RAJRATAN GLOBAL WIRE LTD (NSE: RAJRATAN) Q2 2025 Earnings Call dated Oct. 22, 2024
Corporate Participants:
Sunil Chordia — Chairman & Managing Director
Yashovardhan Chordia — Executive Director
Hitesh Jain — Chief Financial Officer, Rajratan India
Analysts:
Sailesh Raja — Analyst
Parth Bhavsar — Analyst
Eshwar Arumugam — Analyst
Sanjay Shah — Analyst
Unidentified Participant
Mayur Milak — Analyst
Nikunj Mehta — Analyst
Pranay Jain — Analyst
Saket Kapoor — Analyst
Bijal Shah — Analyst
Parth Bhavsar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Rajratan Global Wires Q2 FY ’25 post-result Earning Conference Call hosted by Batliwala and Karani Securities, India Private Limited. [Operator Instructions]
I now hand the conference over to Mr. Sailesh Raja from Batliwala and Karani Securities, India Private Limited. Thank you and over to you, sir.
Sailesh Raja — Analyst
Yeah. Thanks, Sita. Good evening, all, and thank you for joining us for Rajratan Global Wires Q2 FY ’25 earnings conference call. During this call, from the management side, we’ll be hearing from: Mr. Sunil Chordia, Chairman and Managing Director; Mr. Yashovardhan, Executive Director of the Company; and Mr. Pranay Jain, CFO from Rajratan and Mr. Hitesh Ratanlal Jain, CFO, Rajratan, India.
I’d now like to turn the call to Mr. Sunil Chordia for the opening remarks followed by Mr. Q&A. Sir, you may begin now.
Sunil Chordia — Chairman & Managing Director
Yeah, thank you. Thank you, Shailesh, and good afternoon all dear shareholders for your interest in Rajratan and sharing your time for this call today. I’m happy to be here with all of you and very happy to share that your company is continuously growing as indicated earlier. Our focus this year is on maintaining the market share or rather growing the market share and we have demonstrated that in the numbers. So we have done an impressive volume growth in India of 23% of bead wire and the total wire sales have grown by 10%. We have done a very big growth in Thailand, 32% volume growth in Thailand in the first half of this year and that shows this strong growth in both the regions in volume terms as well as the positive growth trajectory thereby ensuring that we have continued to maintain higher market share.
Our strong volume growth has led to operating leverage benefits for our India operations. This coupled with restriction on imports from China and again has led to improvement in the EBITDA margin in India also, which is close to 18%. Even our Thailand business has reported healthy EBITDA margin of 11% to 12% led by volume growth and running our operations very efficiently. And let me also remind you that inn Thailand we are having a tough competition from China; and in spite of Chinese dumping we have been able to grow the volume business and also maintain EBITDA margin. So overall, we will continue to maintain our consolidated annual volume growth guidance. We have been talking about 20% and I am confident of achieving that and also maintaining EBITDA at 15%-16% for the year.
This is — an on — other than numbers, happy to announce that Chennai has started production and as told you in the earlier calls, it will be in phased manner. So we have done around 1,000 tons of sales from Chennai this quarter, which is going to grow in the coming months. And apart from that, our Thailand — Indore facility has been audited for TPM certification and the final certification audit will be in November and we are hopeful of getting TPM certificate for Pithampur facility by end of this financial year. And we are — we have started TPM project in Chennai and Thailand as well. And as you know, quality and the certifications are very important when we talk about selling to multi-national companies who focus more on quality than the price. And there are some positive green shoots in terms of getting approvals for exporting to multi-national companies in North America and also in Europe.
So Europe, where we had approvals from some customers, the business is continuing and we are getting more business from Europe. And also now, very, very robust plan to work on increasing exports. So there is a separate team which will be continuously working on connecting with customers, approaching them, offering them value. Rajratan offers in terms of green bead wire or reducing the carbon footprint or supplying a better quality material at lower price. With all these propositions, we have made a very robust plan to approach customers continuously.
With this, I am open to take the questions from here. Yeah.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Parth Bhavsar from Investec. Please go ahead, sir.
Parth Bhavsar
Hi, sir. Thank you for the opportunity. It’s very good to see how our operations are ramping up both in standalone entity as well as Thailand. Sir, I have a few questions, first, related to Chennai. Sir, you indicated that we made sales of around 1,000 tons from this unit. And I think our yearly guidance is of around 14,000 tons. So are you on — like, do you think that it will ramp up that fast? Or are we cutting numbers over here or guidance over here for the Chennai facility?
Sunil Chordia
You know, it is the question of getting approval and start supplying from Chennai. Currently, whatever 1,000 tons we have supplied, only some 20% volumes have gone to nearby factories. Rest of the material we had to ship to a long distance where company incurred a huge freight cost. But that was a [Foreign Speech] there was no choice. We are getting very close to major approvals in Chennai. And then, we will divert the volume to Chennai. That is the plan.
