Ifgl Refractories Ltd (NSE: IFGLEXPOR) Q3 2026 Earnings Call dated Feb. 17, 2026
Corporate Participants:
James McIntosh — Managing Director
Arasu Shanmugam — Director and Chief Executive Officer
Amit Agarwal — Chief Financial Officer
Analysts:
Sahil Sanghvi — Analyst
Rohan Mehta — Analyst
Mansi Shah — Analyst
Rajesh Majumdar — Analyst
Hemkesh Khattar — Analyst
Praveen Jayaraman — Analyst
Unidentified Participant
Saket Kapoor — Analyst
Sanjay Nandi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to IFGL Refractories Limited Q3 FY ’26 Earnings Conference Call hosted by Monarch Networth Capital Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital Limited. Thank you. And over to you, Mr. Sanghvi.
Sahil Sanghvi — Analyst
Yes. Thank you, Bhumi. Good evening, everyone. On behalf of Monarch Network Capital, I welcome you all to the Q3 FY ’26 Earnings Conference Call of IFGL Refractories Limited. We are pleased to have with us the management being represented by Mr. James McIntosh, the Managing Director, Mr. Arasu Shanmugam, Director and Chief Executive Officer-India and Mr. Amit Agarwal, Chief Financial Officer. We’ll have the opening remarks from the management followed by the Q&A.
Thank you. And over to the management for the opening remarks please.
James McIntosh — Managing Director
Good evening, ladies and gentlemen. Thank you for joining us on the IFGL Refractories Limited Q3 and nine months FY ’26 earnings conference call. I hope you and your family and friends are in good health. Joining me on the call today are Mr. Arasu Shanmugam, Director and CEO earlier and Mr. Amit Agarwal, our CFO and SGA, our Investor Relations Advisors. Our results and investor presentation have been uploaded in the stock exchanges and we trust that you have had an opportunity to review them. I am pleased to share that we delivered healthy revenue growth during the quarter. Consolidated revenue grew by 23% year-on-year while standalone revenue increased by 16%.
Gross margins moderated during the period due to changes in product and sales mix. EBITDA margins were impacted by elevated employee costs and related overheads during the quarter. We have initiated cost optimization measures and expect gradual improvement in margins over the coming quarters. Standalone EBITDA translating into a margin of 6.5%. Consolidated EBITDA was 24%. Now let me briefly touch upon the global steel industry outlook and we continue to operate that volatile global environment. As per the latest outlook by the World Steel Association. Global steel demand is expected to remain broadly flat followed by a modest recovery in 2026 whilst trade tensions and geopolitical uncertainty infrastructure investments under improving financial conditions are expected to support gradual stabilization.
Regionally, China’s steel demand is projected to decline by around 2% in 2025 with the pace of decline moderating in 2026 as the housing sector stabilizes. In the U.S., demand is expected to grow by approximately 1.8% in both 2025 and 2026 supported by infrastructural spending and Europe is also expected to witness a gradual recovery with demand projected to grow in the region of 1% to 3% over 2025-’26 aided by infrastructure and defence spending. Importantly for us, India continues to remain a key growth engine with steel demand projected to grow by around 9% over 2025 and also in 2026 driven by broad-based expansion across steel consuming sectors.
Demand growth is also expected to remain robust across several developing economies. Against this backdrop, our strategic focus on domestic operations has yielded strong results. India remains one of the fastest growing steel markets globally and in our India Made, India Sold strategy has delivered meaningful traction. On a nine month basis. Our India Made in India Sold business grew by 25% year-on-year reaching INR648 crore in revenues, reinforcing the strength of our domestic positioning and gaining the market share. Moving ahead, our American operations have shown encouraging improvements during the quarter. The recent tariff related developments calibrated price adjustments with key customers and a rebound in demand supported strong performance.
Revenue by our U.S. operations grew by 37% year-on-year. Profitability in the region has also improved on a sequential basis and we are confident of carrying this momentum into Q4 subject to stable market conditions. In Europe, revenue grew by 39% year-on-year whilst overall regional demand remains challenging. We have taken structural changes within the team and repositioned our focus from application equipment towards core refractory products. These initiatives have begun to show results at the revenue level. However, profitability in the region remains under pressure due to higher operating costs. We are working towards operational improvements and aim to move towards break even over the next financial year assuming stable macro conditions.
Sheffield Refractories has been operating steadily and continues to progress at a measured pace. The technology transfer to India is underway and is expected to be completed by March 2026. Whilst there has been some delay, the process is moving forward in a structured manner. Following completion, the localised products will undergo trials at leading cement plants in India for shock seating and related applications. Beyond these geographies we are also strengthening our presence in Middle east and Australia, where we see emerging opportunities and potential for incremental growth over the medium-term. In conclusion, while the operating environment remains dynamic, we believe the Company is positioned on a stable footing.
