Sahyadri Industries Ltd (SAHYADRI) Q3 FY23 Earnings Concall Transcript

Sahyadri Industries Ltd (NSE:SAHYADRI) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Analysts:

Anjana Shah — Shah Investments — Analyst

Abhishek Dave — Bright Securities — Analyst

Riya Verma — NR Securities — Analyst

Saket Kapoor — Kapoor Company — Analyst

Aditya Sen — RoboCapital — Analyst

Pankaj Jain — Mahaveer Investments — Analyst

Dipti Kothari — Kothari Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Sahyadri Industries Limited Q3 FY ’23 Earnings Conference Call. 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] I now hand the conference over to Mr. Tuljaram Maheshwari, CEO, CFO and Whole-Time Director. Thank you and over to you, sir.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thank you. Good evening, everyone, and thank you for joining us on Sahyadri Limited Q3 FY ’23 earning conference call. I hope everyone has had a chance to view our financial results, and investor presentation, which are presently posted on the company’s website and the Stock Exchange. I’m accompanied by Mr. Arvind Garg, our Financial Controller; and SGA, our investor relation advisor on this call today.

As per the survey published by Mordor Intelligence, the global fiber cement market is expected to be 34,940 kilo tons in 2022, rising to 42,984 kilo tons by 2027, registering a CAGR of 4.23% during this period. As we all know, the Indian government has launched Housing for All, which will be a game-changer. The goals for this initiative is to construct housing that is more reasonable — reasonably priced, which will give the housing construction industry a sizable boost. As a result, it will provide numerous opportunities for the country fiber cement market to go in the coming years. Furthermore, this product lightweight, long-lasting, along with being resistant to fire, water and termites.

Fiber cement product are preferred by middle-class families worldwide since they are easy to install and are low maintenance, long-lasting and cost-effective. The growing middle-class solution, combined with rising disposable incomes, has added in the growth of middle-class housing segment.

As a result, the use of fiber cement is expected to rise. This product is also used to cover the outside of variety of buildings, including hotels, schools, office buildings, retail centers, hospitals and corporate centers. All with such great applications and lower-cost with ongoing and upcoming construction projects, the construction sector will benefit, generating significant market demand.

Now moving to the performance during the quarter. During the quarter, we witnessed a slowdown, demand for using services, particularly in rural parts of India. The raw material costs are at elevated levels on the back of inflationary trend prevailing in the economy. However, we have been able to pass on the partial increase in course to our customers. The stabilization of operations at the present day plant resulted in increased expenditure, which impacted the bottom line.

For nine month FY ’23, our capacity utilization was 66% with flagship product having a high-capacity utilization than new SIL products. However, new SIL products utilization was impacted due to sluggish demand in the rural market.

Now I move to the capex update. For capacity expansion in Maharashtra state for manufacturing of non-asbestos cement board, plant having capacity of 72,000 metric ton have been initiated. Land has been identified and land acquisition is in process. Also companies in-process of setting up new unit in [Indecipherable] state for manufacturing asbestos corrugated sheet of 120,000 metric tons. Before we discuss regarding the financial performance, the company has declared an interim dividend of INR2.5 per equity share of the face value of INR10 each for FY ’23.

Q3 FY ’23 performance consolidated total income stood at INR123.7 crores in Q3 FY ’23 as compared to INR111.2 crores in Q3 FY ’22. EBITDA of the company stood at INR16.2 in Q3 FY ’23 as compared to INR15.3 crores in Q3 FY ’22. PAT for the quarter stood at INR4.7 crores.

Nine months FY ’23 performance, consolidated total income stood at INR429.5 crores in nine months FY ’23, as compared to INR413.5 crores in nine months FY ’22. EBITDA of company stood at INR69 crore in Q9 [Phonetic] FY ’23. PAT for the quarter stood at INR32.4 crore.

We at Sahyadri are committed towards the goal of becoming a pan-India player, which means that we will continue to explore new markets, increase our market penetration, improve our potential, efficiency and product more, produce more value-added products.

Thank you. Now I open the floor for questions and answers.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Anjana Shah from Shah Investments. Kindly proceed.

Anjana Shah — Shah Investments — Analyst

Thank you for this opportunity, sir. Couple of questions from my end. Sir, to begin with our capacity utilization for nine months FY ’23 stood at 66%. So sir, what kind of steps are we taking to improve our capacity utilization? And sir, also what would this number be for Q3 FY ’23?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See, as I mentioned in my presentation that these three quarters have been impacted badly on account of sluggish demand. And generally, the Q4 is better quarter of the year compared to other Q2 and Q3 quarters. So hopefully, this capacity utilization will go to around 77% to 80%.

