Bharat Wire Ropes Limited (BHARATWIRE) Q4 FY23 Earnings Concall Transcript

Bharat Wire Ropes Limited (NSE:BHARATWIRE) Q4 FY23 Earnings Concall dated Apr. 27, 2023.

Corporate Participants:

Anuj Sonpal — Founder and Chief Executive Officer

Mayank Mittal — Joint Managing Director

Murarilal Mittal — Managing Director

Analysts:

Jatin Damania — Kotak Securities — Analyst

Amit Jeswani — Stallion — Analyst

Alisha Mahawla — Envision Capital — Analyst

Pratik Pandya — Girik Capital — Analyst

Raval Shah — — Analyst

Falguni Dutta — Jet Securities Private Limited — Analyst

Deepak Poddar — Sapphire Capital — Analyst

V.P. Rajesh — Banyan Capital — Analyst

Binod Modi — Sharekhan — Analyst

Vivek Gautam — GS Investment — Analyst

Manan Shah — Moneybee Investment Adviser — Analyst

Ankur Kumar — Alpha Capital — Analyst

Kirtan Mehta — BOB Capital Markets — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Pratik Choudhary — Samara Capital — Analyst

Dhiral Shah — Philip Capital, PCG — Analyst

Payal goenka — Tusk Investments — Analyst

Sudan — Individual Investor — Analyst

Arpit Shah — Stallion Asset — Analyst

Devesh Singh — DS Investment — Analyst

Presentation:

Operator

Ladies and gentlemen, Good Day, and welcome to the Bharat Wires Limited Q4 FY 23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Mr. Sonpal.

Anuj Sonpal — Founder and Chief Executive Officer

Thank you. Good afternoon, everyone. A very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors, the Investor Relations of Bharat Wire Ropes Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the fourth quarter and financial year ended 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs, as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Murarilal Mittal, Managing Director; and Mr. Mayank Mittal, Joint Managing Director.

Without any further delay, I request Mr. Mayank Mittal to start with his opening remarks. Thank you, and over to you, sir.

Mayank Mittal — Joint Managing Director

Thank you, Anuj, for hosting this call, and a very good afternoon to everyone joining us today. It is my pleasure to welcome you over to our first ever earnings conference call for the fourth quarter and the financial year ending ’23. Being that, this is our first ever earnings call. Let me first give you a brief about the company so that everyone is on the same page. Bharat Wire Ropes Limited was originally incorporated in the year, 1986. And later in 2010, it was acquired by us. We are today one of the leading manufacturers of specialty wire ropes, wire ropes links and wire trends, with over thousands of varieties of products and SKUs. Our products meet the functional needs of various industrial applications such as general engineering, aviation, fishing, elevator, cranes, material handling, on and offshore oil exploration ports, shipping and mining. The company has two manufacturing plants, one is in Atgaon, Maharashtra, which is 90 kilometers from Mumbai, and it’s the old plant that we acquired, which has a capacity of 6,000 metric tons per annum and a new state-of-the-art facility in Chalisgaon, Maharashtra, which has a capacity of 66,000 metric tons per annum. Our manufacturing facility at Chalisgaon is equipped with the latest technology, machines and infrastructure from the best companies across the globe.

We have machines mainly from South Korea and Germany which helps us to compete with the global manufacturers. We are exporting our products to over 50-plus countries covering the six continents, including Australia, lease, Nepal, New Zealand, U.K., U.S. Singapore, South Africa, Vietnam and many more. Alongside this, the company also caters to the government, semi-government organization, private organization and multinational companies. There has been a significant transformation in the company’s business and performance. Strategic efforts have been made to focus on improving marketing, enhancing productivity and maximizing plant utilization by minimizing waste at reducing material holding costs and focusing on sustainable operations. Let me give you a brief on the fourth quarter and financial year 2023. For the fourth quarter under review, on a consolidated basis, we reported revenues of INR162 crores, which was up by 21% on a year-on-year basis and 12.5% on a quarter-on-quarter basis.

EBITDA margins for the quarter were reported at 28.16% in which represents a significant growth, both on a yearly and quarterly basis. Net profit stood at INR16 crores, which was up by 106% year-on-year but down by 16% on a quarter-on-quarter basis due to the additional deferred tax provision taken of INR8.4 crores in this quarter. For the financial year ’23, consolidated revenue stood at INR589 crores, reflecting a strong growth of 43% year-on-year basis. EBITDA for the quarter was reported at around INR139 crores, which represents a growth of over 100% on year with EBITDA margins at 23.5%. Net profit for the year was INR62 crores, which was up by 354% year-on-year basis. Please note that the company has made an additional tax provision of INR8.4 crores on account of change in tax structure. Without this item, the net profit would have been INR70.6 crores in FY ’23.

Now we request our Managing Director, Mr. Murarilal Mittal, to give you some of the operational highlights.

Murarilal Mittal — Managing Director

Good afternoon, ladies and gentlemen. And thank you for joining us today on our first ever earnings calls. I’m happy to inform you that after many years of hardwork, our company has reported its highest ever quarterly and yearly revenues in Q3 FY ’23 and FY ’22. In FY ’23, our sales volume increased by 13% year-on-year, and we are currently operating at 60% to 62% capacity utilization level. In FY ’23, there was improvement in our realizations by 30% on account of improvement in the product mix, higher economical scale of operations and also improvement in credit ability due to good manifesting cap record and lastly, also supported by increased industry prices. We have also seen improvement in the probabilities due to increase in sales realizations, cost optimizations and reduction of interest costs. The company has turned around its operations and also a very strong and healthy balance sheet. Our business is trading with the strong demand outlook. We have an ongoing order book position of INR130 crores, which is usually executed within a quarter. Our credibility with the customers is improving day by day, resulting in repeated orders consistently coming to the company. We are also looking at substantially–sustainability initiative by switching to solar power, which will not only reduce our carbon footprints but also help us in saving energy cost almost 30% to 40% in the coming years.

Our future plans, looking towards past performance, we are confident that consumer side will grow 80%, 50% to 20% in volume growth during the next three to five years to achieve our rated capacity of 72,000 tonnes per annum, by investing a small amount of in balance equipments from our internal cash accruals. Our major production is for export market. However, looking to Indian infrastructure development plans from government of India, we are confident that huge demand will be generated in the country, which will also support our growth projections. Recently, Honorable Minister of Transport and Highways, Nitin Gadkari, has announced billion investment in the road play construction to be completed in next five years. This is the largest budget in the world. Apart from this projected demand, ongoing infrastructure, metro and case activities also generating huge demand in the country and our company will able to get the benefits of the government of the new demands.

We should ensure that our total debt in the company should not be approximately equal to one year EBITDA and surplus money to be generated in the future, we intend to invest in new product developments and which will give us ROC of at least 25% to 30%. Details will be informed in next two quarters on finalization of the schemes, which will be implemented in the next two years. We have also issued CCPs to the bankers, which we [Indecipherable] converted into equity shares after 13.5 years to 20 years in each income at that time trailing price as per semi formula. However, we are closely monitoring and working to address this issue much earlier without affecting existing shareholders’ interest because it is not the liability of the company as of date.

We can now open the floor for the question-and-answer session. Thank you very much. Over to Mr. Anuj.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Jatin Damania with Kotak Securities. Please go ahead.

Jatin Damania — Kotak Securities — Analyst

Thank you for [Indecipherable], and congratulations on the good set of number, Mitall. Sir, just to understand that since you have 72,000 Tonnes of capacity and we operated at 60%, 65% utilization. So now given the ramp-up that we had seen, it seems like we will be operating at the rated capacity in FY ’24. So, I just wanted to understand the road map going ahead two to three years down the line? What are we seeing in terms of the capital expenditure in terms of the volume, as you already highlighted that given the strong demand, huge volume growth over the next three to four years?

Mayank Mittal — Joint Managing Director

Yes. See, I’ve mentioned we will be going volume growth, 15% to 20% consume side. Last year, we achieved around 39,000 Tonnes production. And if you take a 15%, 20% growth, the 72,000 Tonnes production, what we are expecting the rated capacity achievement next two to three years’ time, with this rate of 15% to 20% growth, we are confident to achieve these numbers, number one related capex. Again, the investment will be very small, negligible only for the balancing equipments wherever the shortfall is there in this to achieve this capacity. So, there is a major capex plan to achieve this capacity in next two to three years’ time.

