Kirloskar Ferrous Industries Ltd (NSE: KIRLFER) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Ravindranath Gumaste — Managing Director
Analysts:
Pallav Agarwal — Analyst
Nirmam Mehta — Analyst
Aashav Patel — Analyst
Unidentified Participant
Chetan Thacker — Analyst
Prolin Nandu — Analyst
Sahil Sanghvi — Analyst
Manish Goyal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Kirloskar Ferrous Industries Limited 3Q FY ’25 Results Conference Call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Palab Agarwal from Antique Stock Broking. Thank you, and over to you, sir.
Pallav Agarwal — Analyst
Yeah. Thank you,, and good afternoon, everyone. A very warm welcome to the 3rd-quarter FY ’25 Results Call of Faires Industries. We have the senior management of the company represented by the Managing Director, Mr Gumaste; and the Executive Director, Finance and CFO, Mr. So I would like to now hand over the call to Mr Gumaste for his opening comments. Over to you, sir.
Ravindranath Gumaste — Managing Director
Thank you. Thank you very much and welcome all the participants for today’s conference call. I will start with some of numbers which are basically are relating to the and casting steel and cube. During the quarters, in general, the markets were subdued and especially Pigaran went through a very tough challenge on the margin front.
But we operated all the three furnaces most of the time, except the plant went through some maintenance activities and the capacity utilization is 93%, whereas other two were more than 100% capacity utilization. So we produce close to 1,50,000 tonnes of liquid and the casting production during the quarter was 35,000 between the two units, which is a better than 3rd-quarter of last year, tubes also, the production was 52,465, which is much better than 3rd-quarter last year, 23% higher tube production and 19% higher casting production, bigger and 3% less than the last year.
However, still production also was 48,800 against INR55,000 last year, which is less by 12% quarter-on-quarter. Coming to the sales during the quarter but we were better-off on the Pigure and the total cumulative sales for nine months is better and higher by almost 26%, 6% whereas casting we have done about 1 lakh metric ton of casting sales against 91,000 last year.
However, quarter three is subdued because of the bigger in — sorry tractor industry demand being subdued. Done better in tubes, although the volume sales is slightly subdued, 3% less, but we expect that quarter three and quarter-four are going to be much better than quarter one and quarter two, because quarter one and two were affected one from the market condition, but also because of some of the operational reasons or one of them being merger-related issues as well as the ERP system implementation related issues.
Over to the next quarter, we are seeing some improvement in almost all the sectors. From January, February onwards, better demand forecast from the casting from the tractor industry as well as earth-moving equipment and commercial vehicle also schedules are better compared to the last two quarters. The major pressure is on the and steel margins because of the increased input costs and almost bottoming up — bottoming down to the lowest possible prices and bigger and across the regions.
So though we don’t see any immediate major increase in the prices, but we expect to get some benefit of reduced cost coming on account of two things. One is because of reduced coking coal prices quarter-on-quarter because of the reducing coking coal prices. Typically, we have three months inventory, so we get delayed benefit by three months. Also, we have started operating Bharat mines and we are gradually increasing the consumption or utilization of our own mode. That should also benefit in the coming months and quarters.
But overall, I would say that the quarter three was the quarter of headwinds, though the volumes are not come down much, rather our sales this quarter is a marginally better compared to the quarter three of last year, improved by 4% overall. But on the margin front, definitely there is a pressure. On the project front, we have commissioned the solar power plant, Phase-1 and Phase-2. Now in-place, we are operating close to 69 megawatt out-of-the 70 megawatt power plant.
And as I mentioned, Bhatt Mine’s operations are on and we are moving the iron-ore and have started consuming the iron ores. And also we have started trial production and sample supplies from Oliver and we expect that from the month of February and March, we should be able to start ramping-up of the production and sales and Oliver should start giving us the volumes from quarter one of next financial year.
So with this a brief introduction, I would request to open the question-answer so that I can try and that answers the questions, if, if any, coming from the audience. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchdown telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles we have the first question from the line of Nirma from Unique PMS. Please go-ahead.
Nirmam Mehta
Yeah. Hi, thank you for the opportunity. Sir, sir, my question is largely, if we look at our performance over the last two, three years, our — so keeping aside the prices, our volumes have largely remained flat in almost all the segments. So are there any specific challenges or hiccups that we are facing on the volume front? And secondly, so and where can these volumes go to in the next, say, two to three years?
