,000 tons, which has been commissioned. As we explained last year, we still did about 18,000 tons from our existing plant.

Dhavan Shah — AlfAccurate Advisors — Analyst

Correct.

Sanjay S. Majmudar — Independent Director

So now that volume will obviously be shifted to this dedicated plant, point number one. And what —

Dhavan Shah — AlfAccurate Advisors — Analyst

Correct

Sanjay S. Majmudar — Independent Director

— partly. So see, we have that flexibility of using the dedicated plant —

Kunal Shah — Executive Director, Corporate Affairs

Mill liner is 50,000 tons dedicated, plus another 15,000 tons, 20,000 tons will come from the shared plants.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay.

Kunal Shah — Executive Director, Corporate Affairs

So what I’m saying is, don’t again — don’t get bogged down by that. This capacity will fully utilize in three to four years, okay?

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. Okay, okay, okay. And secondly sir, that realization like normally we had guided for — at least we will be at the level of 150, so basically this quarter is obviously exceptionally high. So at least we will maintain that 150 realization run rate or it will come down below?

Kunal Shah — Executive Director, Corporate Affairs

That is a function of our cost, no. I mean, cost, shipping, currency, so the average selling price is a function of a lot of other input variables, and it will move in line with that.

Dhavan Shah — AlfAccurate Advisors — Analyst

I got it. But sir, basically, since till last quarter, we were saying that we were not able to pass on exactly the whole thing, right? Obviously, we would have passed on in this quarter. So I’m just saying that, is there going to be a lag effect [Speech Overlap]?

Sanjay S. Majmudar — Independent Director

No, no. Dhavan, I am sorry, I am interrupting you. There is a little bit of a misconception here. So first, let us understand our model. Our model is that we are 100% in a position to pass on the cost increase in the input cost as and when they happen with a lot of about one quarter in most of the cases. But many times, it may go up to two quarter, correct? Now, so your statement that we are not able to pass on these is not a correct statement. We have said, we are able to pass on even the freight cost on a full basis — shipping costs on a full basis and raw materials, mainly ferrochrome and scrap. Now, what we are talking, therefore, that current realization of about INR160 average for first half is looks to be the peak because, A, the shipping costs have started coming down, B, the raw material costs do not look like going up from this level, but only going down a bit. So we saw lag. The price reduction will also happen. The way it happens — increase happens with a lag — reduction happens with a lag. It’s a transition process which is continuous.

Dhavan Shah — AlfAccurate Advisors — Analyst

Correct, correct.

Sanjay S. Majmudar — Independent Director

Now, we — our price realization is a function of therefore the costs which are going in the input, the freight, plus the product mix. So what is more important for you is that what is my margin, my margin has to remain comfortable and fixed. And therefore, we believe that we will be able to maintain a decent margin of [Foreign Speech] without any problem on an operating profit level. [Foreign Speech]

Dhavan Shah — AlfAccurate Advisors — Analyst

Correct, correct. [Foreign Speech]

Sanjay S. Majmudar — Independent Director

And that should happen. So I think a better way is that you track it as a percentage more rather than a realization. Realization is just to explain that pass-through [Foreign Speech] benefit [Foreign Speech]

Dhavan Shah — AlfAccurate Advisors — Analyst

Perfect, sir. Thank you.

Sanjay S. Majmudar — Independent Director

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Bhoomika Nair from DAM Capital. Please go ahead.

Bhoomika Nair — DAM Capital — Analyst

Yeah, good evening, sir, and congratulations on a good set of numbers. Sir, sorry to just harp upon this realization bit, very accurately you said that we are clearly seeing the benefit in terms of the better pass-through, which is reflected in our utilization, while now of late, we started seeing the correction in commodities and freight cost, et cetera. Would it be possible to get a — obviously in the second half, there will be a decline in realizations because of the same aspect. But as things stand today on spot basis, what would be the gap in terms of the pass-through versus what today is in terms of spot of ferrochrome or in terms of scrap or logistics costs, et cetera?