Jatin Damania — Kotak Securities — Analyst

But sir, given the such of number that we reported in FY ’23 and probably largely in FY — last quarter in this number. Now with the volume increase of 15% to 20%, is it safe to assume that the incremental volume that you will be doing will come with the higher margins?

Mayank Mittal — Joint Managing Director

Yes, definitely, margins will improve because we mentioned that our operational efficiency improving about proton cost is getting reduced we are going to serve our product mix we are changing regularly. We are going for the higher sales price by offering the different products, which will be a high value like elevators or compacted ropes, other different type of products for the same type of [Indecipherable]. At the same time, our cost of production is in control. We are reducing because of volume. We are buying the raw material immediate payment, most of the raw materials we are getting substantial discount on the purchase price also as compared to early years that all these factors will give additional top line as well, bottom line.

Jatin Damania — Kotak Securities — Analyst

Sir, last question, if you’re looking at the last, your number, definitely, we have see a sharp increase in our power and fuel cost. So are we moving into a renewable or any steps that you are taking to reduce the overall [Indecipherable]?

Mayank Mittal — Joint Managing Director

Yes, we mentioned that we are going for the solar. We already started 5.5-megawatt solar energy and another 3.5 megawatts under installation that will be competitive with the next two months’ time. At the same time, as compared last year, if you remember last year, the LNG price should up up to 140 per kg. Now, Ecogen LNG price is INR70. So additional benefits we are going to get through to energy cost as well as solar cost.

Jatin Damania — Kotak Securities — Analyst

Is it better if you can quantify what will be the savings that we’ll be doing through solar, and energy is it possible?

Mayank Mittal — Joint Managing Director

Around 30% to 40% of the cost of the energy will be stable covered last year.

Jatin Damania — Kotak Securities — Analyst

Okay. Thank you. So, I’ll come back in if I have any more questions.

Mayank Mittal — Joint Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Amit Jeswani from Stallion. Please go ahead.

Amit Jeswani — Stallion — Analyst

Hi, good afternoon. Just trying to understand first margin volatility of the business. So, this quarter, we reported closer to 28% EBITDA margin this year, we’ve done 23% EBITDA margin. So, these margins are now larger than the market leader in this industry, like way higher than the market leader. These margins are so high because of reduction of domestic steel prices, and that’s how you benefit, or these are sustainable margins?

Mayank Mittal — Joint Managing Director

Yes, the three components for the higher EBITDA margin and net margin, number one, product base is we are continuously changing and upgrading our product mix, we are getting a higher realization on the product mix side. Second, our sales price getting increased because our credibility in the market is improving there by rate. We are mainly in export market, almost 85%. Third, the productivity, once we achieve a certain threshold limit of the production, then any incremental production given the higher realization because other costs remain unchanged except that raw material and let us proportion of power, all other costs remain unchanged. So, all these factors is heading in the bottom line and EBITDA margin. And we are confident that we can sustain these margins in the coming future also.

Amit Jeswani — Stallion — Analyst

So, you think 28% of the margin that we reported this quarter is sustainable, Mayank?

Mayank Mittal — Joint Managing Director

It is possible to sustain in the coming years also is possible that’s why we’re just committing this, yes, we are able to get this margin in future also.

Amit Jeswani — Stallion — Analyst

Got it. Sir, if steel price goes down, except inventory losses, you don’t have any other impact, right?

Mayank Mittal — Joint Managing Director

No, we got an impact factor, we are covering, we are hedging properly. Let us see, we have supposed 10,000 Tonnes orders in hand. Our total inventory in the system is almost 10,000 Tonnes. So, we are not exposed to the commodity prices, the major fluctuation. Small purchase on definitely be absorbed because we are contribution is very high. Our gross contribution is almost INR59,000 per Tonnes, which is highest in the industry. So small fluctuation in steel price or in price, definitely, you can absorb and we are confident that, yes, we can enter this mall.

Amit Jeswani — Stallion — Analyst

Got it, sir. Sir, typically, let’s say, elevator rope. Okay. I’m just trying to understand your business a little better. like elevator ropes, sir, would it take, let’s say, OTC our plans I’m just giving you an example, okay? I don’t know if they are clients or not. Would they — do they have some kind of permission approval timeline that goes through, what is like the most like in our business? Or it’s like a commodity that Joe base? Could it be like whoever two, three vendors are there and whoever gives the lowest cost customer goes towards that? How does it work?

Mayank Mittal — Joint Managing Director

Actually, all these elevator manufacturers have a stringent approval process, which can take years also. And these, most of the multinationals have testing facilities abroad, so they do their testing abroad, they have rigorous testing procedures, and it can take years. It’s a pretty stringent market to end up, and it has entry barriers.

Amit Jeswani — Stallion — Analyst

Got it. Just trying to understand the bank conversion thing. So, I was just going through your annual report and your annual report says that we’ll have to pay INR328 crores to get the debt cleared. How does that work? Sorry, might be very wrong here? Because it’s on the balance sheet.

Mayank Mittal — Joint Managing Director

Yes, I [Indecipherable].

Amit Jeswani — Stallion — Analyst

382 crores.

Mayank Mittal — Joint Managing Director

Issued INR382 crores CCP to the bankers two years back, which has a condition that after 3.5 years, this will contribute the equity at that time prevailing market price as per SEBI Pharma, and that also from 13.5 to 20 years. So average, let us say, 17, 16, 17 years after they will convert into equity. At the same time, management have put and call options, and we can buy out this instrument at 9% deep discounting any time after 1st April 2023. The NPV value of those stand, if I want to buy out, I can buy out at INR105 crores, INR143 crores, so as such companies per se, it is not the liabilities at all in the companies in future also. It is an equity instrument, compassionate equity stent and we are seriously working. We are monitoring closely, at the appropriate time, we will come back to the investors and the shareholders, everybody that gives you our plans once we finalize. Otherwise, it’s over 20 years is a long period this type of instrument conversion to equity.

Amit Jeswani — Stallion — Analyst

Got it. [Indecipherable]

Mayank Mittal — Joint Managing Director

[Indecipherable] Equity instrument.

Operator

Sorry to interrupt Mr. Amit, may we request that you return to the question queue for follow-up questions as there are several participants waiting for their term. Thank you. [Operator Instructions] Thank you. Our next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead.

Alisha Mahawla — Envision Capital — Analyst

Hi, goof afternoon. Thank you for taking my question. So first, I just wanted to know what is the amount of subsidy that we have seen in this low and the corresponding over last year? Also, has there been any extension or in 20 bid?

Murarilal Mittal — Managing Director

See, this is a ESI scheme of the government of Maharashtra, we are in record area region. So we are eligible to get subsidy to the extent of that collected GST collected from the customers. And last year, we received INR30 crores we issued last year from the government of Maharashtra. And our total legibility INR435 crores and we are tying up to October ’25, afterwards, we might that extension, but right now, we have up to October ’25.

Alisha Mahawla — Envision Capital — Analyst

Has it already got extended because last time we spoke, you said this was still April ’23.

Murarilal Mittal — Managing Director

Last year [Indecipherable], now we got two years extension because of COVID away up to ’25 is the final date we got the letter from government of Maharashtra.

Alisha Mahawla — Envision Capital — Analyst

Understood. And this INR30 crores is for FY ’23, right?

Murarilal Mittal — Managing Director

Yes.

Alisha Mahawla — Envision Capital — Analyst

The thing [Indecipherable]. Oh, sorry–

Murarilal Mittal — Managing Director

FY ’23 we have just requested it will be around INR44 crores, we’ll get over the period next 15 to 18 months time.

Alisha Mahawla — Envision Capital — Analyst

But have you already accounted [Indecipherable]?

Murarilal Mittal — Managing Director

Did you already accounted?

Alisha Mahawla — Envision Capital — Analyst

Hello?

Murarilal Mittal — Managing Director

Yes. Yes. This is accounted. INR38 crores we accounted in the March ’23. And what we got to that is patented to 2019, ’20 and 2021.

Alisha Mahawla — Envision Capital — Analyst

Okay. Okay.

Operator

Thank you. Our next question is from the line of Pratik Pandya with Kiri Capital. Please go ahead.