Our focus remains on disciplined execution, improving cost structure, strengthening regional operations and enhancing products. With steady demand in India, improving traction in the U.S.A. and structural initiatives underway in Europe, we are working towards gradual margin recovery and sustainable growth. We remain committed to long-term value creation for all of our stakeholders. Before I conclude, I’d like to share an important update. As part of our previously announced succession planning, I will be stepping down as Managing Director of the Company upon the close of business hours on 28th February 2026 and will also cease to be a director effective 1st of March 2026.
Based on the recommendation of the Nomination and Remuneration Committee, the board has appointed Mr. Mehir Prakash Bajoria as Managing Director of the Company for a period of three years commencing 1st March 2026. I am very confident that under his leadership the Company will continue to build on its strong foundation and pursue its long-term strategic objectives. I will continue to remain associated with the Company and its Wholly owned subsidiary IFGL Worldwide Holdings Limited and a consulting capacity for a period of three years from March 1, 2026, ensuring continuity and smooth transition.
I can say it’s been an immense privilege and honour to serve as Managing Director of this Company and I’m deeply grateful to the Board, our employees, customers, partners and shareholders for their trust and support throughout my tenure. I take immense pride in what we have collectively achieved and remain confident in the Company’s future journey. Thank you for the opportunity to lead this organization with this.
Now I’d like to hand over to Arasu for his comments and our developments in the Indian region.
Arasu Shanmugam — Director and Chief Executive Officer
Thank you Jim Good evening everybody. We delivered a stable performance in Q3 FY ’26 reflecting our continued efforts, strengthened market positioning and expand share across key regions. On a consolidated basis, total income increased by 23% year-on-year while standalone revenue grew by 16, largely driven by strong momentum in the domestic market. Profitability during the quarter was impacted by, as it was mentioned, higher employee expenses and related overheads. In addition, lower export offtake and continued investments in business development and marketing initiatives weigh down margins. We have already initiated targeted cost rationalization measures and expect gradual improvement going forward.
Turning to operations, our India business continues to perform strongly and remains the core growth driver. Domestic revenues grew by 17% year-on-year in Q3 FY ’26 and by 25% for the nine month end period, reaching INR648 crores. Consequently, the domestic segment’s contribution to standalone revenue increased to 78% in nine months from 71% in the previous year. Export revenues for the quarter grew by 13% year-on-year to INR62 crore. Our focused approach towards the domestic market has strengthened our engagement with leading steel producers. Supported by advanced technology capabilities and continuous innovation at our R&D center, we have expanded our customer base and deepened penetration across steel and cement plants.
We are also seeing encouraging traction in the non-ferrous segment which we believe will emerge as an important growth avenue. On the expansion front, our greenfield project at Kurda Wadisha has commenced and is progressing as planned with the completion target by the end of financial year 2728. Our second facility in Gujarat being developed through a joint venture with Marvel is also seeing a good development even by Government of India measures like the commencement of direct flight from China to India as well as the opening up of online business visa. So this will help us take the project from here on with better speed.
During the quarter we made meaningful progress on the product and technology front which we believe will support long-term growth and customer retention. Our in house tube changer refractories in a segment previously, which is a segment previously dominated by global suppliers are now delivering measurable productivity gains for customers. These solutions are enabling longer casting sequences and increasing tundra’s capacities from 30 to 70 metric tons directly improving plant efficiency and throughput. Similarly, our snorkels continue to outperform industry benchmarks against a typical industry life of 65 to 80 heats. Our products have delivered 85 to 119 heats at leading Indian steel plants.
This superior performance enhances customer economics by reducing downtime and refractory consumption, strengthening our value proposition. On the automation side, we introduce the Tip changer mechanism SIB HS D1 system designed for high quality steel making environment. The system combines advanced control, precision engineering and built in safety mechanisms to ensure consistent and repeatable operations. In simple terms, it improves operational stability for customers which is increasingly critical in modern steel plants. Our total Refractories management TRM model is witnessing encouraging acceptance in the market and we are currently engaged in advanced discussions with multiple steel producers. Through total refractories management we go beyond supplying individual products to products and instead provide end to end refractory solutions including application support and performance optimization.
This approach enhances customer integration, improves operational visibility and helps create more predictable and recurring revenue streams over the long-term. To conclude, the quarter reflects steady progress not only in revenue growth but also in strengthening our technological capabilities, customer engagement and long-term strategic positioning. While short-term profitability has been impacted by cost pressures, the underlying business momentum remains intact.