Kunal Shah — Executive Director, Corporate Affairs

Bhoomika, which is where we’ve always shared our long-term margin of 20%, 22%, and things ultimately even out at that level, right? It will — it doesn’t serve any purpose to tell you this quarter I’ve got INR15 crores extra or on our next quarter we could, correct? I mean, the math we can do, but it does not help us because, in any case, our pricing is going to be a function of my cost, right? And we aspire, we work to make sure we keep our margin, like Sanjay Bhai explained, at 20%, 22% margin, It does us no good to know whether next quarter will be 155 or 140. Yes, my absolute margin can change with that, but it’s fait accompli, right? I’m not going to change anything in our business, to know that business, because that requires us to estimate what it will be end of the — the way volatility has worked out, we realize it’s an endless loop of trying to estimate. So we’ll still have to consider that will be at 20%, 22% long-term margin, and we may be a few quarters above that, a few quarters much above that, and few below that. But it will all normalize at that level is unfortunately all I can share.

Bhoomika Nair — DAM Capital — Analyst

Sure, sure. Sir, the other thing is in terms of volume, we’ve seen pickup in terms of the volume trajectory in the current quarter. So if you can talk about the next one or two years, how we are seeing the volume scale up? Where are we in terms of trial run, new customer acquisitions, how is it kind of moving, which gives us visibility for and confidence on the volume growth trajectory as we move ahead?

Sanjay S. Majmudar — Independent Director

So, first and foremost, Bhoomika, as you have seen, there is a definite increase in the level of volume growth is visible now, and therefore, it validates our statement that, annually, around 30,000 tons [Foreign Speech] incremental volume growth, it’s something that we are working on and it appears that things are falling in place. We are very, very cautiously optimistic because that is the way we always are. We want to be. We want to be as close to the reality. The good part is that now — forget about this geopolitical issues, but overall it seems that we are on track for that incremental 30,000, 35,000-odd-tons, minimum volume growth that we are expecting year-over-year, that is point number-one. We have three major focus areas, one is the pure chrome ore cost advantage that we can offer because of the ferrochrome, vis-a-vis, forged. That part is clear that many endeavors towards conversion of mines is happening on that, plus we are working very hard on DP front. We have been always cautious about is that, in our business, it always takes more time for us to convert the customer because the mine is more concerned with the cost control rather than the benefit alone that can come on table, and therefore, it is taking time. Having said that, we are very strongly working on DP and equally strongly working on the mill liner advantage that we are offering both for the purpose of improvement of throughput, improvement of yields and reduction of cost. So we believe that with this three-pronged approach, we should now see a fairly consistent trajectory, the growth can, at times in one quarter, it may appear to be a little low, in another quarter it may appear to be a little high. Our humble request is please track us year-to-year-on a long-term basis, medium to two to five years, and I think we are very comfortable. There’s absolutely no change in any of the business propositions. All opportunities remain the same. Now, we are able to demonstrate something on the balance sheet and that is what we are happy about. So let us see, we’ll wait and watch.

Bhoomika Nair — DAM Capital — Analyst

Sure. sir. So no, definitely it’s visible. Sir, the basic thing is, can it go ahead of that 30,000 incremental volume —

Sanjay S. Majmudar — Independent Director

It can, it can. But we are not giving you any guidance on that. We — as and when we have more clarity, numbers will speak and we will also speak. It definitely can. But when? We don’t know. Let us see.

Bhoomika Nair — DAM Capital — Analyst

Okay. Sure, sir. I’ll come back in the question queue. Wishing you all the best. Thank you

Sanjay S. Majmudar — Independent Director

Thank you, Bhoomika. Thank you.

Operator

Thank you. We have the next question from the line of Amarnath from Ministry of Finance of Oman. Please go ahead.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Hi, sir. Congrats on a very good set of number ahead of what we have expected from you.

Sanjay S. Majmudar — Independent Director

Thank you.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Of course, the market condition has helped you, as you explained. I have two questions on this. First of all, you say that you’re — you aspire to grow 30,000 tons, a little bit here and there on a year-to-year basis. So for the next two, three years, if we assume that this is going to be the case, do you have the adequate capacity to execute that kind of a growth for next two, three, four years?

