{"id":125983,"date":"2021-11-12T09:38:00","date_gmt":"2021-11-12T14:38:00","guid":{"rendered":"https:\/\/44.250.171.167\/?p=125983"},"modified":"2021-11-22T09:58:26","modified_gmt":"2021-11-22T14:58:26","slug":"balkrishna-industries-ltd-balkrisind-q2-fy22-earnings-concall-transcript","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/balkrishna-industries-ltd-balkrisind-q2-fy22-earnings-concall-transcript\/","title":{"rendered":"Balkrishna Industries Ltd (BALKRISIND) Q2 FY22 Earnings Concall Transcript"},"content":{"rendered":"

Balkrishna Industries Ltd (NSE:BALKRISIND<\/a>) Q2 FY22 Earnings Concall dated Nov. 12, 2021<\/span><\/strong><\/p>\n

Corporate Participants:<\/h2>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer
\n<\/em><\/p>\n

Analysts:<\/h2>\n

Nishant Vass<\/strong> — Analyst<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst
\n<\/em><\/p>\n

Nishit Jalan<\/strong> — Axis Capital — Analyst<\/em><\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Joseph George<\/strong> — IIFL — Analyst<\/em><\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

Kaushal Maroo<\/strong> — DSP Mutual Fund — Analyst<\/em><\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

Chirag Jain<\/strong> — DAM Capital Advisors — Analyst<\/em><\/p>\n

Ankit Kanodia<\/strong> — Smart Sync Service — Analyst<\/em><\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Siddharth Bera<\/strong> — Nomura Securities — Analyst<\/em><\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Sunil Shah<\/strong> — Turtle Star Portfolio Management Service — Analyst<\/em><\/p>\n

Presentation:<\/h2>\n

Operator<\/strong><\/p>\n

Ladies and gentlemen, good day and welcome to Q2 FY ’22 Earnings Conference Call for Balkrishna Industries Limited, hosted by ICICI Securities Limited.<\/p>\n

This conference call will 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 risk and uncertainties that are difficult to predict. [Operator Instructions]<\/p>\n

I now hand the conference over to Mr. Nishant Vass from ICICI Securities. Thank you, and over to you, sir.<\/p>\n

Nishant Vass<\/strong> — Analyst<\/em><\/p>\n

Thanks, Peter. Good day, everyone and thanks for joining us today for the call. From the management side, we are represented by Mr. Rajiv Poddar, Joint Managing Director; Mr. M. S. Bajaj, Chief Financial Officer.<\/p>\n

Now I’d like to hand over the call to the management for their initial remarks. Over to you, sir.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

All right thanks Nishant. Sorry for the delay in starting because of some technical glitch. But I’m glad, we can get going now. Good morning everyone and thank you for joining us today. Wishing you seasons greetings. Hope all of you, along with your near and dear ones are safe and healthy. Along with me I have, Mr. Bajaj, President, Commercial and CFO and also SGA, our Investor Relation Advisors.<\/p>\n

Let me begin with performance updates. Demand continues to be robust across segments and geographies. Accordingly, we have clocked our highest ever quarterly sales and reported 72,748 metric ton for the Q2 of financial year ’22. We expect this moment to continue and therefore we are increasing our guidance to 275,000 to 285,000 metric ton for financial year ’22. This guidance is on the back of strong demand trends. Some portion of the incremental logistic cost have been passed on to the customers, which is reflective in our Q-on-Q increase in average selling price.<\/p>\n

In order to meet the buoyant demand, the Board has decided to continue operations at the OLD Waluj plant. To achieve this, there will be a capex of INR350 crores in form of installation of latest machineries, replacement of certain machineries, upgradation of certain systems and some portion of civil work. The advantage of this capex will be to get the much needed capacity enhanced in a short period of time. The OLD Waluj plant, post this capex will be able to produce 25,000 metric ton per annum. This capex will be incurred over a period of next six to nine months. We expect this capacity to be available from Q3 of this financial year ’23. The current achievable capacity is 285,000 metric ton per annum. This includes the new Waluj plant the commenced operations in September ’21. The brownfield capex at Bhuj announced in February, will add 50,000 metric ton per annum and now the OLD Waluj revamped plant will add additional 25,000 metric ton per annum. Therefore the entire capacity by the end of financial year ’23 will be 360,000 metric ton per annum of achievable capacity.<\/p>\n

During October ’21, the company raised long-term finance of INR500 crores. This was done in form of rated, listed, unsecured, redeemable, non-convertible debentures having a face value of INR10 lakh per debenture. In order to leverage the interest rate scenario and our euro receivables, we have swapped the debenture liability to euro fixed liability. Therefore the effective interest rate will be 0.055% per annum. The repayment of this debenture would be spread over 3.5 years.<\/p>\n

With this, I now move on to operational highlights. Our sales volume for the quarter was 72,478 metric ton. This is a growth of 19% year-on-year. For the first half of financial year ’22, sales volumes stood at 141,356 metric ton, registering a growth of 42% year-on-year. Our standalone revenue for the quarter stood at INR2,080 crores, which includes realized gain of forex — of foreign exchange pertaining to sales of INR30 crores. For the first half of financial year ’22, revenue stood at INR3,908 crores, which includes realized gain on foreign exchange pertaining to the sales of INR45 crores. For the first half of financial year ’22, 54% of the sales came from Europe, 17% from India, 17% from Americas and the balance from rest of the world. In terms of channel contribution, 70% was contributed from replacement segment in the first half of financial year ’22, while OEM accounted for 27% and the balance came from offtake.<\/p>\n