We continue to focus on improving operational efficiencies, driving higher value added product mix, expanding our domestic and international presence and executing our capex plans in a disciplined manner. With improving traction in key markets, growing acceptance of our advanced solution, stronger customer relationship, we believe we are building a more resilient and scalable business platform. We remain committed to delivering sustainable growth and long-term value for all our stakeholders.
Thank you and we are now happy to take your questions. Sorry, now I hand over to Mr. Amit Agarwal, CFO for financial performance. Amit?
Amit Agarwal — Chief Financial Officer
Thank you sir. Let me just give you brief on the financials starting with the standalone financial highlights. Total income for quarter three FY ’26 stood at INR272 crore reflecting a healthy 16% year-on-year growth. For nine month FY ’26 total income was INR839 crore up by 13% year-on-year. Gross margin were 44.4% in quarter three FY ’26 and 45.4% for nine months FY ’26 margin moderated during the quarter due to change in product and sales mix. EBITDA for the quarter three FY ’26 stood at INR17.8 crore. EBITDA margin was 7% for the quarter and 11% for nine month period.
Ended margin during the quarter were affected by higher employee cost, increased investment in business development and marketing activities. We have initiated targeted cost rationalization measures and expected gradual improvement in the coming quarters. The quarter also included an exceptional expense of approximate INR4.8 crore related to implementation of new Labor Code. Adjusted PAT after accounting of the exceptional Items stood at INR1.3 crore for the quarter three FY ’26 and INR31 crore for nine month FY ’26. Breaking it down further by domestic and export sales. Our domestic business recorded a robust 17% year-on-year growth in FY ’26 Q3 and a 25% growth for nine month FY ’26 reaching at INR648 crore.
The domestic market contributed 78% of our standalone revenue in FY nine month ended FY ’26 up from 71% in nine month ended FY ’25. Our export business saw growth of 13% year-on-year to INR62 crore contributing 22% of the standalone revenue in quarter three FY ’26 compared to 29% in quarter three FY ’25 for nine month FY ’26 exports were lower by 20%. Primary due to strategic shifts in the focus towards domestic market. Now let me move forward to consolidated financial highlights. Our consolidated financial highlights also include our international subsidiary. Total income for quarter three FY ’26 grew by 23% year-on-year to INR470 crore for nine months FY ’26 total income stood at INR1,418.2 crore reflecting 16% growth year-on-year.
EBITDA for the quarter was INR25 crore 27% year-on-year increase. For nine month period EBITDA stood at INR104 crore. EBITDA margin were 5.3% in quarter three FY ’26 and 7.3% for nine month FY ’26. At consolidated level, margins were impacted by change in product mix, higher employee cost and as we said expense towards business development and marketing initiatives. We witnessed a double-digit growth across key international geographies. U.S. delivered growth of approximately 37% during the quarter and continues to demonstrate healthy operation. Momentum Europe recorded a growth of around 39%. However, recovery in certain market remains gradual and a few operations reported lost during the period.
That said, our Sheffield Refractories U.K. business is progressing steadily in line with our operational roadmap and strategic priorities. The quarter include an exceptional charge of INR4.8 crore arising from the implementation of new labor cost which have an impact at a group level. During the period. Adjusted profit after tax after accounting for exceptional Items stood at INR1.3 crore for quarter three FY ’26 and INR30.9 crore for nine month FY ’26. With respect to liquidity position, we have a debt of INR199.8 crore with a strong balance sheet. Cash is equivalent to that INR122 crore on consolidated basis as on December 2025.
With this I shall now leave the floor open for question answer. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] Our first question comes from the line of Rohan Mehta from Nexus Capital. Please go ahead.
Rohan Mehta
Yes, thank you very much for the opportunity. Am I audible, sir?
Arasu Shanmugam
Yes.
Amit Agarwal
Yes.
Rohan Mehta
Three questions. Firstly, sir, under this total refractory management. Model, can you give us some idea on what would be the revenue visibility and margin profile compared to the Traditional product sales.
Okay, other two questions. Okay, so I’ve seen this for U.S. revenues have grown 37% on yoy basis benefiting from the tariff period development and the price adjustments. So just wanted to understand how much of this growth would be volume led and how much is price driven and going forward on a sustainable basis, is this kind of growth momentum sustainable into FY ’27 or how should we look at growth over here?