Sanjay S. Majmudar — Independent Director

Absolutely, Amar. So that is your first question. Should I answer that or we will take question by question?

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

[Speech Overlap] I will go to the next one.

Sanjay S. Majmudar — Independent Director

Okay. So first is, as you would have seen my rated capacity today, installed capacity today is 440,000 tons. I’m operating roughly at about 70%, 72% average capacity utilization, as we speak. We are also adding another 80,000 tons of brownfield expansion for grinding media, which is our core volume-based product at the same location that is at GIDC, Kerala, which is close to Ahmedabad, and that will take me to about 520,000 tons. So today, assuming that today I reach somewhere around, this year about 290[Phonetic] or thereabouts, and if I keep on adding 30,000, 35,000 tons year-over-year for next two, three years, I should be — I’m good to go for next two to three years without any problem. Secondly, historically, we have been very conscious about the fact that our capacity addition does take time, because we have to first get the site clearances from an environmental standpoint and then we can do the CapEx, et cetera. So we also keep on adding the infrastructure like the required land, et cetera, we have to well in advance apply for all the permissions, well in advance from an environmental or site clearance perspective, which is now very standardized for us because we have been doing this kind of brownfield expansions and the greenfield within the same area quite regularly. So we are very conscious about the fact that we can’t go beyond 80%, 85% of the rated capacity and we have to keep on adding capacity at regular intervals.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yeah, so in that case, your current cash accrual fees will be adequate enough to fund all those future CapEx requirement you are thinking about, right? Or —

Sanjay S. Majmudar — Independent Director

Absolutely. So I have about INR2,000 crores plus liquid or cash investments available. I have decent cash accrual position, so we should be able to take care of that.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

And can you guide to what is your current ROCE?

Sanjay S. Majmudar — Independent Director

Our current ROCE without considering our investment is higher, but on a balance sheet basis, about 22%. If I exclude the investments which are — sorry?

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

[Speech Overlap] Yeah, please, go ahead.

Sanjay S. Majmudar — Independent Director

So if I exclude the investments or the surplus which is passed in these financial securities, then — because that is typically lower ROCE business, then I would be around 27%, 28%.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. Now, if I connect the dots, here we are talking about a volume growth of 10% to 12%. I don’t know about the — I have a control over my margin, which you are talking about, 20% to 22%. with an operational ROCE is between 25% to 28% and most of our CapEx is going to re-plowing back to the business, so every incremental money I’m putting into my CapEx is going to give me an ROCE above 25%, and based on the cash basis, almost no debt. That is the way we are looking into the future cash generations from your Company for the next two, three years. Am I right?

Sanjay S. Majmudar — Independent Director

You are right, absolutely.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. But this is a very healthy situation in the current situation — in the current scenario, I must say. Now, I just have one more question relating to this cash. As you also know that this investment, which is sitting in your book and your future projection of the cash and you are in a position to fund your — most of your CapEx using your internal accrual, and you yourself also know that extra cash investment is lowering down your overall ROCE. Do you have a plan to deal with this extra cash to return to the shareholders in different way, how do you deal with that? Because overall, ROCE is getting rushed, if it is — if that cash accumulation pain increasing.