Anjana Shah — Shah Investments — Analyst

Sir, is there any contribution from our new plant that has led to some improvement in Q4?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It’s already started giving the contribution…

Anjana Shah — Shah Investments — Analyst

Right, which is —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Still certain teething issues are there. So we didn’t reach to that capacity. At present we are working at 50% capacity, which will improve in the Q4.

Anjana Shah — Shah Investments — Analyst

So sir, you’re confident that by Q4 we should reach approximately 70% is my understanding correct?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yeah, yeah.

Anjana Shah — Shah Investments — Analyst

Okay, okay. Sure. And sir, we have mentioned in our press release that our EBITDA has been impacted due to overhead expenses at the Perundurai plant. Sir, what is the quantum of the same?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See the quantum would be around INR1.5 crore to INR2 crores.

Anjana Shah — Shah Investments — Analyst

Right, right. And sir, how are we working towards improving our other overhead costs?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

That is an ongoing process madam.

Anjana Shah — Shah Investments — Analyst

Okay, okay. Sure, sir. That was really helpful. Thank you so much for this opportunity.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thanks, thanks.

Operator

Thank you. The next question is from the line of Hema Kothari from SK Consultancy. Kindly proceed. As there’s no response, we’ll go on to the next question. The next question is from the line of Abhishek Dave from Bright Securities. Kindly proceed.

Abhishek Dave — Bright Securities — Analyst

Hi. Am I audible?

Operator

Yes.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes, yes, please go ahead.

Abhishek Dave — Bright Securities — Analyst

Thank you for the opportunity. I have two questions. One is on, how do you see ocean freight rates going on?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Okay.

Abhishek Dave — Bright Securities — Analyst

And other is during the last conference call, we have stated we will be doing revenue around INR575 crores to INR600 crore. Are we on track or do we see some kind of headwind?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See, ocean coast started reducing. Okay. And there would be a positive impact coming into the Q4. As regards the total line — total the overall revenue, we are in that line of INR570 crore, INR600 crores.

Abhishek Dave — Bright Securities — Analyst

Okay sir. Thank you. I’ll join the queue again.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thank you.

Operator

Thank you. The next question is from the line of Riya Verma from NR Securities. Kindly proceed.

Riya Verma — NR Securities — Analyst

Hi, sir. Thank you for the opportunity. Sir, two questions. What is the share of export for Q3 and nine months?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Okay. What is the second one?

Riya Verma — NR Securities — Analyst

And secondly, sir, we have around 3,000 dealers. So are we planning to increase the same?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Okay. So if you see the export percentage is around 14% of the total spend in three months and nine months is around 12%. But mainly, if you see the export is for flagship product. So that if you see the total sale of flagship, it is around 50%, that means 50% we sell domestic and 50% outside. As regards the dealer increasing, that’s ongoing, because for capacity utilization, for everything, it’s an ongoing process, and we have to work towards that.

Riya Verma — NR Securities — Analyst

And sir, do we have any exclusive dealers?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We have exclusive dealers. We have exclusive dealers, yeah.

Riya Verma — NR Securities — Analyst

Okay, thank you sir.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Kindly proceed.

Saket Kapoor — Kapoor Company — Analyst

Yeah, [Foreign Speech]

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

[Foreign Speech]

Saket Kapoor — Kapoor Company — Analyst

[Foreign Speech] How are you?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

[Foreign Speech]

Saket Kapoor — Kapoor Company — Analyst

[Foreign Speech] Firstly sir, when we look at the nine month number, we posted a turnover of 423, just if even out the seasonality and likewise like comparison, the topline growth is there, but the bottom line has taken a hit, because of the reasons explained by you. So on the volume terms, how are we shaping up for the nine months? What was the nine months utilization levels for ’21 and vis-a-vis this year?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yeah, as I mentioned, it is 60%, 66% capacity utilization for the nine months.

Saket Kapoor — Kapoor Company — Analyst

This is for this year — last year capex, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Last year was 79%.

Saket Kapoor — Kapoor Company — Analyst

Okay.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Last year was 79%, but this year the figure is changing, because the new capacity has come.

Saket Kapoor — Kapoor Company — Analyst

Okay, if we keep aside the new capacity in South and likewise comparisons with last year, how are utilization levels being?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It would be around 70%, 71% for this year and the last year was 79%.