Pratik Pandya — Girik Capital — Analyst

Yes. I just wanted to ask what is the replacement life for the elevator cables that you provide? And also, what is the percentage of replacement revenue that you get every year?

Murarilal Mittal — Managing Director

So basically, for elevator ropes, the replacement cycle is around six years, five to six years. Again, it all depends on the usage of the elevators. But on an average, what you have seen is around six years, five to six years. And elevator is I think so it’s a major part of the general engineering business that we are doing, and we are working with a couple of big manufacturers like Kone elevators, Johnson is there, Fuji Tech is a new entrant. So we are working with a lot of marquee clientele.

Raval Shah — — Analyst

Hi, this is Raval Shah. I have a question what we noticed is that in the elevator industry, the number of average stocks, which limited had that is going up. Like for a long time, there were eight stops and elevator was having. And now that eight going to 11, 12, 15 as more and more tall buildings that are build the country. Now with this, how does your the elevator rope business benefit in terms of strength or the more quality of ropes or anything or it remains the same?

Murarilal Mittal — Managing Director

So basically, as the number of elevators is increasing, the footprint of it is increasing, definitely, there’s an increased demand that we are seeing in our order book. On the follow-up thing, I did not get your question. Can you just…

Raval Shah — — Analyst

No. Yes. So my question is that if earlier an elevator is made for an 8-story building, and now it’s going — as we more and more high rise build you need the– Yes. So then does that the quality of rope used changes with the more taller building, faster speed, because now the global standard is like one second per floor for the tall building. Yes, it’s much less. And while are also moving towards that when we go to up to 50, 70-story building. So how does that rope quality changes once you start supplying for the faster speed elevators.

Murarilal Mittal — Managing Director

Actually, see, the quality of the rope is again specified by the manufacturer, and we give this according to that specification. So these manufacturers work on their designs, and they have R&D centers. So as far as what we have seen is the specification what these people are giving us these ropes are good to go for story, 30, 40-story buildings also, until unless they change their technology and they go and do something else. But what we have seen is our machines, our capability and manufacturing facility is good to go with all the manufacturers I mentioned.

Raval Shah — — Analyst

Okay. Okay. Okay. And my last question, again, on the elevated industry. Given ropes are such a critical part of the functioning of the elevator anywhere in the world do the OEMs make growth tense or everything is made by players like you?

Murarilal Mittal — Managing Director

No. It is all made by rope manufacturers. Yes, a little bit of manufacturer, they are basically assembling all the different components. So nowhere in the world, they are manufacturing their ropes themselves.

Raval Shah — — Analyst

Okay. Thank you. We’ll come back in the queue again. Thank you.

Operator

Thank you. Our next question is from the line of Falguni Dutta from Jet Securities Private Limited. Please go ahead.

Falguni Dutta — Jet Securities Private Limited — Analyst

Yeah. Good afternoon, sir. I have a few questions. One is on the subsidy. Is it a part of revenue from operations for us?

Murarilal Mittal — Managing Director

Yes, it is part of revenue for [Indecipherable]. We are accounting a revenue only.

Falguni Dutta — Jet Securities Private Limited — Analyst

And sir, since which year are we receiving the subsidy?

Murarilal Mittal — Managing Director

We started receiving from the 2019 onwards, and this will go up to 2025 up to [Indecipherable].

Falguni Dutta — Jet Securities Private Limited — Analyst

Meaning FY ’19, you mean to say?

Murarilal Mittal — Managing Director

’19.

Falguni Dutta — Jet Securities Private Limited — Analyst

Okay. And it will go until 2025.

Murarilal Mittal — Managing Director

Up to ’25, ’25, ’26.

Falguni Dutta — Jet Securities Private Limited — Analyst

Okay. And sir, the second question. Could you just tell us the production and sales volume for Q4 of FY ’23?

Murarilal Mittal — Managing Director

11,298 precisely is the production and 10,689 at sales for the Q4.

Falguni Dutta — Jet Securities Private Limited — Analyst

Sir, I missed you. Sir, could you just come again?

Murarilal Mittal — Managing Director

11,298 metric tons is the production, and 10,689 sales.

Falguni Dutta — Jet Securities Private Limited — Analyst

Okay. And sir, as you mentioned that you have a capacity of 72,000 tonnes, but the volume for last year were, if I’m not mistaken, around 39,000 is what you said for FY [Indecipherable]. So sir, what stopped us from doing higher volumes? I mean, why is it that we have not been doing, let’s say, closer to 60-odd?

Murarilal Mittal — Managing Director

I mentioned in my speech also that we are gradually increasing every year 10% to 15% to 20% volume growth to achieve over 72,000 tonne capacity. It’s impossible to achieve optum capacity in year one. So wherever we rebalance in at equipment to achieve the total capacity. So next two to three years’ time, definitely, we are going to achieve this 72,000 capacity.

Falguni Dutta — Jet Securities Private Limited — Analyst

Sir, just to interrupt this 72,000 tonnes capacity since when?

Murarilal Mittal — Managing Director

The install capacity and the ropes industry is 100% of the installed capacity cannot be accused. There are a lot of is in but there for balance equipment for the process, the loading unloading time, a lot of things happen.

Falguni Dutta — Jet Securities Private Limited — Analyst

So I mean to ask–

Murarilal Mittal — Managing Director

So to anybody to achieve day one. Capacity, [Indecipherable] capacity. It’s just like car manufacturer for the speed up to 20 meters per hour, but it’s impossible to achieve four immediately.

Falguni Dutta — Jet Securities Private Limited — Analyst

No, I just wanted to ask you that since I have not followed the lease so closely earlier, so this 72,000 tonnes capacity that we have since which year?

Murarilal Mittal — Managing Director

2016 when we’ll come out of the IPO, that time we installed this capacity with Dejan the entire brand for 66,000 challenge now and 60. So total core capacity invited in our IPO future also.

Falguni Dutta — Jet Securities Private Limited — Analyst

No. Sir the 72,000 since which year we are having this capacity, what is–

Murarilal Mittal — Managing Director

Between ’16 ’17.

Falguni Dutta — Jet Securities Private Limited — Analyst

Okay. And sir, one final question is on the order book. I missed on the order book also.

Murarilal Mittal — Managing Director

Around INR170 crores to INR200 crores is order book, which will be serving within one quarter. And this order, we get daily basis. So this is a continuous process. Around one quarters always in hand.

Falguni Dutta — Jet Securities Private Limited — Analyst

Could you tell us the volume against this?

Murarilal Mittal — Managing Director

Around 14,000 tonnes, 13 to 14,000 tonnes.

Falguni Dutta — Jet Securities Private Limited — Analyst

Fine. Thank you, sir. That’s all from my side. Thank you so much.

Murarilal Mittal — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Mr. Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello.

Murarilal Mittal — Managing Director

Yes, tell me.

Deepak Poddar — Sapphire Capital — Analyst

Hello. Yes, good afternoon, and thanks for the opportunity. So I just wanted to understand, you mentioned 15%, 20% revenue growth, you may look at over the next two to three years, right, year

Mayank Mittal — Joint Managing Director

Yes. Volume growth, volume growth

Deepak Poddar — Sapphire Capital — Analyst

Volume growth, right? So that–

Mayank Mittal — Joint Managing Director

It really does depend upon the steel prices and other factors, and this is also increasing because still by changing and our realize increases. So that may affect further. But the volume got 15%, 20% is likely to be.

Deepak Poddar — Sapphire Capital — Analyst

Okay. So currently, we did about 39,000-odd tonnes of 38.5 — so if we do 20%, so in three years, we would be close to about 68,000 tonnes of utilization as compared to rated capacity. So we’ll reach about 90%, 95% utilization level

Mayank Mittal — Joint Managing Director

Yes.

Deepak Poddar — Sapphire Capital — Analyst

So is that something which is possible in the industry to achieve 95% kind of a utilization level?

Mayank Mittal — Joint Managing Director

This interest rate is unlikely, but definitely by adding some balance equipment, we are trying to achieve maximum possibility.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Okay. And then how do we see the ASPs? I mean, ASPs, we have seen a very — I mean, a sharp jump of 27%, 28%. So how do we look at — I mean, in terms of ASP?