Sanjay S. Majmudar — Independent Director

So Amar, a very pertinent question and a question which we have been very regularly facing. So one, as a company, we remain a bit conservative and we still continue with our same old dividend distribution policy of about 20%. We know that we do have surplus cash generation, free cash also coming in. However, there are two situations, which we are envisaging. One, see, as we have been repeatedly telling, the headroom growth opportunity is significant. We are working on several mine conversion projects in various geographies all over the world. While we are very conservative and we are very realistic, I may use this world, in giving a growth trajectory overall indication of 30,000, 35,000 tons annually, and there is a possibility as one of the previous participant did put a question of a more aggressive growth. In our sort of situation, therefore, there is a possibility of some significantly heavy involvement in working capital, because bulk of our sales happen through warehouses, which are located all over the world where we maintain a significant inventory. So it’s tending to accretive — a little bit more working capital accretive if the growth trajectory becomes steep and we start growing at a faster pace. Now, the problem is, we have not reached our optimum level of sales in mining, which we believe could be anywhere between 300,000 to 400,000 tons. We’re still talking about 200-odd-thousand ton sales in mining, so we’re still talking of at least couple of years where we believe that we may consider having reached a decent level of plateau and the penetration the way we want. So as a management, we want to continue to remain a bit conservative in cash distribution, at least for next one or two years in the maximum situation. Having said that, in every Board meeting, we are consciously discussing this, we are very alert about this. And sooner — as soon as we get the right opportunity, we will be taking a conscious view of making our distributions a bit more aggressive. But this is the conservative stance we want to maintain at least for some more time.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

This is the music to our ears, sir, to hear this explanation. As a shareholder, we don’t want that cash back in any form, especially when a business — while the plowing back can give me 25% return on capital employed. The things you just now said is giving us a hint that there is an opportunity to increase the growth trajectory and utilization of the extra cash within the business, which give me more returns than getting the cash back. We don’t invest in a company to get the cash back. We invest in a company where the company really takes this cash and utilize and give us more ROCE.

Sanjay S. Majmudar — Independent Director

Thank you. Thank you, sir. Thank you for this.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

[Speech Overlap] one more option, sir.

Sanjay S. Majmudar — Independent Director

Yes.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Just now the cement part of your business, as we all know, last few years, cement industry has undergone very difficult time, and as well as it is a cyclical business as well. But what we are hearing from different cement companies’ con call that the business outlook is going to be very good in the next one or two years, demand is increasing, pricing power is little bit coming back. So from that side of the business, this grinding media business for cement, how is your outlook, please, if that business if you can focus, please?

Sanjay S. Majmudar — Independent Director

So simply put, my growth in cement will be coterminous with the industry growth, which still with all said and done is only in a decent higher of single-digit type of a growth for the very simple reason that we have, A, the cement industry worldwide is already converted to a very large extent to the products that I’m supplying that is high chrome. Second, if you talk of India, the consumption — the overall consumption of these wear parts in cement is significantly lower. So we have been talking about the overall replacement market worldwide of — an opportunity of about 300,000, 325,000 tons, most of it is already converted. So therefore, when I have an overall 35% market share in this industry ex of China, whatever the industry grows in India or anywhere else in the world, we operate in more than one 125 countries and we service all the cement mills, key plants all over the world, but the consumption ratios are very low and it is already converted. Therefore, the growth will be only tepid, if I may use that expression.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

And that’s part of the excess growth?

Sanjay S. Majmudar — Independent Director

Yeah.

Kunal Shah — Executive Director, Corporate Affairs

So we’ll grow with the market — hi, this is Kunal. We will growth with the market, and — but it’s anyways not material in the scheme of things now, right? We are — our non-mining business will be about 80,000 tons, 75,000 to 80,000 tons. Even if we grow 10%, that’s 8,000 tons, right? In the scheme of things, if you’re growing to — it will be 300,000 tons this year, that’s still not material, right? So all our growth coming from or all our efforts towards growth comes from the mining market. Cement is, fait accompli, if it grows, will automatically grow.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Are you getting something in China plus advantage somewhere you are seeing it? Because you are [Speech Overlap]

Kunal Shah — Executive Director, Corporate Affairs

Thankfully, both our industries we operate in, which is cement and mining, are local industries. So our customers never migrated to China, right? So they were anyways located all over the world. And chrome nevertheless came from ex China suppliers, right, us and Magotteaux and a few others. So to that extent, they are agnostic to all that’s happened in China.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Thank you very much. Excellent, sir. It’s a very healthy reply you have given, given us a fantastic comfort. Thank you very much.

Kunal Shah — Executive Director, Corporate Affairs

Thank you, Amar.

Operator

Thank you. We have the next question from the line of Pujan Shah from Congruence Advisers. Please go ahead.