And yes, it is a challenge to reach 14,000 tons this year. But we have to reach. Okay? And we will all work towards achieving that number, yeah, because that is a commitment we have made to PLI. Yeah.
Parth Bhavsar
Right.
Sunil Chordia
That is a commitment we have made to PLI. [Speech Overlap] And then only we will get the PLI benefit.
Parth Bhavsar
Okay. Okay. So if we are not able to achieve that, like PLI benefit would be like it will start from next year onwards.
Sunil Chordia
Yeah. Yeah. So we will lose the PLI benefit. I think we have to achieve 80% of our commitment. Yeah?
Parth Bhavsar
Okay. 80%, okay.
Sunil Chordia
So at least 80% of the 14,000 has to be achieved. Yeah.
Parth Bhavsar
Okay. And sir, I wanted to know like this Chennai facility, at what point does it breakeven?
Sunil Chordia
No, I think with current expenses and the major saving in the transportation costs, it should breakeven at 18,000 to 20,000 tons volume.
Parth Bhavsar
18,000 to 20,000 tons.
Sunil Chordia
And that’s compared prime customer. Because again, currently we are supplying to customers in cycle market in Ludhiana. So there is no profit. Okay? But once we start supplying to major customers who are around our factory, the breakeven will come down, okay.
Parth Bhavsar
Okay, okay. Okay. And sir, like now regarding the macroenvironment, like you mentioned how people — companies from Ludhiana, how are they selling? So how is the competition in domestic market and the Thailand market? And what sort of market share are we working with in the domestic as well as Thailand market?
Sunil Chordia
Yeah. So last quarter, their market share was 42%. We also do collect information about competition and how much is the total sales of bead wire that happened in that particular month. So our calculation indicates that we were at 42% of market share in India. And we were a little higher than 30% in Thailand. Okay? And in Thailand, we have competition from Chinese, okay? And in spite of that, we were able to make a decent data margin in China — in Thailand also.
Parth Bhavsar
Okay.
Sunil Chordia
And in India, our competition has also increased capacity. Tata Steel is sitting with higher capacity. One more company has announced major investments. Yeah. Yes, so those challenges will be there.
Parth Bhavsar
Okay. Okay. So competition will be stiff.
Sunil Chordia
Yeah, yeah. But we have lived in competition for entire 30 years of this business. Okay? Yeah.
Parth Bhavsar
And sir, like at Chennai or any other facility, even in Thailand, are we like awaiting any approval from a big customer? And what is the timeline are we expecting to get this approval, if there’s any?
Sunil Chordia
No, in India, we are approved with everyone. It is a question of new approval for Chennai facilities, which is happening. So I cannot name, but one major company has given approval to supply 100% from Chennai facility, which will start this month. Okay> It is starting now. And more, I can say every 15-20 days or a month, we’ll add on one more customer to the list. Yeah. Frankly speaking, the quality of material is perfect. There is no problem. But they have a very rigid system of approval, which they will follow. And you cannot threat customer beyond that point, yeah.
Parth Bhavsar
Yeah. Fair enough. So those are my questions. Thank you so much for answering. Thank you.
Sunil Chordia
Thank you, Parth.
Operator
Thank you, sir. [Operator Instructions] The next question is from the line of Eshwar Arumugam from ithought. Please go ahead, sir.
Eshwar Arumugam
Hi, sir. Thank you for the opportunity.
Sunil Chordia
Yeah.
Eshwar Arumugam
Sir, once our Chennai capacity ramps up, how much can we expect our freight cost to decrease? And are we already supplying to tire companies in Chennai who will — from the indoor plant, who will look to switch to the Chennai plant? So that is my question.
Sunil Chordia
Yeah. So currently, we are doing cross-country transportation. Okay? So in India, typically 65% of tires are made in South India. Okay. And we are in the Western part of the country or in the Central part of the country. So we are paying extra cost of freight of around INR3,000 per ton, okay, which should be saved when we supply from Chennai to those locations. And yes, we will shift — so our long-term plan is to supply to customers in West and North from our mother facility, which is Pithampur. And to our customers in south from Chennai facility. Yeah.
Eshwar Arumugam
Sir, what is the capacity utilization in India as well as Thailand, sir, taken together?
Sunil Chordia
Yeah, it’s almost 80%-85% utilization we are running, okay, both in Thailand and India.
Eshwar Arumugam
So do we have any plans to ramp up the capacity in the medium to long term?
Sunil Chordia
Yeah. So right now, the plan is to ramp up in Chennai, which is the priority. So and also you will see a higher volume in Thailand this year. As I told you in the beginning, we have grown in first half by 32% in volume in Thailand. And so you will see overall 20% volume growth.
Eshwar Arumugam
Okay. Okay. All right. That’s all the questions I have. Thank you.
Sunil Chordia
Yeah. Thank you, Eshwar. Yeah.
Operator
Thank you, sir. [Operator Instructions] The question is from the line of Sanjay Shah from KSA Securities. Please go ahead, sir.