Mayank Mittal — Joint Managing Director

ASP is likely to improve since we are also working on the product mix, wherein we are trying to add more sophisticated products where we are competing with the global giants. So it is likely to improve further. Basically, we have a strong R&D department where we are working with new designs, new technology just to improve the ASP.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Sir, so even if the ASP improved by 5% to 10%, a 20%, 25% CAGR in revenue would be reasonable to assume, right, going forward?

Mayank Mittal — Joint Managing Director

See, last year, because the sharp increase in steel prices 50% growth is because it’s still a increase in the productivity increase. So there are many fetus. So as opposed to more steel pans going to approve say, 40% higher than there definitely SPRI we go down, it will go down also. So there are two factors are important. One is steel price other year volume growth. being a commodity items of the steel, it’s difficult to project completely what is the ASP improvement in the coming three years’ time. But volume growth and our ASP is increasing because of the product mix changing, our credit is improving in global market and domestic market. So we are expecting a good jump in the SPR in the coming period.

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. I understand. And my second question is on your solar. I mean, you mentioned 30% to 40% cost can be seen — so can you quantify it? I mean, how much was the energy

Mayank Mittal — Joint Managing Director

PPA signed INR440 per unit whereas we are paying right now INR nine, 10 government. There is one — second, we are outsourcing solar also, which is around INR five — INR450 Again, there’s billing charges everything. So around INR3 will be getting the dire benefit and in case of 3.5 megawatt will be getting around INR five benefit. So the aggregate by getting 30% to 40% because it time between 6:00 p.m. to 10:00 p.m., government do not allow to use any other alternates in Angore because that is a big time. they charge 110% of the normal tariff. So excluding that period, entire 24 hours, we can use solar or other energy to reduce our power — so gradually, they are shifting to Solar, which is available easily and competitive, and we are confident that 30% to 40% saving will be there this year onwards.

Deepak Poddar — Sapphire Capital — Analyst

I understood. Can you just quantify what was the absolute rupees crore our energy cost in FY ’23?

Mayank Mittal — Joint Managing Director

FY 23 energy cost, actually, [Indecipherable] INR49 crores was the– Sorry, INR51 crores, 1Lakhs was energy cost and last 20 to 43% as compared to INR39 crores of INR22. Last year was a very, very different type of working because of the Russia-Ukraine war the energy price increased up to INR140 because of petroleum shorter thing. This has gone down now INR70 approximately INR six — so this year is likely to be around INR25 crores total energy as compared to INR51 crores over last year. as compared apart from solar energy also given the major benefits in the current Again, depending on the international prices, energy costs may fluctuate, it can go down, it can go up. It is not in control of anybody in the country.

Deepak Poddar — Sapphire Capital — Analyst

So I understood that INR25 crores of — it’s a follow-up. I’m not asking any new questions. Yes. So this INR25 crores savings is about 3%, 3.5% of EBITDA margin saving rate.

Mayank Mittal — Joint Managing Director

Yes, it’s possible. This is — we are working up through the year if the energy price goes up — we are anticipating this saving, but depend upon, again, the energy prices, and we are consuming energy substantially, almost 200 tonnes per month, we are consuming.

Deepak Poddar — Sapphire Capital — Analyst

Okay. And it will start hitting from first quarter, etc.

Mayank Mittal — Joint Managing Director

Yes. Over time, it was INR30 per kg. INR three we become INR140, INR140 become INR60. — right fluctuations in the energy cost — so it is — time will tell what is the actual savings, but we are expecting around INR20 crores, INR25 crores savings in energy costs in the coming year.

Deepak Poddar — Sapphire Capital — Analyst

Okay. That’s it from my side. So all the very best. That’s quite helpful.

Operator

Thank you. [Operator Instructions] Our next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.

V.P. Rajesh — Banyan Capital — Analyst

Hi, thanks for the opportunity. Just one question regarding the customer concentration. So if you can give us the revenue that comes from top five customers or top 10 customers.

Mayank Mittal — Joint Managing Director

Sorry, please repeat, I’m not able to listen, please.

V.P. Rajesh — Banyan Capital — Analyst

Okay. I was asking about the customer concentration in our business. So for example, top five customers or top 10 customers will account for how much of the top line

Mayank Mittal — Joint Managing Director

Just on the top 10 customers to 10 customers, if you see the account around 60% only. We have a wide range, almost 200 customers globally and more than 100 customers in India. So total customers base is spared in 52 countries and Pan India was supply. So there is a concentrated concentration on particular customers.

V.P. Rajesh — Banyan Capital — Analyst

Okay. Wonderful. And the second question is that how much are we earning from exports versus the domestic market?

Mayank Mittal — Joint Managing Director

See all of products are being exported. Almost 85% of products are used in the globally two countries plus and 15%, we are supplying to the domestic market. So revenue is around 85 to 15.

V.P. Rajesh — Banyan Capital — Analyst

So 85% of our revenue is coming from exports. Is it?

Mayank Mittal — Joint Managing Director

Yes

V.P. Rajesh — Banyan Capital — Analyst

Okay. Thank you. Thank you and all the best.

Mayank Mittal — Joint Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Binod Modi from Sharekhan. Please go ahead.

Binod Modi — Sharekhan — Analyst

Thank you for the opportunity, sir, as you said, you derive almost 85% of business from export, right? So I have questions or export business on light. Can you — I mean, explain a little bit about the modality of export in terms of what proportion you get through, I mean, a dealer network, distributor network and what is the proposition under in a B2B director? And how do you manage this ForEx thing being under your export.

Mayank Mittal — Joint Managing Director

See distribution channels and the general will take care of the entire ForEx everything coordination with the customers. And most of the products are being distributed through the distributors overseas. We don’t approach directly to any OEMs because this is a small quantity, consumer items. So nobody is buying is a bulk quantity. They are buying smart sale quantities, so distributed networks is necessary in the business. unless we have on new marketing office or sales offices in the interest market.

Binod Modi — Sharekhan — Analyst

Okay. Understood. So what would have been the kind of — I mean, ForEx again or less losses that you would have booked in your — I mean, other income part in this year overall?

Mayank Mittal — Joint Managing Director

No, this is — we sell through distributors, and we take the rupee account, we don’t book a forwarder sometimes a few cases. But by and large, we are not booking any ForEx. We are just taking rupee data special is very important. What they are special, that says we take the rupee. So we are not exposed to ForEx distributors take care of everything.

Binod Modi — Sharekhan — Analyst

Okay. Okay. So I mean — okay, understood. So it happens 100% through distributors. A new deal only a Understood. And my last question, sir, if you can explain me about the — I mean, realization, right, vis-a-vis your — I mean other — I mean our peers in countries like Korea and Europe as well as America market. So how do we vary in terms of realizing in the key export market as of now, whether are we at par? Or are we offering our product at discount as of now? And if it is, how much?

Mayank Mittal — Joint Managing Director

We try your product. We don’t sell on discount reprice products, and every market have different pricing policies. Some markets, we get good realization some market to be get low, medium, sometime marketers. So our I mentioned that our products are being used globally in more than 50 countries and viruses mainly direly competing with the OEMs and European market because Dis a better advantage for the ontology of production and other benefits. So audience and that are the major competitors. So we benchmark our product as compared to the European and Korean

Binod Modi — Sharekhan — Analyst

Understood. Thanks.

Operator

Thank you [Operator Instructions] Our next question is from the line of Vivek Gautam from GS Investment.

Vivek Gautam — GS Investment — Analyst

I had a slide in the IPO in 2016 around when I come and then was tracking it — and the company went through had some near-death experience. And what was the reason for it? And what have been the learnings from it so that this sort of occurrence doesn’t occur again in the future? And how is the opportunity size and how sustainable is the recent growth? And what’s the expected CAGR growth rate we expect in two, three years?

Mayank Mittal — Joint Managing Director

Cost we already discussed that 15% to 20% volume growth you expected. So far part is concerned, we don’t want to again remember those bad days project started, but it’s a delay in the working capital delay was in implementation. There was a lot of issues there. it was learning of our past is concerned, definitely. And I don’t say it is mitigate experience. And if my world language asked me, this is experience, good experience and the express always stays in the lifetime. So there’s a lifetime experience. I’ve forward in the past, which I was in ICU doctors which medicines use I don’t remember. But very clear that now we have a very healthy balance sheet. We are healthy working, and that will continue. I can assure you all the investor commented that this will be healthy balance sheet, healthy company.