Pujan Shah — Congruence Advisers — Analyst

Hi, sir. One of my query would be, can you just — I think I have missed out the point, can you just repeat that, the secured line INR125 crores of the SAL Steel[Phonetic], which we have been discussing. It is a INR3,000 crores of — 3,000 tons is the incremental, right, from the SAL[Phonetic] which we have been doing backward integration.

Sanjay S. Majmudar — Independent Director

Yeah, I’ll just quickly explain. One, this Company is manufacturing ferrochrome in Gujarat. They have a plant where their peak capacity can go up to 4,000 tons. What we have done, we have we entered into a contract with them whereby the entire capacity they are reserving for us is with a minimum period of three years, and therefore, for us, it’s a raw material security. It’s a raw material security. And it’s a very comfortable kind of an arrangement that we have entered into. And since they have dedicated their entire plant, we have paid them a secured — security deposit, which is interest bearing, of INR125 crores at 10%, where we have taken the first charge on their entire block of fixed assets of ferrochrome and the power plant.

Pujan Shah — Congruence Advisers — Analyst

Okay. And sir, just like add to this question. So if you wanted to set this ferrochrome plant, so what would be the total cost if — let’s suppose, we have set up 4,000 tons of plant currently. So could we say that the cost would be around INR200 crores, INR250 crores.

Sanjay S. Majmudar — Independent Director

Minimum, minimum. More actually.

Pujan Shah — Congruence Advisers — Analyst

Okay. So that is a very win-win situation for us because we are giving just INR125 crores at a yield of 10% and we are getting secured raw materials, that’s a good situation from out side.

Sanjay S. Majmudar — Independent Director

Right, sir.

Pujan Shah — Congruence Advisers — Analyst

Yeah, sir. Congratulations.

Sanjay S. Majmudar — Independent Director

Yeah. Thank you, sir. Thank you.

Pujan Shah — Congruence Advisers — Analyst

Thank you, sir. Thank you.

Operator

Thank you. We have the next question from the line of Gopal Nawandhar from SBI Life. Please go ahead.

Gopal Nawandhar — SBI Life — Analyst

Hi, sir, thanks a lot for the opportunity. Sir, two questions. One, the post-COVID opening up, we saw very limited traveling and all, which was restricting our long-term volume growth outlook.

Operator

Sir, sorry to interrupt. Sir, you’re sounding too low. Can you please increase the volume a little bit and talk?

Gopal Nawandhar — SBI Life — Analyst

Sure

Operator

Yes, this is better, sir. Please proceed.

Gopal Nawandhar — SBI Life — Analyst

Yeah, yeah. So just on the post opening up, the travel restrictions were still there and the client conversions were delayed and all. So if you can just highlight how are the things on the new client conversion, travels, and all.

Sanjay S. Majmudar — Independent Director

So things are very much back to normal. And frankly, we have all forgotten about COVID, so traveling, there is no restriction. Our people are able to travel to most of the mining locations without any problem, and that is the reason why, over the last six months, we have been sounding a little more confident about going back to the growth or incremental volume trajectory.

Gopal Nawandhar — SBI Life — Analyst

Sure, sir. And one of the other element was like at — and the competitive landscape, because of this higher shipping cost and all. We might have lost some volume to the competition with this current reduction in the shipping cost and all. Are you winning back on the competition on the pricing and all?

Sanjay S. Majmudar — Independent Director

So frankly, I don’t think we have lost anything significant to any competition. This is the first statement I want to make. Secondly, the endeavor is always to gain market share and to convert mines from — but current focus of competition is more on the forged players and we are focusing on converting people from forged media to grinding media in our line up. And there, our whole equation and our own business strategy is very different as explained earlier that we are talking of significant cost savings and we are also talking of reducing the cost of ownership and making the mining operations more efficient. So that way, I think we have a superior solution, and of course, we have one major competitor worldwide that is, Magotteaux, but that’s — that remains. That situation very much remains.

Gopal Nawandhar — SBI Life — Analyst

But in terms of pricing, we’ll — now we’ll have a better competitive pricing with the reduction in the logistics cost and INR, right?