Sanjay Shah
Yeah. Good evening, sir. Good evening, Yesho-ji.
Yashovardhan Chordia
Yeah, Sanjay-ji.
Sanjay Shah
Sir, my question was regarding, it is really a point of appreciation that with this competitive and volatile world market, we have still grown on volume side. So my question was regarding, we have now established our Chennai facility. So with this new facility, we will be having a good manufacturing base. And so now a lot of competition is also coming in our bead wire business. So is management of the thought to use this facility for any related products or any growth trajectory from hereon from different products?
Sunil Chordia
No. Honestly, this facility cannot be used majorly for making any other product. We will spoil the culture. We will spoil the quality culture. We do a small volume of black wire in Pithampur facility. So maybe when the volumes in Pithampur go down, we can add one more product to utilize the capex we have already incurred here, okay? But I see that for a temporary three, four years, we will have to do. But Chennai, we will not disturb. It is a state-of-the-art facility for making bead wire and we will continue to focus on that. Okay?
And Chennai, we are working hard on getting some international approval. So we will also use that capacity for exporting in global market. I appreciate and we recognize that the competition is catching up and major investments are also announced in wire business. But definitely, it will take time to get approval. If Rajratan is taking so long, then competition will also take longer time. And like I was looking at numbers, the tire production in India has grown almost 7% to 8%, okay? And recently, more companies have announced investment. So longer run, the India’s story is very strong, yeah.
Sanjay Shah
[Foreign Speech] Thank you. It’s really helpful to understand and good luck to you, sir. Thank you.
Sunil Chordia
Yeah, thank you, Sanjay sir.
Operator
Thank you, sir. [Operator Instructions] The next question is from Darshini Kumar [Phonetic] from SI Investments. Please go ahead, ma’am.
Unidentified Participant
Good afternoon, sir. Thank you for this opportunity. I wanted to ask that what impact do Chinese imports still have on our margins?
Sunil Chordia
Yeah, Yashovardhan, would you like to reply this for — especially [Speech Overlap]?
Yashovardhan Chordia
Yeah. Sure, sure. Yeah, so China has a huge capacity available for bead wire manufacturing. And in today’s scenario, the domestic consumption of bead wire there is very low. So from what we understand, tire companies in China are operating at 60%, 70% ratio. So that’s the reason there’s a lot of dumping of material happening in the Southeast Asian region from China.
Definitely, that’s the only factor where we are losing on margins. There are a lot of places where there are no margins. But to keep our fixed costs in control, we need to keep certain volumes up and running. So we’ve also been aggressive in taking the volume. But yes, it has a big impact on margins.
Unidentified Participant
Okay. And are we planning to apply or — are we proceeding to apply for some anti-dumping duty on Chinese imports?
Yashovardhan Chordia
Not really. Long back, we had done that exercise. Somewhere, we also don’t want to do something which does not make our customers happy or which irritates our customers. So I don’t think that would be the way. But definitely, we are talking to the Thai government to have some relaxation on the import duties applied on wire rod. So if that happens, maybe it will make things slightly easier for us in Thailand.
Unidentified Participant
Okay. Understood. Thanks, thanks. I have another question. You also mentioned that you received some approval from customers in Europe and North America. I wanted to know if — like what is the quantity, like the volume expected from these customers going forward?
Yashovardhan Chordia
Yes. I think we’ve been sharing clearly our strategy to be a global supplier to companies. There are companies like Whitestone, Michelin, Continental, Goodyear are the ones that we are in discussion with. We are already suppliers to their factories in Southeast Asia and India. Because we are an approved supplier since many years, they are also keen to look at starting supplies in America and Europe.
In terms of volumes, definitely, it’s a very, very big potential because America is one of the largest markets for us, but growing volumes will take time. So I really can’t give you any figure in the coming quarters or coming year because approval at these factories take a long time. But I’m happy to share that at most of the places we are approved in terms of sample approval. At some places, initial trial lots have started going and they have started considering us for limited allocation for next year. Now that limited allocation will be low, but definitely it will be a good volume to start with.
Unidentified Participant
Okay, okay. Thank you so much.
Yashovardhan Chordia
Yes.
Operator
Thank you. The next question is from the line of Saumil [Phonetic] from Kodak Mutual Funding. Please go ahead, sir.
Unidentified Participant
Hi. Thanks for the opportunity. Sir, two questions on my side. First, you mentioned that other than Tata Steel, there is another one large capacity which is being set up. Broadly, what could be the capacity which is coming up other than Tata Steel?
Tata Steel has already increased capacity last year. So they are up and running. Okay? And new capacity will come from, I think, RC Steel. They are setting up a bigger capacity. They are shutting down their old plant and shifting their plant. And obviously, the new factory will have higher capacity. I think they are going for a — instead of 15,000 tons they were doing earlier, they’ll be now going to 30,000 tons. This is what I hear. I don’t have the exact information.