Saket Kapoor — Kapoor Company — Analyst

Okay. Sir, lowering of 10% in the volume, it’s because of this shift in demand, which you have already mentioned in your release. So, what are the factors that has led to this lowered offtake, if you could delve more into it.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See, if you see, generally, the Q1 is always one of the best quarter of this industry. And that has impacted very badly this year. Because of continuous monsoon. Monsoon continues till 20th June or something. So the generally the demand which start from the month of May and 15th May, that is impacted, because monsoon continues till — if you have seen till October, there was a monsoon. So that first quarter lower volume has given impact on the capacity utilization forward.

Saket Kapoor — Kapoor Company — Analyst

Sir, the monsoon commences sometimes in the month of May, first week of May.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

But it continue till October.

Saket Kapoor — Kapoor Company — Analyst

Yeah, so.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

So generally, the first quarter is always good. But continuous monsoon doesn’t given a chance to the people to innovate their houses or build the houses.

Saket Kapoor — Kapoor Company — Analyst

So that would have been up — postponing of the demand, but here there is a demand destruction.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It is generally not a corresponding, generally they do before the harvesting, they do the construction. So that’s the industry, it’s not you and we can do this, anything on this.

Saket Kapoor — Kapoor Company — Analyst

So the dependence again would be how the monsoons spread the next year, then the factors would be playing out in the similar fashion.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Monsoon is definitely one of the factors, because overall industry depends on, if you see 80% capacity roofing business is for the rural economy. And it doesn’t — the rural economy doesn’t work well because of whatever X, Y, Z reason, definitely, there would be impact, but considering the boost by Government of India on the rural economy, earlier the dependability or the impact of the monsoon was much more. Now if the monsoon is not there then government start giving the — a lot of incentives or those things. So the impact is not, but we cannot ignore the monsoon.

Saket Kapoor — Kapoor Company — Analyst

And as the allocation for affordable housing has gone up and also the commitment from the government Housing for All scheme, so what kind of trust does this schemes have on improvement — improving of the utilization levels going ahead?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

As a cycle, generally into four, five years, one year come where the demand good low, but what the cycle, which is impacted in the first quarter. I hope that — we hope that, this year should be good because the trend, but now we are seeing in the Q4, appears to be encouraging, but you don’t know how the things would be and how the geopolitical situation and environment would be.

Saket Kapoor — Kapoor Company — Analyst

Thanks. Sir, if you could give us some color on the raw material basket, sir. I think so a major part of that swing has also come. Firstly, you did mention about ocean freight part. So I think so, that would be included in the other expenses and cost of raw-material consumed in both these cases, there have been a significant upward trend. So that if you could give us some more color on the same.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

So there are two impacts, one is the forex fluctuations. When we started the year, I think dollar waws INR76 or so, which reached to INR80, INR82. So that is state way impact of 8% to 9%. Second is, because of this, Ukraine war, there is the impact of the increase in the particularly asbestos fiber pricing. So total around 15%, 16%. However, just for your information, we would able to pass to the market around 60% to 70% whatever is the coast increase.

Saket Kapoor — Kapoor Company — Analyst

Right. On the forex front, just to dwell on the same. It is I think we are unhedged about that, or it is the inflation the dollar-denominated import that are affecting?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We don’t hedge it. It is unhedged always. We don’t believe into that.

Saket Kapoor — Kapoor Company — Analyst

Okay, so it is a dollar-denominated import that is the reason the prices goes up and —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Correct.

Saket Kapoor — Kapoor Company — Analyst

Sir, even on the finance cost front, it is only because of the new unit that the finance cost has —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

One is the new unit. Second is earlier, the fiber is being given again they’ll see. One because of these uncertainties and those things will we increased. Month only compared to six months. And second is, we have pay advance and that advance also remain with them for minimum 30 to 60 days resulting your — working capital is just — is put on that extra this thing is around INR100 crores. So whatever the cost you are seeing today on the interest and etc. That is mainly that sector other than the new unit.

Saket Kapoor — Kapoor Company — Analyst

What has been our working capital requirements, sir, in absolute number?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See, generally, working capital requirement is around INR60 crores, INR70 crores.

Saket Kapoor — Kapoor Company — Analyst

INR60 crores, INR70 crores?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

[Indecipherable] gives the more.

Saket Kapoor — Kapoor Company — Analyst

Come again, sir.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Generally, the working capital requirement is INR60 crores to INR70 crores, but this fiber and those things, that make working capital requirement move.