Kunal Shah — Executive Director, Corporate Affairs

No, no. From a margin standpoint, which is why I giving a guidance of 20%, 22%, right? It will be higher, lower, depending on the pass-through. It takes two to three quarters to pass-through, but that’ll even out over the period.

Gopal Nawandhar — SBI Life — Analyst

Sure, sir. And this current volume run rate of like 78,000, out of which almost 54,000 on mining should be a sustainable run rate?

Kunal Shah — Executive Director, Corporate Affairs

Yes.

Gopal Nawandhar — SBI Life — Analyst

Sure. sir. Yeah, thanks a lot, sir.

Sanjay S. Majmudar — Independent Director

Thank you.

Operator

Thank you. We have the next question that is a follow-up question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.

Dhavan Shah — AlfAccurate Advisors — Analyst

So sir, one more question, like since this arrangement is therefore with — for ferrochrome, so, sir, we’ll be having some benefit because of this on the gross margin also, like, let’s say, getting some discount from the market pricing and all those things.

Kunal Shah — Executive Director, Corporate Affairs

I think this is the agreement. The purpose of the agreement is supply chain [Indecipherable] and that’s you’ll have to look at it from that standpoint.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. And the annual capacity with this plant is 48,000 metric ton, correct?

Kunal Shah — Executive Director, Corporate Affairs

Listen, we can keep sharing more information, not material to the scheme of things, right? I think all we are trying to say is that we try to protect the supply chain, but offering a secured loan, 3,000, 4,000, 2,000, I mean these are all — there are lot of variables linked to that. And as a practice now, we are not sharing more information around it.

Dhavan Shah — AlfAccurate Advisors — Analyst

I got it, I got it. And secondly sir, in terms of the other income, like the current run rate of other income, what would be the ForEx part into the other income in this quarter?

Kunal Shah — Executive Director, Corporate Affairs

It was about INR3 crores this year, [Indecipherable] INR3 crores.

Dhavan Shah — AlfAccurate Advisors — Analyst

INR3 crores in this quarter, right?

Kunal Shah — Executive Director, Corporate Affairs

[Speech Overlap] Yeah.

Dhavan Shah — AlfAccurate Advisors — Analyst

INR3 crores in this quarter. So basically, if we exclude INR3 crores, rest all is kind of a sustainable other income?

Kunal Shah — Executive Director, Corporate Affairs

There is a treasury income of about INR24 crores [Speech Overlap]

Operator

Sir, your voice is breaking.

Kunal Shah — Executive Director, Corporate Affairs

Yeah, there is a treasury income of INR28 crores in the second quarter.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. Okay, fine, sir. And the and the tax rate would be around 23%, 22%?

Sanjay S. Majmudar — Independent Director

Yes, yes. The tax rate — effective tax rate is about 20% to 22%, effective tax — overall tax rate, okay?

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay, 22%. Fine, sir. Thank you.

Sanjay S. Majmudar — Independent Director

Thank you.

Operator

Thank you. We have the next question from the line of Raja Kumar V, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Yeah, good evening. Thanks for the opportunity, sir. Sir, I have three questions. So should I ask all at one go or just ask one by one.

Sanjay S. Majmudar — Independent Director

Yeah, yeah, yeah. Whatever makes you comfortable. We have no issue

Unidentified Participant — — Analyst

Yeah. Yes, the first question is on the margin — sorry, to labor on that point. So what I understand from the call is you’re maxed out on the selling price. so the — but however, the absolute EBITDA reported will be more or less protected, and go forward, the margin expansion will come more in terms of the volume and the mix increase. Is that a fair understanding, sir?

Sanjay S. Majmudar — Independent Director

Yes, of course. I am making a clear disclaimer that, as a matter of policy, we are not giving any guidance about the margins, but your understanding is broadly correct.

Unidentified Participant — — Analyst

Okay, great, sir. And sir, the second question is on the — you have a subsidiary called Welcast Steels. So I was just thinking at the numbers for this quarter, so it has come down significantly compared to the previous quarter. Just wanted to know, are we not fully utilizing the capacity in this subsidiary, and what is the kind of plan for the quarters to come?