Vivek Gautam — GS Investment — Analyst

And basically, — how much is the subsidy helping us right now and it was still around 12 years, I think so, and capex also some there was some limit — and how much has been helping us in getting very good margins? And once it is over, then what will be the impact on top and bottom line, sir.

Mayank Mittal — Joint Managing Director

Subsidiary is more portion of the total overall performance. But at the same time, as miners explain that every time we are improving our product mix, which will give higher value realizations. So MRP or a relation is getting improved. — subsidies are getting additional benefits — so we are not working only for subsidy over the period after was subsidiary expiry by that time, our average utilization will increase more than 15% to 20% in the coming years, 2025. It’s too early to project. But we are confident that with our subsidy ourselves, the company will be doing well due to increased turnover volume, number one. Number two, the sales realization prices increase — the subsidy aspect, we are sensing up to INR435 crores Lcertificate spend October 25 was exit. So still we have two years. two,2.5 years’ time to use the subsidy. Later on, we can just see how we can improve the performance of the company.

Vivek Gautam — GS Investment — Analyst

Lastly on the deferred tax portion pinhole that we got taken into account? And what was the need for it Please Deferred tax, sir.

Mayank Mittal — Joint Managing Director

Deferred actually this accounting entry still we have something when hopefully, another two years will continue. We’ll not be touched paying company. We have around INR290 crores for losses in the company is we contact book loss is only INR30 crores, but income price losses are still INR285 crores is there. So another maybe two years, we can continue to defer tax they have to become actual tax.

Operator

Our next question is from the line of Manan Shah from Moneybee Investment Adviser.

Manan Shah — Moneybee Investment Adviser — Analyst

Congratulations for a good set of numbers. Sir, I understand that the improvement in our realization and margins is also because of value-added products. So if you can just tell us whether there are further new valid products that we can add in our portfolio? And what would be the current value-added mix in our overall revenue?

Mayank Mittal — Joint Managing Director

So we are constantly working on the value-added products, adding a couple of products every quarter. That is our target. So we are continuously adding these products — in terms of realization, again, these things contribute and it helps us to compete with the global measures. So as a mentioned that we are competing with some European manufacturers. We are competing with some American manufacturers. So this product mix will help us to compete with them more aggressively in the global market.

Manan Shah — Moneybee Investment Adviser — Analyst

Right.So are there still gaps in our portfolio that we can fill in the coming years?

Mayank Mittal — Joint Managing Director

Yes, yes, there are a lot of gaps wherein we are working and having the same product line, which anyone in the globe, any major competitor or major players have — so we are working to add those products in our product line.

Manan Shah — Moneybee Investment Adviser — Analyst

Sure. Another question was you mentioned about the order book of around INR170 crores, INR200-odd crores. So over what time frame do we expect to execute this order book?

Mayank Mittal — Joint Managing Director

So this is around three months.

Manan Shah — Moneybee Investment Adviser — Analyst

Okay. So within three months, we should be able to execute this outlook?

Mayank Mittal — Joint Managing Director

Yes.

Operator

Our next question is from the line of Mr. Ankur Kumar from Alpha Capital.

Ankur Kumar — Alpha Capital — Analyst

Sir, my first question is on the subsidy. So have the — have you received most of the subsidy in the fourth quarter? Have you accounted that and that is why margins are higher. Or is it like we are accounting the subsidy every quarter?

Mayank Mittal — Joint Managing Director

Months period. we received up to March 22 subsidy, almost 75% and be 25% will be getting in the next six months’ time. So this is a ripe government of Maharashtra’s available cash flow. — they disburse money as and when the budget allocated. So we are confident that up to INR435 crores, which is a tension in limit or limit — and every year, we are just putting the request for the disbursement once accounts are highlights. Last year, this March 23, I mentioned that around INR34 crores, sorry. INR accounted as income in the balance sheet. And definitely, we’ll get by within a year or 18 months be your time.

Ankur Kumar — Alpha Capital — Analyst

Sure. Sir, basically, I’m asking this 34 most of it is in Q4? Or is it like equally distribute

Mayank Mittal — Joint Managing Director

Throughout the year all four quarters.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And next question is on the order Out of INR140 crores EBITDA subsidy only INR30 crores, INR35 crores, not the major portion.

Mayank Mittal — Joint Managing Director

It is — let’s say, 20% EBITDA.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And sir, next question is on the order book. So in the presentation, you are saying INR170 crore order book now for next three months. But in the last quarter presentation, it was INR200 crores. So basically, there is INR30 crores reduction in order book. So is it like seasonal business, Q1 and Q2 will be lesser than Q4? Or how should we think about the seasonality of the business?

Mayank Mittal — Joint Managing Director

It is continuous process sometimes bunching of orders start to take place like summer exporter, we had to stand at a time, 400 tonnes per 100 tonnes. So this INR20 crores, INR30 crores is material because of the seasonality — not seasonality, bunching of the orders in the export market. and some tenders as some tenders that we are getting in a partial time, order book portion becomes quite high at sometimes the tender will be able to use in six to eight months’ time. So every time it’s impossible to just quantify that this will continue. — depending on the dynamic issues.

Ankur Kumar — Alpha Capital — Analyst

So nothing like seasonal business. Every quarter can be similar to this. Sorry sir, I asked nothing like seasonality in this business.

Mayank Mittal — Joint Managing Director

Or sell business. It is not like sugar or there.

Operator

Our next question is from the line of Kirtan Mehta from BOB Capital Markets.

Kirtan Mehta — BOB Capital Markets — Analyst

I had one question in terms of the end-use market. So if we look at the sort of the end industries, how does the revenue get split across the different buckets? Another related question was also in terms of the geography, if we want to just look at the bigger geography like Europe, Asia and others, how — what will be the revenue split geography-wise? And I also wanted to understand in terms of sort of we are sort of passing through the recession. So what could be the impact? Or what is your outlook or change in outlook between the last half of the year in the next half of the year across different segments?

Mayank Mittal — Joint Managing Director

I didn’t get your first question. Can you just repeat?

Kirtan Mehta — BOB Capital Markets — Analyst

In terms of which are the primary end user industry, which consumes our product. So is it primarily targeted at construction or it gets into some aspect of the manufacturing? How does it get used as the consumables? Which are the industries which are consuming it?

Mayank Mittal — Joint Managing Director

Basically, our major industries would be someone like elevator manufacturer, crane manufacturers, oil and offshore exploration, shipping, mining, so construction also uses a lot of ropes. So it’s primarily related to a lot of it is infrastructure related. Plus we also have a big replacement market. So there is constant orders coming in once the rope is installed. Again, it has different cycles depending on the durability. So it can vary from 10 days to 25 years, again, depending on the application. Piling is, again, one good example of viral application. The second question is the distribution across the globe. So around 30%, 35% comes from Europe, 20% comes from U.S. and the South American market. The balance comes from the South Asian countries and Middle East. So we are well spread across 52-plus countries on almost all the parts of the world.

Kirtan Mehta — BOB Capital Markets — Analyst

You’re right. [Indecipherable] for sharing this detail. The third question was about in terms of the basically the world, we had seen some sort of the decline coming across in different markets. How are you seeing this change in outlook? Is it a region level or at some of the industry level?

Mayank Mittal — Joint Managing Director

Difficult times. So I think we, as a country and as an Indian manufacturer, we have a big opportunity, especially when we look at the global landscape since our cost of production is very competitive. We have almost the same machines that German manufacturer can have. And our input quality of roads is again at world state. So the kind of value proposition that we can give in is, again, one of the best in the world. So I think that is what our focus is.

Kirtan Mehta — BOB Capital Markets — Analyst

Understood, sir. Thanks [Indecipherable]

Mayank Mittal — Joint Managing Director

Yes, sure.

Operator

Yes. Thank you. Our next question is from the line of Mr. Vignesh Iyer from Sequent Investments.

Vignesh Iyer — Sequent Investments — Analyst

Congratulations, sir, on a very good set of numbers. Sir, just to understand, I can understand the steel price is a major factor when it comes to sales and EBITDA, the inventory loss or inventory gain as it may. So it is difficult to put a percentage margin. Can you quantify if EBITDA per ton would be a better way to calculate in — if you have any number in mind? I mean, below which the company usually wouldn’t operate. So like if I take FY ’23 number, it comes somewhere around 36,000. So can you just help me understand that?