Ravindranath Gumaste
I think with respect to first the Pigaran volumes, it’s a question of, you know continuously running. I think the volumes, though the Pigaran volumes have gone up with the merger of ISMT into Clear fire, our sales have come down because our — remained flat though we have increased the output because of the internal transfer to JJ. This is with respect to. Going-forward, we are looking that next 12 months, we should be able to produce a hot metal of 7 lakh tonnes and the saleable should come to about 6 lakh ton or 5 lakh 70,000 tonnes.
So which will increase, but there have been some headwinds, some, but otherwise, I see this progress happening in coming quarters. Casting depends also on the market condition, especially the tractor and automotive industry and also our capacity additions and new product development. And we have reached a level of about 36,000 in a quarter and we are adding and some more orders from the customers. And subject to the market, of course, we expect that casting has been sluggish for two years, but we will achieve some reasonable growth this year.
I’m quite hopeful that we will achieve some reasonable growth this year itself. As on-date, the volume growth is 9%. We have sold 1 lakh ton till-date. I should expect if we do well going towards 1 lakh 40,000 tonnes against 1 lakh 26,000 or 28,000 tons last year. Coming to the tube business, there have been ups and downs, but we have enhanced the Bharamuti manufacturing capacity and the plant has come to the level of manufacturing 12,500 metric ton per month from the level of 10,000 metric ton per month.
And I definitely look-forward to producing and selling 1,50,000 ton next year. And Amad Magher contributing anywhere between 40,000 to 45,000. So we can look-forward to two volumes of 2 lakh metric ton next year for the whole year. Steel is one where we have the challenge of variable-cost because of the power cost and the arc furnace and steel scrap route. But we are hopeful and we are confident of going towards green steel and then also bringing down the costs and should be able to enhance the output and the sales.
But I agree that last year and this year, it has been sluggish at the same level. But once again, I look-forward that we are working for both reducing the cost, improving the competitiveness and we should be able to sell more steel in coming. So we are working towards substantial growth on casting and tube as well as steel and will be the balance to be sold.
Nirmam Mehta
Got you, sir. That was helpful. And sir, so coming to the casting segment, so even the profitability this quarter was lower so what were the reasons here?
Ravindranath Gumaste
Yeah. No, one of the main reason is we are running two foundries in whereas selling one foundry quantities and that increases the cost substantially. I think that has been the real the cost trainers. Other than that, I don’t see any major issue. We have a volume growth ramp — ramp-up opportunity of at least another 20,000 tons from the 40,000 level now, another 20,000 possibility in Solapur very quickly it can happen in two to 3/4 and that can take us to 60,000 ton in, 1 lakh 10,000 in copper plus olive. So the profitability is mainly because of the higher-cost in Solapur right now.
Nirmam Mehta
Okay, sir. And sir, just one clarification on the solar project that we’ve done. So we spent INR270 crores for this 69 megawatts. Megawatts is that right?
Ravindranath Gumaste
INR370 crores.
Nirmam Mehta
Sorry.
Ravindranath Gumaste
When we started this cost is close to INR3.8 crores per megawatt.
Nirmam Mehta
And so for the remain — and we have further plans for installing solar capacity, right?
Ravindranath Gumaste
Yes.
Nirmam Mehta
How much would that
Ravindranath Gumaste
We plan to add more, but we are very closely observing government policies also. See, the flexibility with monthly banking is different than real-time consumption. And I would say that battery storage of mass power is still not a viable proposition. So the solar expansion requires a at least fair minimum one-day banking. Without that, rather the monthly banking is the ideal, but without that, it is very difficult.
So we are closely watching, but otherwise, we have said that we would like to expand 200 megawatt DC. And in the meantime, we also have commitment that we will be — we have ordered a wind power also to the extent of 12.6 megawatt. And of course, we wind generate much more than solar almost doubled. So we will keep on balancing between window and solar.
Nirmam Mehta
Yeah. Okay, sir. All right. Got it. Thank you. That’s it from my side.
Operator
Thank you. The next question is from the line of Ashav Patel from Molecule Ventures PMS. Please go-ahead.