Sanjay S. Majmudar — Independent Director

So in the overall scheme of things, Welcast is sort of our contract manufacturing support subsidiary. It has a facility in Bangalore. We — as you know, we are putting up significant capacities here. So it’s more to be looked at, not in isolation, but in the overall scheme of things. And therefore, Welcast — therefore, from that point of view, has a very limited role to play, but it’s important because it’s a facility in South[Phonetic] for grinding media.

Unidentified Participant — — Analyst

Okay. But will you plan to utilize them kind of fully in the quarters to come or it will be more in the current —

Sanjay S. Majmudar — Independent Director

Again, it will depend on which type of product, where markets, et cetera. It’s on a totality basis, exactly.

Kunal Shah — Executive Director, Corporate Affairs

We will not be able to share plant-wise information.

Sanjay S. Majmudar — Independent Director

Yeah.

Unidentified Participant — — Analyst

Okay, sir. Sir, and lastly, one housekeeping question. So I saw INR460 crore borrowing on the balance sheet side, just wanted to know what is that, given that you have a high cash balance?

Kunal Shah — Executive Director, Corporate Affairs

It’s a treasury investment, the borrowing.

Sanjay S. Majmudar — Independent Director

The borrowing is actually — no, no, I’ll explain. The borrowing is in the nature of export credit, which we are getting at a very, very competitive rate, and therefore, as an export finance, we are utilizing it because it is to our advantage.

Unidentified Participant — — Analyst

Okay, got it, sir. Thanks a lot, sir. Thank you, and all the best.

Operator

Thank you. We have the next question that is a follow-up question from the line of Amarnath from Ministry of Finance of Oman. Please go ahead.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Thank you for giving this opportunity for the follow-up. Actually I missed one question last time.

Kunal Shah — Executive Director, Corporate Affairs

Please go ahead

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

You said that you are going for an investment for this power plant, and for your, I think, renewable energy. Can you just elaborate a little on that, that by doing that, are you going to save some of your electricity and energy costs? And second related question is, how is your outlook as a company towards the ESG side, I mean, regarding decarbonization relative targets and how much investment or something you are planning for that? Because the industry you are operating at, at an international level, the foreign investors, including us, we all look at that ESG compliant part very seriously nowadays. So if you can give little more outlook on that side, please.

Kunal Shah — Executive Director, Corporate Affairs

Yeah, hi, Amar, this is Kunal again. So absolutely, very conscious on the ESG footprint that the company has. It’s a regular feature and conversation at the Board level, and which is where we started our journey for renewable power. So end of ’22, about 20% — March ’22, about 20%, 22% of our power — 23% of our power came from renewable sources. The idea is to take it up to 30%, 35%. That’s how the policy allows today. If it was our choice, we would have done all possible. There is a limitation on how much captive renewable offsite one can setup. So we will do all that is possible within the current regulation to migrate to the — on the renewable side. In addition to that, we move to cleaner fuel sources like PNG for our heat treatments, which we moved away from electricity — coal-fired electricity, right? So that’s as far as fuel is concerned, but outside of that, we are, by and large, not just compliant, but looking to do — we are doing green plantations, et cetera, but a large part of multi order value is what we bring on the customer side, right? We are helping customer reduce their power cost and overall reduce the amount of power that goes into their overall system. So some of these things — or as far as gold and copper is concerned wherein our chrome grinding media potentially reduce the consumption of reagents, which has a toxic residue or improve the recovery of gold and metal — gold and copper. So these are the footprints that we have as far as ESG is concerned is significantly higher at the customer end, but also mindfully doing all possible as far as our — doing things at our operational level is concerned.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yeah, nice to hear. Sir, during that process, are you able to have some financial savings due to coming out of your traditional power input to 30%, 35% of the renewable power? Net-net, will there be any finance relating to that?