And Bansal Wire, who has recently gone public and has announced bead wire capacity also. But he’s going in for tire cord also, for bead wire also, and very, very big announcements for other products also. Yeah.
Unidentified Participant
Sure, sure. Sir, my second question is on the cash flows. Now, I believe, obviously, there will be some upfront inventory and startup costs because of the Chennai plant getting commission. But when I look at the first six months of this financial year, the operating cash flow profile has weakened significantly because inventory and trade receivables have gone up very, very sharply. How should we look at second half of the year?
And structurally, with Chennai plant now, do you believe what we’re speaking to on a steady stream basis? The working capital requirement will be the same, lower, higher, any color of it?
Sunil Chordia
Well, I agree with you that it has gone up because of the Chennai startup. I’ll say Chennai startup has not reached the desired level of volume to start tightening the screws on outstandings and inventories and all of that. Okay? We have to give some breather before we start doing all that exercise. [Speech Overlap] Starting a new facility has its own challenges, and we have to push material. So when you push material, obviously, the credit cycle gets spoiled. So, that is temporary. I feel that it’s temporary and we should be correcting all those parameters in next six months’ time. So this year will be a year of some variation in all this number, yeah, in all these parameters.
Unidentified Participant
Okay, so I mean, correct me if I was wrong, but once it hits the 50% neutralization, hopefully by the end of this year or the exit quarter for this ’26 — FYT ’26 financial year will be a normalization. [Speech Overlap]
Sunil Chordia
The exit number for sales from Chennai, I’m looking at 2,000 tons per annum — per month from Chennai. And accordingly, next year, we hopefully want to do 30,000 tons from Chennai. Yeah.
Unidentified Participant
From Chennai? Sir, and for my last question in terms of Thailand, obviously, the margins have recovered over the last month or two quarters. But also, when you compare that to maybe FY ’21 or ’22, we are significantly lower. So you believe there is still some room from current level’s profitability to go up or you believe the Chinese competition will arrest any meaningful increase in cost? That’s my last question. Thank you.
Sunil Chordia
You know, Saumil, comparing with 2022 financials will not be normal, because that was a post-COVID period when China was shut, supply chains were disturbed, containers were not available. And nobody wants to go back to that situation. Because before this, there was a COVID, which was worst. And we don’t project going back to that high number of EBITDA in Thailand. Because, frankly, we are exposed to global competition. But at the same time, we are very happy that we are making good margins there. If we look at our competitors’ balance sheet internationally, whether it is Descartes or Kids wire [Phonetic] or a Chinese company, nobody is reaching a double digit number in EBITDA, okay? While your company is able to do that. That demonstrates our competitiveness and capabilities to continue to grow. Yeah.
Unidentified Participant
Sure, sir. Sure. Point noted. [Speech Overlap]
Sunil Chordia
And in business as a management, every time we can’t focus only on profitability. Okay. And because of profitability, we can’t lose the market share. Because in the long term, it is the market share which will be useful. And whenever the tide [Phonetic] turns, that’s a big volume will give a very big return also.
Unidentified Participant
Sure, sir. Thank you and all the best for future quarters.
Sunil Chordia
Thank you.
Operator
Thank you, sir. The next question is from the line of Mayur Milak from Asian Market Securities. Please go ahead, sir.
Mayur Milak
Hi. Good afternoon, Sunil-ji.
Sunil Chordia
Good afternoon Mayur sir.
Mayur Milak
So, [Foreign Speech] One, I’m just trying to understand that we used to look at this as a very big entry barrier for people who really did not have much money to make out of the whole industry. So, correct me in my numbers if I’m wrong sometimes. One, if this entire bead wire industry was supposed to be a INR90,000 crore industry, the entire beadwork industry in India would be about INR1500-odd crore
Sunil Chordia
INR2000 crore.
Mayur Milak
INR2000 crore. And you’re already sitting on INR600 crore to INR700 crore of money, I mean, revenues. So, what I’m trying to understand is why would somebody like a Tata Steel or Aarti [Phonetic] or Bansal would want to invest because at the end of the day the top line [Foreign Speech]. So, where is it making commercial sense for these people to invest new money and make money out of this business?
Sunil Chordia
But, this is a question you should ask them, not me. [Speech Overlap]
Mayur Milak
So, what are you saying, sir? Why would somebody come in this field unless [Technical Issue]. What I’m trying to understand is Bansal only invests in their [Technical Issue] for the wire industry?
Sunil Chordia
But I’m sorry, I won’t be able to answer this because it is their strategy. Okay? One thing I can tell you for sure that it is a complex business. It is a tough business because if Rajratan is taking time in getting approval in a new facility, okay, we know this business for 25-30 years.
Mayur Milak
Absolutely, absolutely.
Sunil Chordia
Okay?
Mayur Milak
I remember you…
Sunil Chordia
And in spite of that, I’m open to say that we are still learning, okay.