Aashav Patel
Thank you for the opportunity, sir. My question is a follow-up question to our earlier discussion regarding the casting volumes. So the volumes in casting segment has been really disappointing over last two years, we are still at the FY ’23 run-rate of 1.3 lakh metric ton despite having a additional capacity plus the Oliver acquisition. So what exactly are the challenges we are facing? Because few quarters back we were talking about seeing green shoots in the deemed export market and now even tractor industry like players like Swaraj has been reporting robust set of numbers, highest-ever numbers. So what is the exactly challenge which we are facing? We are not able to ramp-up the volumes.
Ravindranath Gumaste
No, few things. One, I just told that Oliver is there to get into the productionization. So I expect that maybe one more quarter, we should be into substantial production like maybe 1,000 ton per month, 1,500 ton per month is possible within a quarter or two from the Oliver. That volume is still definitely not in our current quarterly volumes. As I mentioned to you, we have produced and sold about 100,000 tonnes of castings in last 3/4 and which we have lost at least 15,000 to 20,000 in this because of the tractor industry bit of slowdown and other than that, I would say that coming quarters we are quite you know no major challenges other than new product development-related challenges and the industry demand challenges. I think we should be able to get breakthrough in coming quarters in terms of volumes.
Aashav Patel
And what would be the revised estimate for FY ’26 in terms of volume? I understand pricing is not in ARPU, but in terms of volume.
Ravindranath Gumaste
I think it could be maybe about 1 lakh 75, 1 lakhs 70 kind of numbers. Okay. We are able to finalize the plans, but that’s the kind of numbers I look-forward for the next year.
Aashav Patel
Okay. And sir, when can we double the mining capacity to 2.5 lakh metric ton?
Ravindranath Gumaste
I think both are important that one is mining, other is utilization. We have just started consuming the iron-ore, trying to increase the consumption ships. It is still — I would say that we are at low-grade levels. We will be able to improve the grade and consumptions quickly. And I expect next year also we will go with the 1,20,000, but we will have around 2 lakh tonnes for consumption.
Aashav Patel
Okay. And sir, what is your view on the dimmed export segment? Because now that our sales mix has more of say CV in terms of export and dimmed export compared to tractors. So now we are more skewed towards that sub-segment how do you see demand shaping up there because we were expecting some green shoots because of European power crisis, we were expecting lot of additional demand to flow into India. So where are we there? What is the outlook?
Ravindranath Gumaste
I think there has been very steady and continued support on the earth-moving equipment sector. We are adding more components, more developments into that. And with respect to commercial vehicles, not only there is a steady supply, but the volumes are increasing further. I expect over the next couple of months growth of at least 20%. So you know the customers from 7,000 to 8,000 vehicles per month have moved to 10,000 vehicles per month. It is something like 30% to 40% growth on commercial vehicles with one customer. And I think there is a good support and that’s why I am thinking that the next year we should look for volume beyond 1,70,000 for the full-year.
Aashav Patel
Got it, sir. And sir, last question, apart from the 70 megawatt which we have already commenced, what would be the roadmap for the incremental power capacities coming up timeline?
Ravindranath Gumaste
See we have already ordered 12.6 megawatt ton wind and we are working on another 12.6 ton wind. We are working on 30 megawatt solar also there is Maharashtra some reconsideration on power policy for renewable energy. We are little bit — we are watching that what happens because right now it is one-month banking which is very good and very essential for promoting green power. And otherwise, I would say that we are looking-forward to add another 70 megawatt equivalent in next one year time. So about 25 megawatt of wind will mean 50 megawatt of solar plus 30 megawatt of solar about another 70 to 80 megawatt equivalent in the next one year time.
Aashav Patel
Okay, okay. Okay, sir. That’s all from my side. Thank you.
Ravindranath Gumaste
Thank you. Thank you.
Operator
Thank you. The next question is from the line of Devi Agrawal from Ficom Family Office. Please go-ahead.
Unidentified Participant
Hi, hi, sir. Thanks for taking my question. So, sir, just wanted to know about the power cost. So I mean with all the power cost coming in, with all the power projects coming in, so what will the approximate savings that will be have that will be — that we will have on the P&L?
Ravindranath Gumaste
Sir today solar power plant plants are being set-up at INR3 crore per megawatt DC. And the cost has come down over the last two, three years. And as I mentioned, we are looking for 70, 80 megawatt. So we are definitely looking for the capex of about INR200 crores into green power within the next one year time. And typically 1 megawatt of solars the power cost-saving is INR1 crore per annum.