Kunal Shah — Executive Director, Corporate Affairs

Yeah, yeah, yeah. There will — captive power is always cheaper, but instead of using — setting up our own coal-fired captive, we’ve chosen renewable which could be higher cost, but ultimately — obviously there is a cost saving linked to it, right? Because you’re getting an offset from the grid power, which is more expensive than a captive source.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yeah. So just to — if I may allow, because it is all leading to one final question to. Now, if I link all the things you said that we can increase our capacity, we can increase by capacity utilization, we increased our volume, we are using the renewable power, and as the capacity utilization increase, the economies of scale must be fit[Phonetic] onto it. Then if I put all the things together, then I suppose to get an higher EBITDA margin as all those things progressing upon. Then why we always keep that EBITDA margin range between 20% to 22% because, okay, at a small volume, it is okay. But as you’re increasing everything and economies of scale kick start, it should reflect in a higher EBITDA margin. Does it so?

Sanjay S. Majmudar — Independent Director

So Amar, thanks for this question. And this is Sanjay again. Actually, see, if you look at our history, we have grown from a very small company. We’ve had a joint venture earlier. Our whole mindset is to always remain conservative and be mindful of what we are talking. Now, you’ll see we are — the whole game today is market share gaining, so which is my biggest range of — I mean, the biggest targeted range of customers, they’re all mines. These mines are extremely decentralized, if I may use this word from a power or a budgeting standpoint. Mine manager is the boss, he works with a very close budget. In spite of all the benefits, we have to take a lot of time and efforts to convert that mine and start getting orders. So therefore, we also, many times, have to become very, very competitive in order to ensure that the mine manager remains comfortable. So sum total of all these factors, they make us the little conservative when we talk about achievable operating margin range of 20%, 22%. Having said that — again, I’m talking of pure operating, so you remove other income, you remove FX, you remove everything, okay? So my point is, yes, there is a potential for increase in margin, but since our entire focus today is gaining higher market share, we are very consciously sort of giving this kind of a guidance that, yes, this looks to be a long-term sustainable margin, given the fact that all these imponderables or all these variable factors we have to always face.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

So sir, now you are giving us a look that, okay, even if there is an opportunity to increase the margin, I will preferably make it within a range and use that as a weapon to gain the more market share by increasing our competitiveness in the international market, which is very competitive there. So I will gain through the volume and market share and probably I will maintain my EBITDA at the current level and use that economies of scale to gain my more market share. So that is the strategy?

Sanjay S. Majmudar — Independent Director

Well, broadly, without taking this as a guidance, yes, that is the strategy. But we remain — we want to remain conservative. Tthat’s very important.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Thank you. That’s my last question. Thank you.

Sanjay S. Majmudar — Independent Director

Thank you.

Operator

Thank you. We have the next follow-up question from the line of Raja Kumar V, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Yeah, sir, thanks for the follow-up. Just one question. Sir, there is a news article that government is trying to revive the Kolar Gold Fields in Karnataka. So just wanted to know, is that an immediate opportunity for AIA or it’s like a long-term? And also, what will be the potential?

Sanjay S. Majmudar — Independent Director

So Mr. Raja, frankly, our market is actually worldwide. The volumes outside India are much, much larger. All our efforts are actually for mining concentrated outside India. Having said that, if any such opportunity does in fact come, we will look at it.

Unidentified Participant — — Analyst

Okay, sir. Thank you, sir.

Sanjay S. Majmudar — Independent Director

Thank you.

Operator

Thank you.

Sanjay S. Majmudar — Independent Director

So operator, if — moderator, if there’s no other question, we can conclude the call.

Operator

Okay, sir. As there are no more questions, I would now like to hand over the conference to AIA Engineering management team. Please go ahead, sir.

Kunal Shah — Executive Director, Corporate Affairs

Yes, thank you, once again. And Sanjay Bhai and I remain available offline for any further clarification. Thank you so much, and have a great evening.

Operator

Thank you. Ladies and gentlemen, this concludes your conference for today. We thank you for your participation, and for using Chorus Call Conferencing Services. You may please disconnect your lines now. Thank you. Have a great evening.