Mayur Milak
That’s quite humble of you actually.
Sunil Chordia
Yeah. But [Foreign Speech].
Mayur Milak
Sir, I think you invested, I mean [Indecipherable] you invested about — INR300-crore-odd was the plan for 60,000 metric ton, your green field in Chennai right?
Sunil Chordia
Yeah, yeah.
Mayur Milak
Assuming that even if you make a 15% to 18% return at your level after so much experience, it will generate about INR200 crore profit for you at 80% utilization. I’m wondering, why would somebody else really figure, I mean, [Foreign Speech] because it is spoiling the whole market for everybody, right? Because once you have the capacity, everybody will want to do more volumes. So what is the — how are we really planning to face this for a longer run? I mean, there has to be a permanent solution to this, right?
Sunil Chordia
No, no, there can’t be a permanent solution. Market has played like this in the past. When we started this business, we were eight in the queue, okay? So — and we have been continuously demonstrating profitable business, continuously growing business. And, yeah, so focus on quality has given us rewards. And fortunately, we are not leveraging our balance sheet, we are not diluting. So other parameters also, we are very rigid on all of them. And in longer run, this should be successful, okay?
And, of course we have to have a strategy. We can’t say that competition can’t do anything. Competition — we have to have a strategy to emerge as a winner, end of the day, okay? I remember we incurred losses in Thailand for many, many years and we fought with international players like KISWIREs and [Indecipherable], whose balance sheets are very strong. We have fought with Chinese, but today Thailand is doing very well in the international market, yeah.
Mayur Milak
Sure. So, coming to your Thailand facilities, Yash, please come in if need be. So…
Yashovardhan Chordia
Yeah, sure.
Mayur Milak
I believe this competition at Thailand is more from Chinese, right or KIS this has also started introducing a price cut. We were at a relevant discount to KISWIREs in the Thailand market or the European market. Does that still hold the way it is or even KIS has become more competitive?
Sunil Chordia
No, definitely, KISWIRE also has become more competitive because since last two years, we have also encountered a challenge to them. We have entered into customers that they were sole suppliers or they were prominent suppliers. So somewhere where we are getting that volume, it’s putting a back pressure on them to sell to other counters. But still, I would say, they are very good competition to have. They generally don’t dump the material.
So I would contribute to — more to the Chinese companies. They are really aggressive and China really dumps material at times. But definitely there are indications that the domestic market also is reviving. There is some production increase that is happening in China. I think that should ease out the situation in the coming months.
Mayur Milak
Okay. And just one last question…
Yashovardhan Chordia
And KISWIRE is selectively competitive, okay?
Mayur Milak
Okay.
Yashovardhan Chordia
So he goes to a customer, dumps the price because he wants to sell in that quarter and again goes back, and next quarter he will evaporate from there, okay? But major MNCs, they have larger market share at a very good price and that is our target. We are knocking doors to increase volumes in those counters.
Sunil Chordia
So, Mayur, to your previous question of capacity and the total market size, let me also tell you that we are only at about 10% or less than 10% of the world demand. So, our main focus today is to reach to global counters in the west and also increase our footprints in Southeast Asia.
So, we are still confident of selling this volume in the coming years and that’s why we are not very aggressively structurally changing the product mix or not adding another product and getting confused with it. Definitely next two years might be a challenge, but in the longer run we are still confident of selling 180,000 tons from these three locations.
Mayur Milak
Alright. That’s nice to hear. So just one thing from, on the financial, we had made inroads with the smallest plant with Bridgestone, if I remember well. Are we on track to get the other plants from Bridgestone as well?
Sunil Chordia
Yeah. So we were approved with the smallest plant with Bridgestone in Thailand. But unfortunately they stopped operation in those plants — in that plant because it was right in the middle of the city. It was a 50 year old plant that resulted in a break of three months of supply. But fortunately we have got approval for the biggest factory in Thailand, which is another factory. And there is a final audit that is going to happen in December.
Team is coming from Japan for the audit and we are already discussing a 20% allocation from that factory starting from first quarter, like calendar year first quarter. So Jan, Feb, March. So definitely…
Mayur Milak
But you do need to supply them some quantity even now [Speech Overlap].
Sunil Chordia
Because we are doing limited allocation right now. But I meant to say the regular business would start from Q4.
Mayur Milak
All right. This is very encouraging. All right. All right. All the best to you guys. Thank you.
Sunil Chordia
Thanks.
Operator
Thank you. The next question is from the line of Nikunj Mehta from Magma Ventures. Please go ahead sir.
Nikunj Mehta
Yeah. Hi, thanks for the opportunity. Hi Sunil-ji and…
Sunil Chordia
Hi, Nikunj.
Nikunj Mehta
Hi. I have a couple of questions. The first question is, in this particular quarter, what would be the sales and the absolute in terms of cost from the — for the Chennai plan?