Unidentified Participant
Okay. So basically INR200 crores of savings we will have also…
Ravindranath Gumaste
When we set-up 200 megawatts of the solar, correct, perfectly correct.
Unidentified Participant
Okay, sir. Got it. Secondly, on the oxygen management plant, so what would be the savings on that, sir?
Ravindranath Gumaste
See, or the savings benefit has to again come through unfortunately. But you know, we have increased with oxygen enrichment. Till-date, we have increased for the steel and basic rate from 80 kg to 120 and for a foundry grade from 50 KG to 80 KG, about 30 to 40 kg, half of that is the typically the saving coming. So we can say that about 20 kg of co-consumption saving benefit we get, which is about INR600 per tonne of hot metal. Okay. Got it, sir. And trying to trying to improve the oxygen enrichment utilization so that we can go to maybe 135, 140 kg, another 10 kg core consumption benefit in both the grades. That is currently the attempt that we are trying to achieve.
Unidentified Participant
Right, right, sir. And on the iron-ore cost iron-ore mine, so we have just started our iron-ore mine. So what will be the savings per ton on that? And when can we expect the second mine to start.
Ravindranath Gumaste
See I just mentioned that next year going-forward, I look-forward to mining and utilizing maybe two lakh to 2.5 lakh ton ton from which becomes say, 25%, 30% of the total iron-ore. And the second iron-ore mine which is in Durga is not going to come and it will take some more time. That mine is gone into the reserved forest or wildlife Rizard forest and it’s not going to become operational.
Unidentified Participant
But we own the mine, right? I mean it will be operational, but not right now. But in, we have won…
Ravindranath Gumaste
Recently what we have won, we have yet to get the official communication from the government. We are awaiting, but it has been public in the media and our platform. And I think that will take a couple of years to come to operation. And the whole industry and ourselves we are working as these were amalgamation of the working mines, whether government can give us the permission to operate the operating mines within the bigger integrated block. That point is still with government is — there is no full understanding on that. If that permission comes, we will be able to operate very quickly instead of waiting for all the clearances over the next one or two years.
Aashav Patel
Sure, sir. Sure, sir. Thanks. That’s all from my end and all the best. Thank you very much. Thank you.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. We have the next question from the line of Chetan Thakar from Ask Investment Managers. Please go-ahead.
Chetan Thacker
Good evening, sir. Good evening. Sir, just wanted to understand what would be the unabsorbed losses today from Solapur?
Ravindranath Gumaste
No losses there.
Chetan Thacker
So you mentioned that out-of-the two foundries, given the volumes that we are seeing, you’re selling…
Ravindranath Gumaste
Part is still in profit. One foundry makes the profit for both the — the costs are higher, the profit margins are coming down. So margins have not improved.
Chetan Thacker
So how should we look at that improving going-forward? So is it volume than the operating?
Ravindranath Gumaste
I have mentioned a couple of times, one big order is from Ford, which has to come to about something like 1,000 ton per month, 12,000 tonnes per annum, that’s one. And also another 1,000 tonne to 1,200 tonnes per month is in the development-stage. There has been a huge setback from the foundry — sorry, from the tractor industry volumes, but we are already on-the-job to alternative component to be developed. I expect it may take another two, 3/4 to go to a level of 5,000 tonnes per month. I’m sure 5,000 tonnes per month is the beginning of both the foundries generating profits.
Chetan Thacker
So sir, this quarter drag that we see on OP per ton on the casting side, is it primarily because volumes were lower and that operating deleveraging are…
Ravindranath Gumaste
Basically volumes are lower, sir.
Chetan Thacker
So if we start hitting the INR40,000 run-rate, we can expect that profitability to go back to the normal rate.
Ravindranath Gumaste
Yes, yes. See, it starts absorbing the cost of the second-line and profitability will definitely improve.
Chetan Thacker
And given the schedule, we are expecting that volumes from here will ramp-up from Q4 onwards and we should start seeing some benefit of that flowing into profitability. That will be a fair assessment.
Ravindranath Gumaste
No, I think if you see, we have hit in this year out-of-the 3/4. 1/4 we have hit 38,000. I’m looking-forward to at least go back. See, we — we were 34, went to 38, came to 34. So I’m first looking at go back to the 38 level and then go to 40-45 level. And that’s what we are looking to happen because we are saying that we should be able to hit a number of about 1,75,000, 1,70,000, 75,000, 80,000 for the next year, which naturally means that I need to hit an average of 14.5 to 15,000 tonnes per month should come.