Murarilal Mittal — Managing Director

The EBITDA margin is slightly dependent on the steel prices, productivities, sales utilizations. So EBITDA margins at last year, let us see, was INR59,000 per ton was the gross margin. EBITDA margin was INR36,000 per ton, and that margin was INR16,000 per ton. And this margin, we are, personally, I’m confident, yes, we’re able to maintain it in the coming period also subject to variation of the energy price, steel prices. But by and large, look into the business plans other than the order book position, we are comparing just to maintain the growth, what we have assessed last year.

Vignesh Iyer — Sequent Investments — Analyst

Yes. I mean on the power side of it, you are quite confident of reducing the cost. So whatever over and above that, we are confident of making better EBITDA, right?

Murarilal Mittal — Managing Director

We are trying to mitigate the risk, power cost energy costs include two portion. One is the power cost, second LNG gas. LNG is not in control. Power, it was like, if you remember, the government of Maharashtra increased power by INR120 from first April 2023 recently, to be exact. How to address? So to mitigate this type of increase, we have decided to go to solar and partly already start from first of April partly under ejections It’ll take another too much time. So we are trying to mitigate all the business risk so far negative things are there. We are trying to work on those negative aspects in the business so far, cost is concerned. And LNG, I told you it’s impossible. Anybody can project that what will be the production, the solid cost. But looking to the global scenario, we expect this pipe should also go down by 15% to 20% based on the Indian oil and other companies we are talking. But again, the global political situation that if something goes wrong, then it can go again a very high side or low side. LNG, I cannot predict, but solar, we can predict that my domestic power cost will go down at least 30% to 40%.

Vignesh Iyer — Sequent Investments — Analyst

Okay. Sir, final question on my side is, can you tell me what is the regular capex spend for the solar power?

Murarilal Mittal — Managing Director

We don’t expect a major capex, maybe 1% or 2% of our gross block will be capex to just achieve our related capacity within two years’ time. Very small number, maybe INR10 crores per year.

Vignesh Iyer — Sequent Investments — Analyst

Okay. And the solar power, the cost for solar power?

Murarilal Mittal — Managing Director

Solar, we are outsourcing that we have signed the PPA with some Swiss company, and we are just paying the INR440 per unit and other which we outsourced, which is we are paying INR450. There’s no capex at all.

Vignesh Iyer — Sequent Investments — Analyst

Thank you, sir. That’s all on my side. All the best.

Murarilal Mittal — Managing Director

We have to use our entire cash flow for the better utilization and better returns. So I mentioned that we expect any cash we are spending at least we should go to 20% to 30% returns.

Operator

Thank you. Our next question is from the line of Mr. Pratik Choudhary from Samara Capital.

Pratik Choudhary — Samara Capital — Analyst

Sir, could you specify what’s the exact subsidy, which has been booked in Q4?

Murarilal Mittal — Managing Director

INR10 crores or 10 lakh to be exactly booked in the third quarter or last quarter, Q4.

Pratik Choudhary — Samara Capital — Analyst

How much, sir? Could you repeat? I could not hear.

Murarilal Mittal — Managing Director

INR10 crores, 10 lakh.

Pratik Choudhary — Samara Capital — Analyst

INR10 crores, INR10 lakh.

Murarilal Mittal — Managing Director

That is INR10 crores, Pratik.

Pratik Choudhary — Samara Capital — Analyst

Okay.

Murarilal Mittal — Managing Director

Again, I think INR40 crores is EBITDA

Pratik Choudhary — Samara Capital — Analyst

Right. Okay. And how much subsidy do you expect for FY ’24?

Murarilal Mittal — Managing Director

This link is the total turnover, and it’s too early, but definitely, it should be around, say, maybe INR14 crores plus. It’s hard to give the complete breakup. Once two quarters, three quarters over, then definitely, we can guess what is the final numbers.

Pratik Choudhary — Samara Capital — Analyst

Okay. Got it, sir. And sir, we mentioned that 85% of our turnover is through exports. Are these deemed exports? Or are we directly exporting to–

Murarilal Mittal — Managing Director

These are deemed exports.

Pratik Choudhary — Samara Capital — Analyst

These are deemed exports?

Murarilal Mittal — Managing Director

Yes.

Pratik Choudhary — Samara Capital — Analyst

Okay, sir. Okay. Thank you.

Operator

Thank you. Our next question is from the line of Mr. Dhiral from Philip Capital, PCG. Please go ahead.

Dhiral Shah — Philip Capital, PCG — Analyst

Yeah, good afternoon, sir. Thanks for the opportunity. Congratulations for the good set of numbers. Sir, what is the contribution of high-margin products in our revenue?

Mayank Mittal — Joint Managing Director

It would be around somewhere in the range of 8% to 10%.

Dhiral Shah — Philip Capital, PCG — Analyst

And sir, what was this figure last year FY ’22?

Mayank Mittal — Joint Managing Director

’22 would be around 5% to 6%.

Dhiral Shah — Philip Capital, PCG — Analyst

How much, sir? 5% to 6%?

Mayank Mittal — Joint Managing Director

Yes, you’re talking about special products, right?

Dhiral Shah — Philip Capital, PCG — Analyst

Yes. Sir, talking about a value-added product– [Indecipherable]–better margin.

Mayank Mittal — Joint Managing Director

–[Indecipherable] in ’22.

Murarilal Mittal — Managing Director

In ’22, 5% to 6%. Last year, we did maybe around [Indecipherable], 15%, 20%. So there’s you know, multiple range. There are products thereafter, maybe five or six times of value-added products.

Dhiral Shah — Philip Capital, PCG — Analyst

Okay. So, from 5% to 6% that we have done almost 15% to 20% kind of a high value product mix?

Murarilal Mittal — Managing Director

Yes.

Dhiral Shah — Philip Capital, PCG — Analyst

Okay, okay. Thank you so much, sir.

Operator

Thank you. Our next question is from the line of Payal goenka from Tusk Investments. Please go ahead.

Payal goenka — Tusk Investments — Analyst

Hello, good afternoon sir. Sir, I want to know, like, for FY ’23 right now, you mentioned that 8% to 10% is from the high value-added product. In FY ’24, what do we expect this percentage to be?

Mayank Mittal — Joint Managing Director

This is going to increase to approximately, I think, around 20%. That is our projection. But it’s too difficult to tell right now because a lot of these products are under trial and we have to see how it performs in the–with the customers and what is the feedback. But this is our goal to achieve at least 20%.

Payal goenka — Tusk Investments — Analyst

Okay. Okay. And the water[Phonetic] has been an industry growth in the wire market in the last two, three years? And what is expected in the next two to three years?

Mayank Mittal — Joint Managing Director

There is no official figures about the growth but as per again, our estimate, it would be in the range of 5% to 6% CAGR.

Payal goenka — Tusk Investments — Analyst

Okay. So that is for the next two to three years, we’re talking about?

Mayank Mittal — Joint Managing Director

Yes.

Payal goenka — Tusk Investments — Analyst

Okay. And sir, like in terms of volume growth, you are talking about 15%, 20%, right, for next year? So, industry growth is 5% to 6%–so, in that way, are we like confident of getting the market share that way or something?

Murarilal Mittal — Managing Director

See globally, I mentioned that we are competitive with the Korean and European definitely, we are taking the market share of other international players, and they’re getting our footprints. At the same time, [Indecipherable] market also increasing — and I also mentioned that in media infrastructure is going to be boom, Mr. [Indecipherable] also announced a big project of $15 billion in metros in highways and the press, a lot of things is going in the country also. So, it is not the only industry growth, but overall, the replacement growth and the shifting of the capacity. Like Europe, the energy cost is very high, that a lot of companies are shutting down because of higher costs. So, we are getting the market share in those countries also. So, there are multiple reasons why we are expecting between 20% growth in our company.

Payal goenka — Tusk Investments — Analyst

Okay. Sir, out of — if you can just — the last question, if you can tell me sort of the total revenue of INR150 crores, how much would have been approximately the cement order replacement revenue?

Mayank Mittal — Joint Managing Director

It would be very difficult to quantify that because majority of our business happens through distributor — and that distributor, again, in turn, gives it to the OEM order replacement market. So, we are not able to track that information as to what is the percentage of the replacement market.