And thirdly, with the technology transfer from Sheffield Refractory expected by March, March 2026, what is the kind of incremental revenue or margin benefit that we are expecting after the localization happens? Because we see other players also doing quite well in the iron making. So what our, our plans in, in this space? So yes, that was my three questions.
Arasu Shanmugam
Okay, see I would leave that U.S.A. part to our managing director. The other two, let me respond. One is that TRM model in coming days, this TRM model is continuously growing and roughly I would say it is around 35% to 40% of our total monthly revenue comes through this TRM model which is continuously expected to grow. Okay. And so this is definitely an area where we will be concentrating more and that’s also going to be a differentiating factor for IFGL from the crowd of many refractory manufacturer and suppliers in the industry.
So we will be one among top three. And in this place because the profitability range, I mean is also a better than the direct material because the efficiency of our own application at the plant has a direct impact on our margin and iron making question. I would say that yes, iron making is definitely is a new area for us. As I said, there are maximum, let’s say leading. There are only two players who are very actively involved into this space. And with the growing upcoming steel, iron and steel making expansion, they want an alternate additional vendor.
And there are a very welcoming discussion with two, three important leading steel producers with us already. Competition is going to be a common element in every space wherever you go. So there are, we can’t expect any space where we’re free from competition. But it all depends on how are we executing. And here the major strength comes from a well proven technology provided by our Sheffield Refractories who are doing exceptionally well in this space. So this equips us to make and naturally once when you get into this field and establish yourself for sustainable continuous volume, then we will be able to give you a kind of a Margin levels and all. But we are bullish and we are very, very optimistic in this on U.S.A. part 37% and other thing. I would request our MD to respond.
James McIntosh
Yes, I mean obviously 37% is quite a nice jump for the U.S.A. businesses. And I can say that, I mean this was over quite a lackluster year last year. The American market this year is very robust and it’s going to be growing and especially in the customers that we are involved in. We feel that looking at the next year, we feel that we’re going to have a really good growth year. Again, it won’t be at 37% level, but it will be a very good level of growth for the United States. And also at the same time we expect to continue the growth and profitability.
Rohan Mehta
Thank you so much sir. Thank you for the detailed answer and wishing you all the best. That’s it for myself. Thank you.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Mansi Shah from EVNA Advisors. Please go ahead. Hi sir.
Mansi Shah
Am I audible?
Arasu Shanmugam
Yes, yes, very much.
Mansi Shah
Yes. So sir, my question is that as new capacities in Odisha and ramp up, what asset turns and margin profile should we expect from these investments?
Arasu Shanmugam
Yes, I think we have indicated in the earlier definitely at any point of time it will never come down from two-digit margin that is absolutely assured because of this product nature and also at present available competition in the market, it’s very less. So definitely this is going to be very high rewarding project and that is how we are putting all our effort in making it, putting it on a fast track.
Mansi Shah
Okay sir, I have one more question regarding the margins. So despite healthy revenue growth, EBITDA margins were below expectations. What would you consider a normalized sustainable EBITDA margin range for the standalone India business and for the consolidated entity?
Arasu Shanmugam
Double-digit is definitely ensure. That’s what we always do and maintain and that’s our thing. Yes, I mean, I mean plus, minus 0.5 point here and there, but it will never come down from double-digit.
Mansi Shah
So sir, double-digit in like what range would you.
Arasu Shanmugam
Yes, standalone, we have already said 12% minimum on that range.
Mansi Shah
Okay sir. And can it go as high as 16 also? Or is it that in the same. Range that we cannot actually suggest at this stage but the minimum level what I mentioned will be there. Sure, sure. Okay. Thank you for answering my question, sir.
Operator
Thank you. Our next question Comes from the line of Sahil Sanghvi from Monarch Networth Capital Limited. Please go ahead, Sahil. Kindly unmute your line and go ahead with your question.
Sahil Sanghvi
Yes. My first question is the employee cost as a percent of revenue, where should it stabilize now? Because there is a lot of volatility in that number. So for our modeling purposes and for our assumptions, where should we look at that number? Would it be fair to say that it will be around 10% or it would be 12, 13% of the top line? Can you help us?
Arasu Shanmugam
Yes, it will be around 10% only. For coming year because as we know that we have, As we have these projects which are already on and the team is working and this will be around that percentage. 10 around. As we have mentioned also that there are some non-recurring cost, employee cost included in this quarter. So we do foresee a reduction in employee cost in the next quarter.
Sahil Sanghvi
Right. So — but the expenses that we had this quarter, do you expect this kind of thing to be happening once a year, every year or how.
Arasu Shanmugam
No, no. It’s not decorating.