And I think the order booking as well as the component under development are in support of this kind of volumes and we feel that we should get the industry support and we should be able to ramp-up as we have the capacity as well as we have the components of the customers to support this kind of production and sales. Yes, there is a delay, but I think there’s no question of going down, but we should keep going up on the volume in. Whereas tube has improved smartly, I look-forward to at least going to a level of about very close to INR200,000 to volume in the next year itself.
Chetan Thacker
Got it. And sir, on the savings that you were mentioning from the oxygen plant for coke, so fair to assume when we have the full savings, given the numbers you’ve shared that translates to about INR50 crores to INR60 odd crore of annual savings that can happen?
Ravindranath Gumaste
Actually, see, coal injection oxygen enrichment is — it’s supposed to give about INR200 to INR1,200 per ton, so which is on 7 lakh tonnes, it amounts to the kind of number you are talking. But question is how much we retain it for our profit and how much again we are compelled to pass it on to customers is the key thing. And the figurine has bottomed-out terribly. I only hope that we will get some support and some recovery on the pricing.
Chetan Thacker
Understood, sir. And capex number for next year would be INR200 crore for the renewable and any incremental capex net?
Ravindranath Gumaste
See, there are a lot of projects both in this cost-reduction segment as well as the capacity utilization segment. And something on the technology segment also. For example, we are looking towards not only that, we hit 2 lakh volume next year, but how do we go maybe 2 lakh 25 next to next year and what are the capex required, so we will have to deploy next year itself. Similarly, on the casting side, we may have to look at what we want next to next year and thereafter, there will be some related capex.
There are capex in the area of machining and there is capex in the area of large castings beyond 300 kg two-part foundry related. So the number of projects which are very attractive in terms of the payback and supporting the volume growth expectations. Because if we are talking about INR1,35,000 as the realized capacity in castings, definitely in next three years, we are looking for how to go to 2,70,000 metric tons per annum. So doubling up the casting volumes will require incremental debottlenecking investments and machining related investments.
Similarly in the tube, we are looking from the current level of whatever we are looking for 2 lakh 2,25,000 coming in the next two years and maybe bigger tubes in the subsequent years. We are looking for substantial growth both in customs and tubes in addition to setting up of the steel plant. So there is a lineup of the capex even for the next year. I expect in the range of INR500 crores to INR600 crores would be the capex out of which INR200 crores would be the renewable energy.
Chetan Thacker
Understood, sir. Sure, sir. Thank you for that and all the best. Thank you very much. Thank you.
Operator
Thank you. We have the next question from the line of Nandu from Public Alternatives. Please go-ahead.
Prolin Nandu
Yeah, hi. Thank you for taking my question. A few questions from my side. Sir so Kumar, when you say next year you are aiming for 1,70,000 in casting, this is on a standalone basis, right,, is my understanding correct?
Ravindranath Gumaste
No, including Oliver, we plan to merge Oliver into KF5 in the next financial year.
Prolin Nandu
Okay. So can you just remind me as to what is in that 175 how much is Oliver that we are building in?
Ravindranath Gumaste
I think I am looking for 15 Olivers and 160 existing. So 1,000 to 160,000, 20,000 coming from the existing four lines and 15,000 from the Olivers. Right. And 75.
Prolin Nandu
Got it, got it. So this is including — this target is including Oliver. So that clarifies. And so, see, in chapter, we have been having issues right for quite a few quarters now, right? And I mean, one is that are we losing market-share there or what is happening because some of the — our numbers or our — you know, we call-out tractor as a sector, right, which is a headwind. But some of the companies are reporting decent numbers in terms of volume. So where-is the mismatch happening? How do we, you know, bridge this gap in our understanding as to how bad are things in factor.
Ravindranath Gumaste
Sir, basically, I would like to say that we are gaining market-share in block and head. Critical items, auto, tractors are moving across. We are gaining on the block-end head. Maybe we are slightly going not that strong at losing something on the housings and focus on block and dead. But with the Oliver coming that 30,000 would be mainly housings. So that’s where we want to ensure that we regain the lost capacity, but also go higher than that, gain the market-share. Overall, there will be no loss of market-share. Rather we are going stronger and also increasing the gap.