Sunil Chordia
As I told you, we are ramping up there, okay? So if we have to achieve 12,000, 14,000 in this year, remaining six months, we should be running at a run rate of 2000 ton, which is difficult in the next month. But we have to start with 1,000 tons, like we are doing 1,000 tons this month. Next month should be 1,200, 1,500 hundred and that is how. But giving you exact numbers is difficult. Yeah.
Nikunj Mehta
No, my — sorry, my question was in this particular quarter, what would be the — our sales amount from the Chennai [Technical Issues].
Sunil Chordia
No, no, it’s last quarter, Quarter two.
Nikunj Mehta
Quarter two, yeah.
Sunil Chordia
In quarter two we have done close to 1,000 tons of sales, which is there in the sales number.
Nikunj Mehta
Yeah. Okay. And the subsequent cost, the fixed cost, opex is not recorded in the P&L. Is my understanding correct? It is still in the CWIP?
Sunil Chordia
No, not — around 60% of the assets are capitalized, okay. And balance are in the WIP, and gradually everything will get capitalized. As we start the — more and more machines complete the trial, those machines will be capitalized.
Nikunj Mehta
Understood. Understood. And once we are at, let’s say a 2,000 ton per month kind of a number, then what would be our fixed cost on a quarterly basis, opex cost? Just wanted to understand that.
Sunil Chordia
I think we will have to connect separately for all that information.
Nikunj Mehta
Sure. Sure.
Sunil Chordia
So, you can talk to Vinay and take those numbers. Yeah.
Nikunj Mehta
Absolutely, I’ll do that. And the other thing that you mentioned is that we are gunning for Chennai to reach 14, 000, 15,000-odd to get the PLI benefits. So, just wanted to understand that in case if the demand or the approval don’t come through, is it fair to say that we can, the fungibility of the capacity from the Pitampur and Chennai is fungible, as in we can increase Chennai till 14,000, 15,000 just so that the PLI benefit we kind of receive. At the same time, Indore utilization will be a bit lower to that extent. Is that…
Sunil Chordia
[Foreign Speech]
Nikunj Mehta
That’s how we’re looking at, right? Okay.
Sunil Chordia
Yeah, yeah. That is how it is going to happen. So, like, we are still sending lot of material to North India from Chennai where approval is not required. But we wish that that stops, okay. In the worst scenario, that wish will not be fulfilled and will continue to supply from there.
Nikunj Mehta
Yeah. Okay. Understood. And last question from my side is regarding the BIS implication. So we, as per our last interaction, the imports are deduced significantly to, I think, around 600 tons per month or that number. So just wanted to understand the current situation. Is it still — the imports are still kind of at the lowest level possible right now?
Sunil Chordia
No. So imports can happen for the tires which are being exported. Okay. And tire companies can still import bead wire. But they have to use that wire only for export of tire. So nobody wants to get into that headache. Yes, but few companies who are 100% exporters or who are into ACZ, they are continuing to import from China. But that import is limited quantity. And as far as BIS status is concerned, the first company which lost its BIS license was Rajratan Thailand. And we are still far away from getting that license renewed, okay.
Nikunj Mehta
Okay. Okay. Understood. So my question to — in that — a follow up question was that our utilization in India when I look at, is around 88,809 per ton and it has remained flattish on a Q-on-Q basis and on a Y-o-Y basis as well. So my understanding was that if the imports reduce drastically, then ideally the realization should have improved a bit. So, just I’m not able to connect the two points. If you can just help with your inputs on that.
Sunil Chordia
No. So, giving the exact calculation may not be possible at this point of time. But in this quarter we have sold higher quantities to low cost customers also and especially from Chennai, okay. I’ve been repeatedly telling on this call also, okay. So, customers who are better priced will take longer time to approve. So this is a transition, okay. And you will see this happening more in the next quarters also, okay. We can’t be targeting only the prime customers from a new facility, yeah.
Nikunj Mehta
Sure, sir. Thank you so much and all the best.
Sunil Chordia
Yeah, thank you. Thank you.
Operator
Thank you, sir. The next question is from the line of Pranay Jain from DealWealth. Please go ahead, sir.
Pranay Jain
Thank you. With a desired volume of about 30 tons from Chennai next year, wanted to understand what is the kind of export volumes we are looking at, particularly towards North America and Europe over the next one, two years. What’s the kind of export tonnage and market share, if we have any aims on that front?
Sunil Chordia
Our projected exports from India is 30,000 tons in three years’ time, okay. I cannot draw a straight line to tell you that this is what it will happen and this is how it will happen. But yes, there may be some up and down, but we have to ramp it up to 30,000 tons in three years’ time. That is our target to achieve full production in Chennai and to achieve overall 180,000 tons of sale, okay.
So there may be some anomalies, like Thailand may grow suddenly faster or sometime you will see that now Chennai volumes have picked up. Everything depends on — a lot of variables are there. You have seen in last quarter, freight prices for U.S. had gone up to $4,500, okay, which have now come down to $2,500 again, okay. So, we also have to change our decisions of price calculations and from which location we can supply to customers. So there are a lot of dynamic things playing out in the market.