Sahil Sanghvi
Okay. And with respect to cotton on the console side, it’s fair to assume that your employee cost will be what, in the range of 17 to 18% or.
Arasu Shanmugam
Would it be similar range, similar range what we have. But we do not foresee further increase from this level for sure.
Sahil Sanghvi
Right. Now secondly, on the, on the margin, sir, I think we had a guidance of working around 12% on the consol side of the EBITDA margins. I think this year we are very much far away from that number in the nine months that we have delivered. So I mean can we get back to that number in next year or FY ’28? What would be your guidance? What would be your understanding on that?
Arasu Shanmugam
As that because of U.K. operation our margin are getting eroded. Okay. We, our U.S. operation has come back and is performing well. So our U.S. operation with respect to revenue is doing good. And as we informed that we are working on the cost optimization. So we are hopeful that in maybe in couple of quarter we’ll be able to reduce our losses or make it zero for monocon and then we can expect then growth in EBITDA margin for Consolidated.
Sahil Sanghvi
And what will be these measures that you are taking up in the, on the monocon side which will help us turn positive on the margins.
Arasu Shanmugam
There are different operational efficiency, cost cutting, everything is there. We, as we have worked upon sales, we have regained sales, part of the sales. We work on the cost Efficiency model also to get back on track. And obviously market has to support us.
Sahil Sanghvi
Right. Got it. And lastly I wanted to know your capex number. I mean how much will you spend on the capex side this year and next year?
Amit Agarwal
So we see. Sahil, I think we have already announced that we have two major capex in the pipeline. One is for the Kurda project which will be around INR325 crore approximately and it will be 100% IFG. And second is your JV project which will be 51% IGN, 49% Marvel which will cost around INR300 crore. So this we need to bifurcate in two years time. So this year and next year you will complete both these spendings. This is exactly what I want to. Be targeting to close. And 29 is the target for Marvel.
Sahil Sanghvi
Again that doesn’t answer my question. I’m asking you this year how much will be the spending?
Arasu Shanmugam
So that will be bifurcated. Let’s say INR350 crore will be bifurcated into two years. Maybe 60% to 70% this year and balance next year. And Marvel will start after this regulatory approval. Have already acquired land that that is already spent. So we need to spend just 50% of 30% of investment. Because it is bifurcating into 70. 30% that equity. 50. 50 degree.
Sahil Sanghvi
Yes. So that first year will be. That spending will start from next year. Right? FY ’27.
Arasu Shanmugam
Yes. Yes.
Sahil Sanghvi
Okay. Thank you. Thank you. That’s all for myself.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Rajesh Majumdar from 361 Capital. Please go ahead.
Rajesh Majumdar
Yes. Sir, I had a question on the standalone business. Why are our margins so sharply down despite peers reporting a better performance this quarter on account of slightly better pricing and slight moderation in what has happened this quarter in our product mix that the margins are so sharply down when it should have been a better quarter compared to the earlier quarters for the domestic business.
Arasu Shanmugam
I think we have spoke about that. There are three things what has impacted our margin. One is the product mix. Second is the increased employee cost. And third one is the operational overhead. What we have increased in this quarter. Otherwise if we see YTD level numbers, nine month numbers, our standalone EBITDA margin is 11%. Maybe in line with our peers.
Amit Agarwal
Excluding the employee cost, the gross margins also down very sharply. So the product mix has deteriorated in favor of. I mean clearly what has happened because you have TRMs as well. What has happened to warrant of a shutdown? That’s a sharp drop in the gross.
Arasu Shanmugam
You see every quarter. We may not have the same product mix. It may vary from quarter-to-quarter. We are hopeful that next quarter will have a better product mix and margin levels. If I talk to you about pricing, what is the pricing change you have seen this quarter, say on a quarter, on quarter basis? In terms of the pricing, there is. No major price change from last quarter to this quarter.
Rajesh Majumdar
Okay. And sir, last question is on the TRM Zoo, we also see some performance incentives, etc. So that is there any chance of us getting some performance incentives down the line from any of the TRM contracts going forward or largely it’s going to be like this only I think performance.
Arasu Shanmugam
Bonus and penalty is part of a contract and that is a recurring nature. Sometimes plus, sometime minus. So it will not have a very big impact until unless there is a specific big kitted item in the quarter.
Operator
Thank you. Our next question comes from the line of Hemkesh Khattar from Green Portfolio. Please go ahead.
Hemkesh Khattar
Hello. Hi sir, thank you for taking my question. My first question is regarding the technology transfer. So earlier the management had given a guidance of technology transfer to be completed by December. But now we have moved this to March. So what is the reason behind this delay and whether like can we expect a further delay or the technology transfer is to be finalized now?