Prolin Nandu
Okay. And you also mentioned that you want to probably think about alternatives probably reducing our overall dependence of tractor as an industry, right, which is, let’s say, in casting still 36% as per your latest presentation. But if I look at — so if I look at your Slide 17, right, and if I look at the number of customers in casting, right, it has been stagnant since FY ’22, right, at ’26. So when I think about this chart, this is like a lead indicator as to where we want to go in terms of diversifying our customer-base. How should one read the stagnancy of number of customers, right, 26, obviously, see, there would be some ins and outs. But on an overall basis, despite our capacity going up and you would be seeding some customers which will become big in a future, et-cetera, etc., those customers will also be included here. So how should one read this flat number of customers in casting for our future target for next couple of years?
Ravindranath Gumaste
Sir, I think it’s very important to know that 26 customers means almost all the important customers across India are covered. But I had mentioned earlier also that leaving the top-five, six customers, the remaining at least 15 customers, our share of business is like 1% to 3% and that is pretty too low. And opportunity lies with every customer, we need to go to at least 5% of business. If we do even very decent few components, a good share of business, it amounts to at least 5%. I am looking that what we are working is in addition to the top-five six customers, how do we increase our share of business with the — all the remaining 15 to customers to at least 3% to 4%, 5% level. I think there is great opportunity. Customers have interest, we have interest and we are working to increase that and that itself will give enough loading to go to 2,70,000 in next three to four years.
Prolin Nandu
Sure, sir. And one last question from my side. See, FY ’25 has been quite challenging for us, right, in terms of both on profitability as well as volume growth. But if we step-back and think about the casting opportunity or opportunity for our kind of company, right, in terms of export orders coming in or a lot of some of the players also putting up their plant here for exports in tractor industry, for example. So are we still very positive about the outlook for the opportunity for our company, let’s say, for the next two, three years, right, because you sounded a bit you know on steel, you did not sound that much optimistic on and also you have been calling out a bottom, but it’s taking longer than you know probably our past experience as well for things to recover. So how should one think about medium-term outlook for some of the expansions that we have done and some of these things which we are ventoring into. So can you just give some color — qualitative color on how should one think about ’26 onwards, things are going to improve significantly or it would be more gradual progress.
Ravindranath Gumaste
I think it’s very important that the value additions in casting tube business are far more stable than margins. And figure in, we have done everything that is required to tie-up the value addition chain right from the mining to, power, plant, coke, coal, everything is done, but the market is what it is. So I am quite hopeful that these things happen. Many people enter when iron and steel industry is back, but I’m still quite optimistic that the cycle will change and we will see much better position on bigger and and tube, we are very confident and we are quite optimistic, I would rather say, that within next two, three years, we will achieve the volume growths and that will give the benefit on cost as well. And including steel with the — you know the green energy as well as our energy, power and fuel costs coming down, the steel volumes will pick-up and you may see that unless the iron and steel improves, the growth may be gradual, but we are okay. What we need to achieve is how do we achieve, 13% 14% growth over a long-term period. Once the things improve, it will. Another very important thing is whatever the growth and the turnover we are talking today, the prices have come down from INR60,000 to INR33,000. I think it gradually does happen, but it has happened. And other way around it’s not going back to 60, something will happen and scenario will get changed. So I’m quite optimistic that it could be gradual, but it will — we will pick-up the volumes.
Prolin Nandu
So what I understand is that…
Operator
We request you to please the queue. Thank you. The next question from the line of Sahil Sanghvi from Monarch Networth Capital Limited. Please go-ahead.
Sahil Sanghvi
Hi, sir. Good evening. Thank you for the opportunity, sir. Sir, first thing I wanted to confirm is that let’s assume the tractor demand stays as at the current state. Would we still be able to do the offtake, the production that you’ve guided at Oliver, is it subject to the tractor demand improving or is that a sort of a confirm kind of volume that we will do irrespect of the tractor demand.
Ravindranath Gumaste
No, I think Oliver for, Oliver, what I’m talking about for the next year, I think that market is there. I think there are so many customers in the North and they are definitely keen on sourcing from Oliver. I think I’m not linking that to-market. I expect that 1,000 or 1,000 from 1,000 to 1,500 should get loaded quickly. Are you online?