Saket Kapoor — Kapoor Company — Analyst

So that has gone up to, sir, what levels now, because of these factors of number —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We’re actually managing with INR60 crores, INR70 crores, because we had investment on those things. So we are still managing with that had that should not — would not have been a situation, we would have a surplus.

Saket Kapoor — Kapoor Company — Analyst

And the two, three points, sir. First on the raw material front sir, other than — in all commodities, whether it is crude, or whether metals or chemicals gases everywhere there has been an even out in the prices, whatever the high, they have touched, they have corrected, not only to the previous level, even if we can take previously to the Ukraine war level, but even lower than that. So how are the dynamics working for the fiber prices, sir. And what factors are equally keeping them higher and what’s the outlook sir going ahead?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See fiber there is monopoly. There are only two suppliers. So you don’t have say much. Whatever as I said, we have to take it. However, they reduce the prices by 4% to 5% for the next year.

Saket Kapoor — Kapoor Company — Analyst

Okay, so we have a long-term contract, sir, in that case?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Not a long-term contract, it’s a yearly basis.

Saket Kapoor — Kapoor Company — Analyst

Yearly contract with them?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes.

Saket Kapoor — Kapoor Company — Analyst

So for the next year terminated for the calendar year that the prices have been fixed for the entire offset?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It is lower than the last year, but if further illustration would be around 4% to 5%, then you will be zero.

Saket Kapoor — Kapoor Company — Analyst

It will get mitigated. And how will this ocean freight affect us, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Ocean freight because they don’t give us, they give us CIF. So if there is any reduction or increase, they bear it and they make it part of the price.

Saket Kapoor — Kapoor Company — Analyst

Okay, so we won’t be benefiting from the same?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

No, no.

Saket Kapoor — Kapoor Company — Analyst

Okay, but only in our exports, sir, what portion of our sales in the export —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Export also we are not doing now, CIF we’re doing FOB, because last time we have seen very — the steep increase in the sea freight, and which is impacted badly. So now we are going only on FOB. We are selling only on FOB.

Saket Kapoor — Kapoor Company — Analyst

As we have seen —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Fluctuation on sea freight.

Saket Kapoor — Kapoor Company — Analyst

But sir, since the currency fluctuation is part and parcel of our business model, so the cost of hedging is higher than the rupee depreciation on a historical business?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We have seen few examples. It’s like that. And as a management policy, we don’t go into [Indecipherable]

Saket Kapoor — Kapoor Company — Analyst

And now coming to the capex part, sir. We have outlined our capex in your release also and again, in the presentation. Taking into account the current environment and the type of the dynamics of the industry, what should be the timeline by which set for both Odisha and Maharashtra. We will be going ahead and how are we going to

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

’24, ’25. Odisha would be, because it’s still land identification is going on. Because as you know, nowadays land acquisition is not that easy.

Saket Kapoor — Kapoor Company — Analyst

Correct.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

So first would be — that should be in place and say fourth quarter of ’25 that means last quarter of ’24, ’25.

Saket Kapoor — Kapoor Company — Analyst

Okay. And, sir, if we differentiate between the product mix, like the asbestos corrugated sheet and the non-asbestos cement, the end-user the same or the end-use customer are the same people? What are the key differentiation sir between the two?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Different.

Saket Kapoor — Kapoor Company — Analyst

Could you explain — throw some more light, sir, what is the key differentiation between the two products?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See the roofing is being used for the roofing and that’s the rural and this non-asbestos is as if you’re seeing my explanation in my last con-call, this is a straight replacement of plywood and wood. And in my this presentation also I mentioned, based on that report everywhere now that demand is increasing. So I feel that is going to be product for future.

Saket Kapoor — Kapoor Company — Analyst

Okay, so when we mentioned flat sheet, flat sheets are the same non-asbestos cement board?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes.

Saket Kapoor — Kapoor Company — Analyst

Correct. And you also mentioned about value product. Value-added products in the case. So which one classified for value-added products, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Flat sheet may — there is a value-added product like you know planks, panels, those things.

Saket Kapoor — Kapoor Company — Analyst

Okay, and these are comparable to be false ceilings, also sir that we have —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Product goes to false ceiling also. Because if you use a different false ceiling, there is a lot of negative after the moisture that get fall on the people who are living and you would have been noticed that lot of accident happens. In oil products, this doesn’t happen.