Pranay Jain
Okay. And the 20% kind of guidance on volume growth along with the steady 15%, 16% kind of margins, do you think that that would be a sustainable trajectory going beyond next year too?
Sunil Chordia
Yeah, because it should be there. Because we, by that time we will get more approvals from international — multinational tire companies where prices are much better than what we are supplying to a lot of customers in Thailand, lot of customers in Southeast Asia and some customers in India also, okay. So, overall, if we shift 15%, 20% of our sales to those customers, we will be able to maintain this profitability. And that is the strategy we are working on.
Pranay Jain
Okay. And lastly, are we seeing any green shoots in the existing large markets like North America, Europe in terms of not just client conversation or positive audit, but also some demand forecast from them? And are we seeing some opportunity in your market or emerging markets like Middle East and other areas also, where we can settle down?
Sunil Chordia
So, Middle East is not a big market, but Yashovardhan will tell you a little bit about North America and global export. He’s directly involved in that project, yeah. Yashovardhan?
Yashovardhan Chordia
So, America, we’ve touched a run rate of about 120 tons a month dispatch to two counters. We’ve already started supplying material to them. In Europe, just to give you an update, at one counter, we sold about 1,200 tons last year and for the next year we are projecting a 2,000 ton sales which will add one more factory in that customer. So there are three factories in Europe.
So, these are broad numbers that we are looking at. Definitely next year second half, I think the volume pickup is going to be much faster from what I can understand on how the approval process is going on.
Pranay Jain
Got it.
Sunil Chordia
And the price premium would also be at least 15%, 20% greater than present to such kind of customers. Structurally the prices are definitely much better, 15% 20% higher than Southeast Asian market. But last two quarters there had been a lot of volatile situations. One missile coming from one country to the other. And I think before that only ocean freight started rising in anticipation of the Red Sea crisis. So, ocean freight surcharges means steep increase in the freight cost somewhere affects the margin and we entering into the market, don’t have that strong relationship with customers where we can say, okay, you give us extra cost, we can’t put in a lot of conditions.
So last two quarters we had really good numbers for Europe, but profitability on excel sheet was much higher and accessibility turned out to be much lower. Now for the next two quarters, it’s a downward trend. So freight is reducing and it’s reducing below the level of what we had considered in the price calculation. Such challenges are also there which need to be incorporated when supplying to Europe and America.
Pranay Jain
All right. We are living in a complex world, but we are having a good strategy also. So I appreciate it. Thanks for the clarity and all the very best.
Sunil Chordia
Thank you. Thank you.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor
Namaskar sir. Thank you for the opportunity. Sir, I missed the earlier commentary, so pardon me for repeating question. When we look at the Chennai unit ramp up. What are the other costs involved in the quarterly performance since I think so, they are not at optimum level, but their production? So what are the costs that are absorbed by currently by our Pithampur unit? Can you give a ballpark number?
Sunil Chordia
Hello. So we have given in the notes that we have absorbed — we have capitalized around INR5 crores of the trial run cost, okay. Apart from that, there are fixed costs which cannot be capitalized, like depreciation, finance cost, because after declaring commercial production, all those fixed costs are becoming part of the profit and loss account. So, yes, you can do that automatic, yourself, okay? So there is an interest cost which is fixed. There is a depreciation which is a fixed cost. And there are some overheads, okay.
Overheads are planned for a big volume. But volume ramp up is taking time. So — and we had anticipated all that. It is not a surprise for us, okay. Any new company, new facility for this kind of product will take some time to become profitable.
Saket Kapoor
Sir. And the balance amount of INR72 crore that is lying in the CWIP is also pertaining to the same unit or…?
Sunil Chordia
No, no. most of it is Chennai. Maybe some small amount from Thailand or Pithampur.
Saket Kapoor
Okay. So, when this — that will be capitalized and then there will be an additional depreciation on the same?
Sunil Chordia
Yeah, yeah. But that will be capitalized as the production ramps up. So, as I told you, 70% is already capitalized. So, remaining 30% on a much higher volume. So that will be not a big burden, okay. Like building land, electrical equipments, all the installations, other than main modular plant and machinery, everything is capitalized, yeah. Only the modular machines as and when they get started, they will be capitalized.
Saket Kapoor
Yeah. And sir, going ahead, taking into account the increased volume we have for the first half. H2 looks in similar lines only or what factors will contribute to the improvement in margins going ahead?
Sunil Chordia
We are not anticipating very big improvement in margin. But because our focus will be on achieving the volume growth. So, we are cautiously telling you that margins will be 15%, 16% only.
Saket Kapoor
And volume will be at this levels only? We are at optimum level right now.
Sunil Chordia
Yeah. So like we have done volume — so as I have told in the earlier, we are targeting a 20% volume growth for this year.