Operator
Sir, the current participant seems to have dropped from the queue. We have the next question from the line of Manish Goyal from ThinkWise Wealth Managers. Please go-ahead.
Manish Goyal
Yeah. Thank you so much and very good afternoon, sir. Sir, sorry harping lot on. So I believe our Phase-2 of 20,000 tonnes capacity is also likely to come up at Sholapur. So just to clarify that probably you mentioned that current production run-rate is around 35,000 tonnes per quarter in Solapur and the new capacity which we had created of 20,000 tonnes is probably not contributing much. And then we would have another 20,000 tonnes operational. So how should we understand that, sir, like in…
Ravindranath Gumaste
I think Manish, not like that. See, we are currently at, let’s say, say 40,000 or 44,000 ton this year. And our capacity there, utilizable capacity is 36,000 or 40,000 plus 40,000, 36,000 plus 36,000 user — we have used 36 from one-line, so I take it as 72,000 out of 80,000 is usable capacity. Out of this, we are at only at 40 44. Out of these 72,000. And the capacity is available, nothing more is getting added there. It is a capacity utilization improvement, that’s all.
Manish Goyal
Okay. So ideally we are everything to go to that level. So ideally we are looking at this probably incremental 20,000 tons is what we probably looking in the coming year from.
Ravindranath Gumaste
20,000 from as well as. Maybe it is more from Solapur, less from, but 20,000 come in-between the two.
Manish Goyal
And this is probably dependent on what you mentioned that 1,000 tonnes per month order from Ford, which should start and should help. So is it subject to this order of Ford?
Ravindranath Gumaste
However, we have orders, we have to production night, get approval from customers, validation completion and production night and ramp it up. So we hope that we should be able to go up to 15 crores.
Manish Goyal
Sir, I was asking for Solapur these 1,000 tonnes of…
Ravindranath Gumaste
Solapur items are under production. So validations are on and I expect that within next two, three months, we start increasing the volumes and next year we should go to a level of, say, 50,000, INR55,000 from and another 5,000 increase from together increase of 20,000.
Manish Goyal
Sure, sir. And sir, in the tubes, we have seen that probably this quarter we have seen volume or revenue coming from oil and gas sector, probably the order which we had won in-quarter four. So just want to get a perspective what is the steel order book we have in oil and gas and what is the outlook over there? And also related question, like we probably had the probably pricing pressure in the first-half for certain categories of pubes. So how are we seeing on that front? Is the situation still very challenging on the trade segment and auto segment, if you can highlight that? And then I have one more question on what is our —
Ravindranath Gumaste
Manish, let me complete this. Yeah, whatever you asked so-far because there are so many questions in that. Sure. Okay. I will again take-up the next question. See, quarter one and quarter two, steel and tube got affected because of one is a sluggish market, but also because of the implementation and merger of ISMT into KFI. Although we wanted to do without any effect, but gas effected.
Q3 has improved and I expect Q4 at least to go in-line with the Q3 and slightly better. So and if you ask me, our ability to produce and sell-in steel and tube is 50,000 tonnes of tube per quarter. We have ramped-up to that level. Whether order can support. So we are able to get into the tender for the next year. So I hope that they will all come. May not be for 4th-quarter, we will manage 4th-quarter, but then we get the next tender and we should be able to utilize that 2 lakh tonne next year. This is what I’m telling on the business.
Manish Goyal
Okay. And sir, you also mentioned that probably we — probably we are still 10 inch and probably looking to increase the capacity or probably put capacity for higher dire diameter, which I believe will help you to participate in oil and gas standards. So what is the plan for that?
Ravindranath Gumaste
It may not be in the immediate year, but we will do that within couple of years.
Manish Goyal
And one question which I asked earlier on the pricing front for probably the trade segment where we were probably seeing a lot of import pressure and the market was quite challenging over there. So like apart from oil and gas, how is the situation for tubes in such markets?
Ravindranath Gumaste
Nothing great there, but we also are very clear that we have to load our bills and we should sell good quantities, cost gets distributed. So we have a good relook at that and we will continue to be aggressively ensuring that we sell the volumes.
Manish Goyal
Okay. And sir, what is the — linear project.
Operator
Please rejoin the queue for further questions.
Manish Goyal
Yeah, this is the last small question. Sir, when do we plan to the KFL on…
Ravindranath Gumaste
This is the question I just put it to Mister. I think it is the work-in progress and will close.