Arasu Shanmugam
No, I mean we are expecting because the delay was due to some of key the technology is combination of both material as well as application, installation combined. And there was some delay on a key component supply which has affected fabrication of that particular unit. So we are now expecting this to be shipped in end March, April. So we will get it Q1 end of Q1 next year. So from there onwards our journey starts.
Hemkesh Khattar
Okay, that’s very helpful sir. And the second question is regarding the capacity utilization. So if we specifically talk about the two plants that we commercialized in FY ’25, what is their current capacity utilization?
Arasu Shanmugam
Various different lines and different lines are varying. And there are two lines which we just recently only started. So right now putting up a number like capacity places and for that two year old plant will be misleading. So we are making a good progress. That much I can say.
Hemkesh Khattar
Okay. And is there any guidance of incremental revenue to come from those plants going forward?
Arasu Shanmugam
No, no. I mean that is included in our entire growth and I think specifically we don’t have number to tell in plant wise.
Hemkesh Khattar
Okay. And just one thing, what is your guidance regarding FY ’27 growth numbers?
Arasu Shanmugam
’27, I think will come next quarter with our guidance this year will let us close this year first.
Hemkesh Khattar
And just one last thing that in the investor presentation you have mentioned some regulatory delays coming in the jv. So can you please elaborate there a little?
Arasu Shanmugam
No, no. See that’s like actually specific to this particular case is PN3 that press note number three which suggests the one layer additional approval required when we bring technology from the countries sharing the border with our nation. So that is the thing which is now coming. But now as I was mentioning in my opening remark that very positive things which are in public domain now that direct flights which was not there for almost three, four years now it started. And also now a special manufacturing and technology transfer related business visa which is also already approved for this what you call the neighboring country, what we are discussing. So all positive signals are coming. And so those are all the things.
Hemkesh Khattar
Okay, thank you. Thank you so much.
Arasu Shanmugam
Thank you.
Operator
Thank you. Our next question comes from the line of Praveen Jayaraman from Avendus Spark Institutional Equities. Please go ahead.
Praveen Jayaraman
Good evening sir. Thanks for the opportunity. Hope I’m audible.
Arasu Shanmugam
Yes, yes.
Praveen Jayaraman
My question is in the line of dolomite refractory. In the earlier con calls we mentioned that the size of the market will not be only pertaining to the stainless steel ASEAN market. And we could take global average or global usage of dolomite refractory and apply that in India as a market size. So here my doubt is if even in normal steel case, if you are using dolomite factory, what would be the case of switching here whether it will be on a quality basis or it could be on a cost basis.
Arasu Shanmugam
It is primarily on quality basis because of the material it contains that it helps making cleaner steel compared to the conventional thing. So it’s basically on quality and not the cost front. It is a special reproductive. Yes.
Praveen Jayaraman
And how far the adoption rate that we are expecting internally, sir, you see.
Arasu Shanmugam
When the kind of growth expected in stainless steel alone is going to give full market potential for our product. What I mentioned was that I mean the it will take some two to three years for normal steels to adapt for a quality based quality needed adoption of this brick that will come which is for further our expansion of the project. But the project at this stage has much more a market only in stainless steel growth alone. That’s what we mentioned. It will take long time and that has got no impact on our projected supply from this project. That is for further expansion of this project.
Praveen Jayaraman
Okay, so the steel plate adoption is for further expansion of dolomite refractory products.
Arasu Shanmugam
Yes, yes.
Praveen Jayaraman
Thank you. If, if that’s the case on existing stainless projects, that which we are going to serve, whether it is going to come from growth of stainless products from the base of. From current base or it will be more of an import substitution.
Arasu Shanmugam
Both. Because we are envisaging six million ton to come up in another one and a half two years from four million ton right now. And also import substitution. Both will have. It’s not only single element, both elements are there.
Praveen Jayaraman
And what would be the thumb rule here, sir? Refractory usage per ton of stainless steel?
Arasu Shanmugam
No, no, it depends on. Because of now 40 to 60 ton AODs to 120 AOD. It will vary and I mean so we can’t put a one number because it will also be used in the label carrying the same thing. So it’s a single number right now I am not, I cannot give you a single number.
Praveen Jayaraman
Okay, sir. Okay. A question other than this. In electric arc furnace, whether there would be any increasing refractory usage compared to blast furnace and if yes, could you contact quantify the same or.
Arasu Shanmugam
Definitely electric furnace will consume. The specific consumption of refractories in electric furnace route is going to be slightly higher than the conventional route. Overall value chain from blast furnace to converter.