Saket Kapoor
Correct sir. And sir, what are our current maturity for this year?
Sunil Chordia
Sorry, say again.
Saket Kapoor
Our loan — what is our loan repayment schedule? How much we need to repay this year?
Sunil Chordia
Can, Hitesh, you tell how much loan we have to…
Hitesh Jain
Hello sir. Hello? Hello, INR30 crore to INR50 crore per year for the year and half year already is gone.
Saket Kapoor
So we have repaid…
Sunil Chordia
[Foreign Speech]
Saket Kapoor
[Foreign Speech]
Hitesh Jain
Around 8% to 8.5%
Saket Kapoor
Okay. Sir. [Foreign Speech] This has been rising steadying. So this is a variable cost line item or what is included…
Hitesh Jain
This includes items of Rajratan Chennai. Okay.
Saket Kapoor
So this is all about the ramp up part only, the connecting part.
Hitesh Jain
Yeah, connecting parts.
Saket Kapoor
Correct sir. [Foreign Speech] Thank you for the answers.
Sunil Chordia
Thank you Saket.
Operator
Thank you. The next question is from the line of Bijal Shah from RTL Investments. Please go ahead.
Bijal Shah
Yeah, hi. Thanks for the opportunity. My question is on your exports. So, in Europe and U.S., can you get new orders? Who are the suppliers you are replacing? And I mean what is the reason for them to switch? Are you offering them much better price or there is some other reason? And in the same market, the way you are facing competition from Thailand — from China and Thailand, the same competition is not there in Europe and U.S. where you are able to replace certain suppliers?
Sunil Chordia
Yashovardhan?
Yashovardhan Chordia
Yeah. So, the competition remains the same but it’s not as severe as Southeast Asia. Because Chinese prices in those markets are also fairly, okay. To your question of who we will be replacing, at some counters we would be replacing China. Because geopolitically there are lot of companies who are strategizing to develop an alternate source.
We offer 90% recycled steel bead wire which we have been making since many years in Thailand. And our Scope 2, Scope 3, Scope 1 emissions are also quite low for that product. So there are also factors like this where our carbon emission for bead wire [Technical Issues] is much lower than the existing suppliers that they have. So, there are many factors. Somewhere we will replace China, somewhere we will replace a high cost KISWIRE or a Bekaert who is locally producing there. And somewhere strategically, people want to reduce dependency on China.
Bijal Shah
Okay. Okay. And how do you see? I mean, exports ramping up in terms of percentage of your total volumes. Say three years out, what kind of total volumes will come from export in India and Thailand? So I’m saying Thailand going to Europe and U.S.
Yashovardhan Chordia
So overall, as we mentioned, we’ll target at 30,000 tons of export volumes.
Bijal Shah
This with respect to Chennai or that is overall?
Sunil Chordia
From India, 30,000 tons or maybe…
Yashovardhan Chordia
From India, 30,000 tons, and from Thailand we do an approximate of 15,000 20,000 tons. Which would remain similar between the plants we might switch. So Thailand might start exporting more volumes to Europe and America. Whereas India might focus on the Southeast Asian market and vice versa.
Sunil Chordia
Got it. Got it. Thank you and all the best.
Operator
Thank you. The next question is from the line of Parth Bhavsar from Investec. Please go ahead.
Parth Bhavsar
Hi sir. Thank you for the opportunity. Sir, I have just one question regarding the imports from China. The earlier participant had asked that with BS norms were know implemented, are you mentioned that it’s only like — it’s only for Indian sales. So can you just highlight the number or like how it has — like changed over like maybe last six months from 600 KT to now what it would be?
Sunil Chordia
No, no. So, China was lately exporting a bigger quantity to Indian market like they were dumping. And government has made the — quality control order is very effective. And it is not for bead wires, they have done it. They have done it for all the steel items, okay. Unfortunately bead wire also falls under the same category. So it was also hit by the same bullet, okay. So, the volumes which had gone up to 3,000 tons a month or 3,500 tons a month in one month have come down to 400, 500, 600 tons maximum, import numbers we see now. Yeah.
Parth Bhavsar
Okay. Perfect. Sir, that answers my question. Thank you so much. Yeah.
Sunil Chordia
Thank you. I think we have — Sailesh, if there are no more questions can we request for the closing remark?
Operator
Yes, sir. Mister Raja, please go ahead.
Sailesh Raja
Sure. Thanks for attending this session. We especially thank the Rajratan team for their time. Sunil sir, would you like to make any closing comments?
Sunil Chordia
Yeah. So keep watching Rajratan. And thank you for your continued interest in Rajratan. We are, on our side as management, working very hard to continue to grow and continue to profitability. And also have strategy in place to compete in local market as well as in international market and in Thailand market. But it has been a good experience to run this company and bringing it here. And I see lot of possibilities of growth from here for next couple of years. So stay connected. Stay — keep watching. Thank you very much.
Operator
[Operator Closing Remarks]