Manish Goyal
Hello.
Ravindranath Gumaste
It is work-in progress. We are focused. We’ll try to take it to MAC as early as possible.
Manish Goyal
Perfect, sir. Thank you so much. Thank you.
Operator
Thank you. The next question is from the line of Sahil Sanghvi from Monarch Networth Capital Limited. Please go-ahead.
Sahil Sanghvi
Sir, my only question was that what will we require now for the pig prices to pick-up, sir? Would it be more of the casting and the foundry demand which is dependent in auto again or auto and tractor?
Ravindranath Gumaste
No, I think it is iron and steel industry. It is oversupply problem, not demand problem probably okay. So this iron and steel improves that they will make steel rather than dumping figurine. Right. All right commerce substantial figurine they are not going fully into steel. So supply should the situation should improve rather than the consumption side. Got it. Consumption will help without any doubt, but it is the war supply problem.
Sahil Sanghvi
Got it, got it. Thank you, sir.
Operator
Thank you. The next question is from the line of Vipul Modif, an individual investor. Please go-ahead.
Unidentified Participant
Yeah. Good afternoon, sir. Am I audible?
Ravindranath Gumaste
Yes, very much.
Unidentified Participant
Okay now my question is regarding the casting. We have automobiles, tractor and so are we looking to enter into different sector like defense or railways or something for the casting part…
Ravindranath Gumaste
No, we are looking into entering into — we have started the work on the SGR and castics in addition to grayer and castings. And that will open up some of the sectors what you mentioned and it will be machined erranting possibly railways as well as defense.
Unidentified Participant
Okay. So this transformation will take some time or how exactly it is?
Ravindranath Gumaste
No, we are investing for the facility. Facility should become available within six months in Oliver as well as in Solapur.
Unidentified Participant
Okay, fine, that’s good. Okay. And how about the second mine won’t be operational for as of now. So are we looking to bid for another fresh mines or something?
Ravindranath Gumaste
Yeah, yeah, we’ve been for many mines because we don’t know which one we get and there has been tremendous competition. We have one mine, but we are looking-forward to see if we can get one more, but we have to be also cautious that too much exposure is not a great idea. So cautiously, we will be participating in more mines.
Unidentified Participant
Okay. Okay. Thank you, sir very much. Thank you. Have a good day. Thank you.
Operator
Thank you. The next question is from the line of Ashav Patel from Molecule Ventures PMS. Please go-ahead.
Aashav Patel
Thank you for allowing a follow-up question, sir. Sir, my question is that currently, what is our Pigain EBITDA per cost — EBITDA per tonne cost for segment and how has it moved over the years since we started adding Coke Owen and now PCI and oxygen and everything?
Ravindranath Gumaste
I mean, it’s bit lengthy answer, but I think due to shortage of time, I would say that you know, we started with a 7% to 9% EBITDA and then we went up to 29% EBITDA. We sold at INR68,000 per tonne as Ukraine war started during that period and we had 29% at least in one or two months and 25.6% in quarters and then it came to, 15% 16%, but current could we be, I think maybe 5%, 6%, 7% EBITDA. That is the level what it has come now.
Aashav Patel
And in terms of percentage, sir, our EBITDA cost of production, EBITDA per ton cost of production.
Ravindranath Gumaste
No, you should calculate. I think it’s very simple. I have given percentage of prices are in the range of 30 X works, 32,000 to, 40,000, 45,000 some grades. But on an average, 37,000 38,000 X works.
Aashav Patel
Okay. And sir, what would be the coal cost for Q3 and how it is expected to pan-out for Q4?
Ravindranath Gumaste
See, Q4, Q3 was — I don’t remember exactly Q3, but Q3 was I think 205 blended cost and this quarter would be blended 195. I expect it to go down to INR177 next quarter. Okay. So blended — our blended coal cost in dollars and unfortunately, dollar is also becoming strong day-by day. So again, putting pressure on cost.
Aashav Patel
Okay, sir. That’s all from my side very much.
Operator
Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you.
Ravindranath Gumaste
Thank you very much for a great understanding by all of you. It was a tough quarter with a lot of headwinds. Look-forward and improved situation on the market front as well as our projects supporting us and look-forward to see you after 1/4 again. Thank you very much for your support. Have a great time. Thank you.
Operator
Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.