Praveen Jayaraman
Can you give any broad numbers or a percentage to conventional?
Arasu Shanmugam
Again because when you say electrical furnace, it’s a family energy optimization furnace and then electric furnace and then twin heart electric. Many things are there so. But all put together will be two. I could say that if absolute I will not be able to. But at least 2.5% to 3% will be higher than the normal conventional route.
Praveen Jayaraman
Thanks for taking my question.
Amit Agarwal
Thanks.
Praveen Jayaraman
That’s it from my side.
Operator
Yes, thank you. Our next question comes from the line of Ragini, an individual investor. Please go ahead.
Unidentified Participant
Good evening. My first question is on employee cost. How much increase is one time and what is the real reason for implementing fixed cost?
Arasu Shanmugam
I think, Ragini, thanks for the question. We have identified this that this has some portion of non-recurring cost in the quarter which is non-recurring and non-reductive. And it will not come in quarter four or in the next year. And we expect to maintain 10% employee cost as a percentage of sale as of now.
Unidentified Participant
Can you tell me the quantum.
Arasu Shanmugam
That is not to be disclosed at the point.
Unidentified Participant
Okay, so my next question is. As we are consolidating in INR, we must have got FX positive so how much is EBITDA one time due to this effect positive.
Arasu Shanmugam
Sorry, come again.
Unidentified Participant
As we are consolidating in INR, we must have got FX positive so how much beta is one time due to this FX pos?
Arasu Shanmugam
I don’t think I have that number readily available in front of me. We’ll get back to you on this to our investor relations.
Unidentified Participant
Can you give me an approximate number?
Arasu Shanmugam
So I would not like to give an approximate. We’ll get back to you on this for sure. You can connect SBA for this. We’ll get back.
Unidentified Participant
Sure. Thank you.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Saket Kapoor
Yes, Namaskar sir. Hope I’m audible.
Arasu Shanmugam
Yes, yes, sir.
Saket Kapoor
Firstly, earlier last year, in fact for some part of the first second quarter we were. We were constrained in margins because of the RM prices, especially the alumni prices which the management worked out that post 2/4 the revision in cost that will be passed on. So now taking into consideration those prices being flattened, why have the margins not improved by any material means? And secondly, in terms of the product differentiation from the new facility at Kurda, what would be the incremental margins that we are expecting? You did mentioned earlier, but I missed.
Arasu Shanmugam
Your in the opening commentary on the first part. The price increasing trend is not there. It has flattened but it has never came down to the original level. So that cost pressure it is because of increasing card price instead of increasing cost pressure. It has come to a place where increased price holding is there and there is no much. We cannot compare alumina as a whole because there are some special alumina with specific characteristics where the prices have not come down. There are which are commercially used high alumina for other category which are few used in big quantum of things for brick and other making.
Then there was a reduction and. But in our case there is no much impact. But yes, increasing has stopped platinum so but whereas other costs are increasing. So we are now we love to calculate even the new labor code and all what it kind of kind of impact is going to give. So that set alone otherwise the there was no big relief on that. Only the relief came from flat price, not any reduction. And then the incremental, as I said incremental. Yes. So the incremental from whatever now it will be around if not more minimum 8% to 10%.
Saket Kapoor
8% to 10% more than what our current products.
Arasu Shanmugam
Yes, yes.
Saket Kapoor
Stand standalone Kurda basis. Correct.
Amit Agarwal
Okay.
Arasu Shanmugam
No sir, what I’m getting stand on k will be 8% higher than what we are doing currently in the standalone or will be at 8% for the. Revenue generated in Kurda. We are talking about that, whatever revenue. But particularly if you calculate a specific Kurda based EBITDA margin level that will be 8% to 9% higher than the average standalone Indian right now, whatever. We have 11%.
Saket Kapoor
And what should be the asset turnover from the unit? Sir, when, when will we working at mixed effect.
Arasu Shanmugam
We need to come to that actual mix and that percentage effect on that. We will come back once when any progress further.
Saket Kapoor
Okay. Earlier Amitji mentioned that employee cost for the standalone unit will be 10% of the revenue. So if we take this quarter number at INR270 crore the normal rate would have been INR27 crore wherein we we had employee cost of 35. So this will get even out for the next quarter. So it is one of the in the employee benefit expenses for this quarter.
Arasu Shanmugam
Yes, yes.
Saket Kapoor
Okay. And for, for these consolidation to remain 12%.
Arasu Shanmugam
Yes. It remained at the same level. Obviously the impact of standard will be passed on there.