Saket Kapoor — Kapoor Company — Analyst

Right sir. Sir, if you could throw some right on this Poonam Roofing merger.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It is already done?

Saket Kapoor — Kapoor Company — Analyst

Yeah, it is already done. I just wanted to understand the rationale of the same. What are the key benefits we will be deriving from the —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Old mid term idea, it’s already there in the —

Saket Kapoor — Kapoor Company — Analyst

Annual report?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Already done and completed now.

Saket Kapoor — Kapoor Company — Analyst

So how are we benefiting from it, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We got the land, we got the workers, we got the machineries, everything which is being used for value-added product. That’s what we have mentioned in our scheme in starting getting those things.

Saket Kapoor — Kapoor Company — Analyst

Correct, sir. Right sir. Sir, I’ll just join the queue again.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thank you.

Saket Kapoor — Kapoor Company — Analyst

Thank you for the elaborate answers.

Operator

Thank you. [Operator Instructions] The next question is from the line of Aditya Sen from RoboCapital. Kindly proceed.

Aditya Sen — RoboCapital — Analyst

Yeah, good evening, sir.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Good evening. How are you?

Aditya Sen — RoboCapital — Analyst

All good, all good.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yeah.

Aditya Sen — RoboCapital — Analyst

I have this question on the exports, you just said that 50% of our flagship products go into the exports. So is it because the demand in India is less. And if yes, then, how are we expecting this demand to shape up in the future? And also, do we get higher realization on the same products in the export market?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See it’s not that — we are not supplying to the domestic and we are giving to the export. We have to create the market for new projects which are coming. So we have to balance between two. Coming to the point number two is on the pricing front there is a plus and minus, around 2% to 3%, sometimes we get in domestic booth, or sometimes we get in export booth.

Aditya Sen — RoboCapital — Analyst

Okay, sir, got it. And the next one is regarding the Chennai’s facility, new facility that we have. Are we expecting more than 50% utilization for the next year that is FY ’24?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

FY ’24, ’25, yes.

Aditya Sen — RoboCapital — Analyst

Plus 50% utilization rate?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yeah, more than 50%, yeah.

Aditya Sen — RoboCapital — Analyst

And regarding the margins, last time we got a guidance that it should be around 18%, 19% levels. So are we sticking to this or shall we revise this to down?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

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

Aditya Sen — RoboCapital — Analyst

Last quarter, you guided that margin should be around 18% to 19% levels.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

I’ve not said that, what I said is, we’ll try to work on that, but that all depends on geopolitical situation in net. That’s what I mentioned in my last call. I’ve not say specifically that would be the margin percentage.

Aditya Sen — RoboCapital — Analyst

Yeah, yeah. Right, right. That’s like — that’s in a split —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

You’re putting your words in my mouth.

Aditya Sen — RoboCapital — Analyst

Pardon sir.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

You are putting your words in my mouth.

Aditya Sen — RoboCapital — Analyst

No, it wasn’t exactly like that, but yeah, it sounded. Shall we expect this aspiration to remain the same for now?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See the point is, there is a increase in cost, definitely there’s a endeavor to pass on to the market and market has to take it. So that’s a continuous process to improve the margins. So I don’t say any numbers, but that’s an ongoing process and we will continue to do that.

Aditya Sen — RoboCapital — Analyst

Right, right. Thank you, sir. I got my answers. Thanks a lot.

Operator

Thank you. [Operator Instructions] The next question is from the line of Pankaj Jain from Mahaveer [Phonetic] Investments. Kindly proceed.

Pankaj Jain — Mahaveer Investments — Analyst

Hi, sir. Thank you for the opportunity. Sir, couple of questions from my end. Can you please share the revenue mix of asbestos for Q3 and nine-month of FY ’23?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It’s more or less same, 78:22.

Pankaj Jain — Mahaveer Investments — Analyst

For both, Q3 and nine months?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

I think this three months, it has little changed to 74 versus 26.

Pankaj Jain — Mahaveer Investments — Analyst

Okay, okay and sir on the financial front, what would be the power and fuel cost as a percentage of sales?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Power and fuel is sadly, because here that percentage is very less competitively, very less.

Pankaj Jain — Mahaveer Investments — Analyst

Okay, single digit?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

The main coast is the fiber.

Pankaj Jain — Mahaveer Investments — Analyst

And sir, lastly on the domestic roofing front, volumes are a little lower. So what has led to this reduction of volume front and how do you see the demand panning out in the current quarter?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

I’ve already said that, but again for your satisfaction, there’s a sluggish demand in — till nine months and hopefully Q4 and next year Q1 should give the better this thing.