Payal goenka — Tusk Investments — Analyst

Okay, okay. Thank you, sir.

Operator

Thank you. Our next question is from the line of Mr. Sudan, Individual Investor. Please go ahead.

Sudan — Individual Investor — Analyst

Yes. Good afternoon, sir. Sir, the I have a couple of questions. So basically, the CST subsidy, which you are getting, it’s on an actual basis, so–or on an accrual basis. So, can you just explain this part?

Murarilal Mittal — Managing Director

See, this is absolutely getting on accrual paid basis what we are paying to government to Maharashtra. And that also that we are getting after the completion of a year due to file returns, and then we get to 18 months’ time. So, this is a process. We don’t — we have the exemption we are paying and getting back from the government of Maharashtra.

Sudan — Individual Investor — Analyst

Okay. Okay. And regarding the realization, sir, so we are like 85% we are exporting. So, sir, what is the gap in the realization versus the export and in the domestic market? Like what is–

Murarilal Mittal — Managing Director

–[Indecipherable] plus point. First off is the volume we are getting. At the same time, the payment security is good, as compared to domestic market. We expect that the export markets are getting better realization. That’s our major focus is Expo market. However, we are not ignoring raw machine market also, we are increasing current year of domestic market wages also.

Sudan — Individual Investor — Analyst

Okay. Okay. That’s it. Thank you — thank you so much.

Operator

Thank you. Our next question is from the line of Mr. Arpit Shah from Stallion Asset. Please go ahead.

Arpit Shah — Stallion Asset — Analyst

I have a couple of questions. Just wanted to understand the fund inclusion with the promoter group has turned around INR42 crores. What would be the utilization of that money?

Murarilal Mittal — Managing Director

Okay, any accretion?

Arpit Shah — Stallion Asset — Analyst

Yes. Can you–

Murarilal Mittal — Managing Director

— [Indecipherable] about the repayment of the ICD?

Arpit Shah — Stallion Asset — Analyst

Okay. And how much will that reduce the debt by INR42 crores, right?

Murarilal Mittal — Managing Director

Yes.

Arpit Shah — Stallion Asset — Analyst

Got it. And can you help me with the volume number 13, 20 and 21?

Murarilal Mittal — Managing Director

You’re talking production or sales side?

Arpit Shah — Stallion Asset — Analyst

Sales side.

Murarilal Mittal — Managing Director

[Indecipherable]

Arpit Shah — Stallion Asset — Analyst

Okay. Then 2021, ’19, ’20?

Murarilal Mittal — Managing Director

No, I don’t have ready value, you can ask — you can send request to the [Indecipherable], we can submit it on.

Arpit Shah — Stallion Asset — Analyst

Got it. And the other thing which you were thinking about this year, it will happen across two, three years?

Murarilal Mittal — Managing Director

Hello?

Arpit Shah — Stallion Asset — Analyst

The power thing which you were speaking about earlier where you were looking at around 30%, 40%–

Murarilal Mittal — Managing Director

Current year, the current year. It’s ’23 onwards, April ’23 onwards.

Arpit Shah — Stallion Asset — Analyst

Got it. Got it. Currently, what percentage of data, [Indecipherable] what is the best [Indecipherable], EBITDA currently, for you?

Murarilal Mittal — Managing Director

Last quarter, which is a 48% EBITDA.

Arpit Shah — Stallion Asset — Analyst

Yes. So, what would the biggest risk to that number? Let’s say INR36,000 per ton. What would be the biggest risk to that number?

Murarilal Mittal — Managing Director

— [Indecipherable]–and for the full year, it was [Indecipherable] only 65%.

Arpit Shah — Stallion Asset — Analyst

So what would be the biggest risk to that number, let’s say, INR36,000 per tonne. What would be the biggest risk to that number?

Murarilal Mittal — Managing Director

I mentioned that the EBITDA at INR59,000 per tonne — sorry, EBITDA totaled INR36,000 per tonne, gross contributing to INR59,000 per tonne, and PAT is INR16,000 per tonne.

Arpit Shah — Stallion Asset — Analyst

Can you help you with the walk through from FY ’20 to ’23, have it moved from INR18,000 to 36,000. What were the [Indecipherable] of that EBITDA per tonne from INR18,000?

Murarilal Mittal — Managing Director

The four drivers. Number one is the volume is increased by almost 13%. Number two, our realization increased by 30% because of the steel price increase and our production cost is reduced at same time allow 5% to 10% the valuated product also we inducted in the market. So, the three factors which has increased our EBITDA quarter-to-quarter. Every quarter, the improvement in the EBITDA.

Arpit Shah — Stallion Asset — Analyst

Sir, can you quantify that for the full year, how much is INR5,000 came from steel price utilization, you would say around [Indecipherable] tonnes from power savings. Anything on that share quantify?

Murarilal Mittal — Managing Director

Number catching[Phonetic]– we can [Indecipherable], you can give to Mr. Anuj. Otherwise, we don’t have it right now, immediately.

Arpit Shah — Stallion Asset — Analyst

Got it. And is there a way that you’ve flagged are the lowest production people globally for our products? And have you tracked it? What kind of production cost we have on [Indecipherable]?

Mayank Mittal — Joint Managing Director

Actually, we don’t have any data about the peer group for competitors. So, it would be very difficult to quantify if we are the lowest cost manufacturer. But our focus is constantly to improve our production cost–to reduce our production cost and increase our productivity. So that is a [Indecipherable].

Arpit Shah — Stallion Asset — Analyst

Got it. And that is the subsidy receivables is around INR435 crores for our project. And close here, we are getting around INR35 crores to INR40 crores every year. And the team is support to end FY ’25 ’26. So would there be a bulking up of subsidy in the latter part of the scheme?

Murarilal Mittal — Managing Director

It depends upon the total volume on the thing, and we may request government to Maharashtra to extend out. But right now, we have 25 only approval. And — let us see, maybe 70%, 67% able to utilize if government gives an extension. So is it too early to predict whether the government will change or not. Last time, they give about two years.

Arpit Shah — Stallion Asset — Analyst

How do we calculate out-out? How is the incentive calculated? Is it on production value? Is it on sale value?

Murarilal Mittal — Managing Director

This is based on what the GST we are paying– yes, especially the government GST that we are paying to Maharashtra.

Arpit Shah — Stallion Asset — Analyst

You ramp up there and that’s how the whole is.

Murarilal Mittal — Managing Director

9% ISG, 9% is you see GSG. So put to the 18% is the tax applicable on the [Indecipherable].

Arpit Shah — Stallion Asset — Analyst

Okay. The higher the [Indecipherable] rate, the higher the [Indecipherable] for that particular.

Murarilal Mittal — Managing Director

And the age of formula, we really input GST out of that, where you have some popular in government.

Arpit Shah — Stallion Asset — Analyst

We had one —

Operator

Sorry to interrupt Mr. Abisha may we request that you return to the question queue follow-up questions as there are several participants waiting for the turn. Thank you. Our next question is from the line of Mr. Pratik Pandya from Girik Capital. Please go ahead.

Pratik Pandya — Girik Capital — Analyst

Yeah. Since we are new to the company, and this is the first time we are holding the call, we just wanted to understand how did the gross margin expand from 37% to 44% because historically, they have always been around 37%, so what led to this jump in gross margin strength?

Mayank Mittal — Joint Managing Director

Basically, again, the three factors would be the product mix, the value-added products, increased productivity, so again, production has increased, and the third is we are catering to new geographies, so our sales realization is also improving. So, these are the three main factors that have resulted in the increase and so the steel price has reduced. So again, all these factors have contributed.

Pratik Pandya — Girik Capital — Analyst

Okay. So sir, there is a 12% volume growth. Now if I’m looking at the history and comparing FY ’23 or ’22, in the 12% volume growth, was there a very significant change in the product mix, which expanded our GP. If you could quantify, what are the big change in the product mix? Any new large customer acquisition plus a new geography or any sort of inventory gains also because there, in this year, we saw steel going up, still coming down. Yes. So if you could help us because this only the world product mix doesn’t explain it, as 7% jump in the GP.