Saket Kapoor
Right sir. And lastly sir, just to understand. The cost structure for, for the sector as a whole and our company. The. Bottom line is not commensurate to the type of effort that we are doing in terms of the capex, the EBITDA number and then the final pbt. There is a very strong declining trend there. The numbers do not suffice to commensurate for shareholders value. So where do we stand today in terms of that value creation exercise which I think so earlier our CEO has mentioned. We did came out with a bonus issue that is also counterproductive in terms of the tax de incentivization that we have currently for bonus. So what’s the thought process for creating the value for your shareholders? That has. That has not happened, sir.
Arasu Shanmugam
No, no. You see all what I have mentioned is the new technology and the better solution and all. So all seeds we have put seedings now let’s say when the next contracts which are going to be renewed down the line of May, June, July so that time our business share will come. These are all wherever we have put our new. Everything has been increasing result has come and customers have assured us So I said it is seeding. So with coming quarters, it’s going to yield us.
Amit Agarwal
Also, if I could add, obviously as Amit mentioned earlier, the U.K. business has been under considerable pressure for over a year. We implemented many plans there for new product developments and many of these new products have already entered the market. Unfortunately, because of the market conditions in Europe and many of the normal market that they’re involved in have been very slow on the uptake of these new products. Much slower than we expected. But we feel that we’re on the track and that along with some changes that we will make in terms of the structure and approach will definitely enable us to increase our profitability. That is a drag on the company. The profitability of the U.K. company as a drag company at the moment. And over the coming quarters we will see improvement in that.
Saket Kapoor
So just to conclude with this, we can see that worst is behind us in terms of the inflationary trend. Then the worst of the product mix and the employee cost factors, all factors that have dented the profit. Are we are these things of past or we can face similar headwinds in the quarter ahead also.
Operator
Sorry to interrupt. Your voice is breaking, sir.
James McIntosh
Oh, my voice is breaking. You hear me?
Operator
No, it’s still cracking.
James McIntosh
No. Is this okay?
Amit Agarwal
Yes, yes, sorry.
James McIntosh
What happened there? Yes, as Amit and Arasu mentioned earlier, I mean on the Indian side for sure, we feel very strong that everything’s moving forward. On the overseas side, as Amit mentioned earlier, the U.S.A. is very strong and we see continuing in the future. Hoffman Ceramics, we feel the bottom is moving forward and moving up. Sheffield Refractories is very strong. The main area only in the company that we need to work on and we are working on very hard is the monocon business in the U.K. and we feel sure that over the coming. Over the coming quarters we will start. Those improvements in those figures will have a massive effect on the company because that is the. At the moment.
Saket Kapoor
So you are not completely audible. If Ashu sir could supplement what sir was.
Arasu Shanmugam
John sir was trying to. I’ll just update what he was saying that, the monocon U.K. business is the only drawback. What we have is dragging us down and we need to work on that. And we are already working on that to overcome the losses. I think if we overcome that, the things will be online aligned. Naturally wanted to convey this.
Saket Kapoor
Okay. That is where the, where the European operations are. So we are studying.
Arasu Shanmugam
Yes.
Amit Agarwal
Correct.
Saket Kapoor
Okay. So hope for better time, sir. Thank you and all the best to the team.
Arasu Shanmugam
Thank you so much.
Operator
Thank you. Our next question comes from the line of Sanjay Nandi from VT Capital. Please go ahead.
Sanjay Nandi
Yes. Thank you for the opportunity, sir. Sir, what percentage of portfolio is being contributed by two control factories on a console basis?
Amit Agarwal
I think we do not. I think like ph. We do not share or give the breakup of the revenue product wise. Just wanted to know. Only flow control.
Sanjay Nandi
That’s it. Sir, I don’t want the remaining kind of product share. If you can kind of throw some light on that, sir.
Arasu Shanmugam
I don’t know if you would like. Yes, I mean it’s. It’s close to, let’s say or low control per se will be around 50, 55%.
Sanjay Nandi
Got it. Thank you for my.
Arasu Shanmugam
Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen. We take that as the last question for today. I would now like to hand the conference over to Mr. Sahil Sangvi for closing comments. Over to you, Mr. Sangvi.
Sahil Sanghvi
Just want to thank the management for elaborately answering all the questions and also thank you to all the participants for participating in the call. The management would you like to give any closing comments please?
Arasu Shanmugam
Yes, I mean we hope we have been able to answer most of your queries. We look forward to your participation in the next call. For any queries you may contact SGA, our Investor Relations Advisor. Thank you.
Sahil Sanghvi
Thank you very much.
Operator
[Operator Closing Remarks]