Pankaj Jain — Mahaveer Investments — Analyst

Okay, okay. Thanks a lot, sir. I’ll join the queue.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of the Dipti Kothari from Kothari Securities. Kindly proceed.

Dipti Kothari — Kothari Securities — Analyst

Good evening, sir. Good evening. Thank you for the opportunity. So my question was that, what is the current status of Odisha manufacturing plant?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Odisha manufacturing land identification work is going on.

Dipti Kothari — Kothari Securities — Analyst

Okay, and sir, Maharashtra unit?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Maharashtra land identification has happened. Acquisition is going on.

Dipti Kothari — Kothari Securities — Analyst

Okay, sir. And have we incurred any capex towards the same in quarter three?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes, for Maharashtra we have incurred the cost.

Dipti Kothari — Kothari Securities — Analyst

Okay, so what will be the cost sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

It is around INR22 crores we have already spent.

Dipti Kothari — Kothari Securities — Analyst

Okay sir. Thank you. That is it from my side.

Operator

Thank you. [Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor Company. Kindly proceed.

Saket Kapoor — Kapoor Company — Analyst

Sir, how are you going to fund the capex going forward? What kind of debt level and currently, sir, what is — what is the debt level on the books, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

At present, it is 0.4%.

Saket Kapoor — Kapoor Company — Analyst

Didn’t get you, sir. 0.4%?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

0.4:1.

Saket Kapoor — Kapoor Company — Analyst

0.4, in absolute number, sir?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Absolute number, I don’t have at present, would be given.

Saket Kapoor — Kapoor Company — Analyst

Okay, and going forward, sir, how will the mix be, how are we going to fund the project that remaining for Maharashtra and as and when they Orissa project in the coast.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

See the endeavor would be to fund minimum from the internal accruals, but whatever is left, we able to take a loan. However, for your information, we have tied up the loan for the Maharashtra project.

Saket Kapoor — Kapoor Company — Analyst

Okay, sir. And we have already spent this INR22 crore. Factoring this we have a debt-to-equity ratio of 0.4:1.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

INR22 crores we have spent for internal accruals. We have not taken any loans so far.

Saket Kapoor — Kapoor Company — Analyst

I think we have not drawn anything as of now?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes.

Saket Kapoor — Kapoor Company — Analyst

Okay. And we have tied-up for the fund as and when required the —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We’ve guided fund because whenever the requirement would be that would be given.

Saket Kapoor — Kapoor Company — Analyst

Okay and what had been the cost of funds, sir, at what rates have been —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

That’s been fluctuating, it is linked. Tomorrow there would be again, increase in the IGA dynamics will be increased. So there is no much meaning on that.

Saket Kapoor — Kapoor Company — Analyst

Correct sir. Sir, as you mentioned that the nine months, thereby the sluggish demand and the factors, because of which we have reported lower numbers. So if you could give us some color on how the business sentiment of business had been for the month of January. Is it in line with what we were expecting or sales sluggishness what we posted, we have seen in December quarter it’s still continuing as of now?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

I know it’s better than December.

Saket Kapoor — Kapoor Company — Analyst

Okay, as per the anticipation, sir, because fourth and first quarter are the one with where we see the maximum business —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

As per the anticipation.

Saket Kapoor — Kapoor Company — Analyst

Right, sir. Sir, about this other expenditure part, I just mixed the numbers. So for nine months, the other expenditure is INR114 crores versus INR95 crores, so the factors that contributed to this is the only be shipping freight costs that is there, what —

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

[Indecipherable] also we are going for the brand-building and the marketing activities, particularly in the South region.

Saket Kapoor — Kapoor Company — Analyst

What have we budgeted sir in terms for the marketing expenses?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

We budgeted INR6 crores. But looking to the results, we are curtailed to the INR5 crore.

Saket Kapoor — Kapoor Company — Analyst

Okay, INR5 crore is the annual budget for FY ’23?

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Yes.

Saket Kapoor — Kapoor Company — Analyst

Right, sir. And one second. I’ll join again, sir. I just missed the point.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Okay.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Maheshwari, for closing comments.

Tuljaram Maheshwari — Chief Executive Officer, Chief Financial Officer and Whole-Time Director

Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. However, if you need any further clarification or want to know more about the company, please contact our SGA team, our investor relation advisors. Thank you once again for taking the time to join us on the call. Thank you.

Operator

[Operator Closing Remarks]