Mayank Mittal — Joint Managing Director

See, apart from the volume Dec 22 and 23, U.S. market, we just captured last year, that is a big contribution. Earlier, it was only Europe and other countries now last one year or 15 months, we are working in U.S., and we are getting good support from U.S. market for tape concern, aand certain products we have launched in the U.S. market, which are successfully given the higher returns.

Pratik Pandya — Girik Capital — Analyst

Okay. Okay. So, would that mean that the EBITDA per ton in the newly captured market would be upwards of, say, INR50,000 to INR6,000 Tonnes?

Mayank Mittal — Joint Managing Director

This is 50,000 is too high. If you get a 10% of 15%, that is more than half in this type of industry 50%

Pratik Pandya — Girik Capital — Analyst

So INR50,000 like [Indecipherable]

Mayank Mittal — Joint Managing Director

Is too high because nowadays, everybody knows the market what the steel prices in India is, what is China, what is it core Europe, we can’t expect the IT companies, we can expect any such 50% of third per Tonne is too high. 10% to 15% we get higher realization, that is a bonus for us.

Pratik Pandya — Girik Capital — Analyst

Okay, okay. Thank you.

Operator

Thank you. Our next question is from the line of Mr. Vivek Gautam from GS Investment. Please go ahead.

Vivek Gautam — GS Investment — Analyst

Thanks for the follow-up. In very good performance by you. And basically, I just wanted to know how are we placed in the world market amongst the different companies organizing in the same area? And in India, specifically, the only one competition is there USA martin, will we placed to them? And second thing is, sir, is about the basically, due to geopolitical tensions and other things, the export performance of Indian companies which have been focusing on exports is not doing that well, and India-focused business is doing quite well. But we are saying that 5% is our exports only. So, any one-off look into Indian market but also with great vigor and focus and margins also in [Indecipherable].

Mayank Mittal — Joint Managing Director

Also mentioned, we performed well in difficult situation. So globally, if there are problems, then definitely, people annual prefer to have better quality at the right price. So, value proposition wise, we are at strategy, we have the right location, we can offer good quality product and drive price as compared to Europe based market, that is number one. We don’t compare with anybody in the India of our top company concern our — we have one market strategy globally and our major competitor from the Koreans and the European market. And in any adverse situation in Europe or any other early, we are comfortable because market gets shifted. The production capacity does countries being going down, and we are getting better realization, better water portion.

Vivek Gautam — GS Investment — Analyst

Yes, geopolitical tension impacting other engineering companies, which were focusing on exports, how have been exceptions, and the margin of [Indecipherable].

Mayank Mittal — Joint Managing Director

Getting wire of we are in better position globally because there are very few industries globally digital produce good quality goes at right price. And this is a repressive market. It’s other engineering companies, there bantering we do, we are not focusing, but our replacement market is quite a big market. At the same time, we are getting benefits if the global less, there is a problem, the energy cost or other posts going higher, Europe and other things that salary wages going higher. We have a very competitive position.

Vivek Gautam — GS Investment — Analyst

What about India focus and opportunity size in India, sir?

Mayank Mittal — Joint Managing Director

Excellent. We are looking to expand our footprint in domestic market, and I think with the current government and their entire focus on infrastructure growth, we are seeing a lot of traction in domestic market also. So definitely, we are going to improve our domestic footprint.

Vivek Gautam — GS Investment — Analyst

Thank you and keep up the good work, sir.

Mayank Mittal — Joint Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Devesh Singh from DS Investment. Please go ahead.

Devesh Singh — DS Investment — Analyst

Yeah, hi. Congratulations for good number I just had one question on the export because that makes most of our revenue. You called out that most of it happens through distributor, do you have any plans to set up our own channel here in any country to start with? The reason I’m asking is that ultimately relationship with the customer currently is owned by a distributor, how do we see that angle moving forward?

Mayank Mittal — Joint Managing Director

See, right now, we don’t have any plan once we finalize, we’ll definitely inform to everyone stakeholders. Eficient, we don’t have any plans to set up any distribution in the Europe or other countries.

Devesh Singh — DS Investment — Analyst

Okay, and connected to that, then in terms of distributor who sort of deal with the end customer, how do we get demand visibility? Does distributor sort of shares orders with us every few months? Or how does that work? Because direct customer, you will have a better demand.

Mayank Mittal — Joint Managing Director

Your distributors actually have the pulse of the market and they do share with us what is the traction they foresee for a few quarters or a few months. they might have annual rate contracts with some of the OEMs. So, they do have a very good visibility of the pulse of that market, of that geography.

Devesh Singh — DS Investment — Analyst

Got it. And these distributors, do we have any exclusivity of relationship or if they can work with anybody?

Mayank Mittal — Joint Managing Director

Most of our distributors are — they keep multi-brands. So yes, we don’t have any exclusive distributors

Devesh Singh — DS Investment — Analyst

Got it. Thank you, and all the best.

Operator

Thank you. Our next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead.

Alisha Mahawla — Envision Capital — Analyst

Hello. Sir, just wanted to understand versus the capacity of 70 to 1000 that we have right now, what is the peak utilization that we can reach?

Mayank Mittal — Joint Managing Director

Sorry. Can you just repeat?

Alisha Mahawla — Envision Capital — Analyst

[Indecipherable] capacity that you have right now as

Mayank Mittal — Joint Managing Director

62%, we utilized last year to March 23, and we are planning to increase 20% in the year increased utilization. So maybe within 3-year time we’re able to achieve the optimum level maybe 95%.

Alisha Mahawla — Envision Capital — Analyst

Considering the fact that we have 1,000 bus STOs, we can still go to 90%, 95% utilization.

Mayank Mittal — Joint Managing Director

I think it’s going to be around 80%, 85% capacity utilization max that we can go. But yes, we would be adding more balancing equipment. So definitely, this number can increase.

Alisha Mahawla — Envision Capital — Analyst

Understood. And if and when we do the site to increase our capacity, is there scope for at our current location at Charleston for the brownfield?

Mayank Mittal — Joint Managing Director

Yes, there is capacity. I mean, there is space for additional capacities.

Alisha Mahawla — Envision Capital — Analyst

Got it. Okay. Thank you. Best of luck

Operator

Thank you. Our next question is from the line of Arpit Shah from Stallion Asset. Please go ahead.

Arpit Shah — Stallion Asset — Analyst

I had one more question. We had signed an MOU with a group of Bridon. What percentage of the revenues comes from the item group there of the larger players in the wire globally?

Mayank Mittal — Joint Managing Director

That MOU was signed four years back around 5% to 6% we are supplying to the

Arpit Shah — Stallion Asset — Analyst

Got it. Do we have any tax losses in our books or everything is clear on

Mayank Mittal — Joint Managing Director

We have around the INR280 crores cash tax losses. And as per the balance sheet is around INR30 crores is the losses carryforward.

Arpit Shah — Stallion Asset — Analyst

Got it. And what kind of working capital are we looking at? What kind of receivable inventory and payable, what kind of inventory are at kind of working capital are we looking out for the next

Mayank Mittal — Joint Managing Director

Winter side, we are quite comfortable around the three months total working capital in the company. And as greater side, we realize around 30 to 45 days. So we are comfortable with the current cycle of three to four months maximum.

Arpit Shah — Stallion Asset — Analyst

Three to four months, so of that payable would be 45 days inventory would be how much?

Mayank Mittal — Joint Managing Director

In the receivable on fatale, we don’t create hardly a if we take absolute numbers. is still on the cash basis, Argentine cash basis other materials we take around essay, 30, 35 is. So overall creditors will be maybe around 10 10 days of the total purchases. But data side, yes, around 45 days’ time, it takes time to get the money and around two months we inventory for the Wunderman trade.

Arpit Shah — Stallion Asset — Analyst

So any scope to reduce it further? Or this is the optimal that you have.

Mayank Mittal — Joint Managing Director

Can go optimization, we can go to depend on situation because sometimes you see the inventory also. So there may be a 5-day attendee plus minus.

Operator

Thank you. That was the end of our question-and-answer session. I now hand the conference over to the management from Bharat Wire Ropes Limited for closing comments.

Mayank Mittal — Joint Managing Director

Thank you for all the participants this evening this earning call. I hope we are able to answer all questions satisfy. If you have any further questions or would like to know more about the company, please reach out to our IR Manager, Oldra Advisors — thank you, sir.

Operator

[Operator Closing Remarks]