In terms of category, agriculture segment contributed to 66% in the first half of ’22, while OPR, industrial and construction contributed to 31% and the balance came from other segments. The standalone EBITDA for the quarter was INR554 crores with a margin of 27.1%, while the first half EBITDA stood at INR1,099 crores, with a margin of 28.1%. Other income for the quarter stood at INR62 crores, while unrealized gain stood at INR27 crores. For the first half of financial year ’22, other income stood at INR102 crores, while unrealized gain stood at INR43 crores.<\/p>\n

Coming to the next forex items. For the quarter, we incurred a net forex gain of INR71 crore, which includes realized gain of INR44 crore and unrealized gain of INR27 crores. For the first half of ’22 we incurred a net forex gain of INR110 crores, which includes realized gain of INR66 crore and unrealized gain of INR43 crores. Profit after tax stood for the quarter at INR377 crores, with a margin of 18.1%. For the first half of ’22, profit after tax stood at INR708 crores, with a margin of 18.1%. The contingent liability as of as of March 31, ’21 was INR65.4 crores as disclosed in our annual report. In the quarter one of financial year ’22, certain tax assessment has been completed and the liability was crystallized at INR35.7 crores, which was included in the tax expense in Q1 FY ’22 as income tax of earlier year. In Q2 FY ’22 remaining tax assessment has also been completed and the balanced liability has also been crystallized in the quarter and the same has been included in the tax expenses as income tax of earlier years.<\/p>\n

Our gross debt stood at INR1,443 crores. Our cash and cash equivalents were at INR1,659 crores implying a net cash position. First half of financial year ’22, we incurred a total capex of INR838 crores, of this approximately INR700 crores has been spent on the new capex program of INR1,900 crores. For Q2 FY ’22 to the euro hedge rate was at INR87.75. Forward hedge rate currently stands at INR89.70. The Board of Directors have declared a second interim dividend of INR4 per equity share. In addition to the INR4 per equity share in the Q1 of financial year ’22.<\/p>\n

With this, I conclude my opening remarks and leave the floor open to Q&A.<\/p>\n

Questions and Answers:<\/h2>\n

Operator<\/strong><\/p>\n

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Yes, hi, sir. Congrats on good volume performance.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Thank you.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Firstly, we have seeing very sharp inflation in RM cost on a quarter-on-quarter basis. If I look at the per ton number is almost gone up by 12%, so why it has gone up so much, basically, because I think generally company will see a 4% to 5% increase in this quarter.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Good morning. We are able to pass some shipping cost to the companies and we have recovered the shipping cost that is why our RM cost is showing lesser.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Shipping costs were rightly part of other expenses, right?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So raw material cost, because we are importing the raw materials and 45 days inventory in transit, so that is why the main region raw material cost is lower.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Okay. And secondly on the Waluj plant, because we are seeing such a strong demand and the OLD Waluj plant is operational till I think September, because all production was happening for that plant only. So why can’t that plant be operated if that even now, if the demand is so strong. Why we have to refurbish and then only restart the plant in say next year?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes, so certain equipments were shifted to the new plant, which was supposed to — which we were already in operational condition. So that is already got shifted. So we need to create the whole pipeline and everything and also the civil work was very old, the pipes were very old. So that was the whole reason why we went out to a new plant. So those things need to be repaired. The utility section needs to be revamped. And before you start up some new production there. So we have taken this call to do it and get going. So it will take us six to nine months to get going on that.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Okay, thank you. I’ll join back the queue.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Nishant Jalan from Axis Capital. Please go ahead.<\/p>\n

Nishit Jalan<\/strong> — Axis Capital — Analyst<\/em><\/p>\n

Hi, sir. Congratulations on very good set of numbers. Sir my question is on the cost, when you did talk about that. The ASPs are higher because some of the abnormal increase in freight expenses has been passed on to the customers. So I just wanted to understand what is that quantum within the revenues? Basically trying to understand where will ASP settle down once this upgrade rates normalize? So what is the underlying business ASPs and how much is these are higher because of this higher freight costs?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So basically if you see our earlier realization was about INR266 which is now currently at INR286. So we have passed on around 2% to 3% of price hike, which has come in July. The rest was — the majority of it was owing to shipping cost reimbursement. So we expect it to be at those levels only. Those items should be expected to be at.<\/p>\n

Nishit Jalan<\/strong> — Axis Capital — Analyst<\/em><\/p>\n

Got it. And secondly on RM cost, we have seen a further spike in crude in the last three to four months. It has gone up almost 85. So, are you seeing inflationary pressures in crude derivatives such as synthetic rubber, carbon black, and in that context, how do we see RM cost increasing over the next couple of quarters?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes, next quarter definitely some cost will increase of the raw materials, 2% to 3% cost increase will be there.<\/p>\n

Nishit Jalan<\/strong> — Axis Capital — Analyst<\/em><\/p>\n

Okay, thank you so much.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal. Please go ahead.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Hi, sir. My question pertains to the price hikes. So in July, we took 2% to 3%. Any further price hikes post July or we are waiting for the price hikes from the competition?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

No, we are proposing to take from January. We are working out the percentage yet but from January we are expecting to take another price hike.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Okay. Okay. Any. With respect to the capex, earlier we were guiding for about INR1,000 crore of capex in FY ’22 around the wind, and we are expecting our capex in new — OLD Waluj has also come in. What will be the capex for FY ’22 and FY ’23?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So earlier, our guidance was 850 to 900 per — in this financial year, but now we are looking to revamp it to INR1,100 crore in this capex of this year and similar amounts in the next financial year, which will cover both the project costs.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Okay. So second, F&B investing just about INR300 crores during the first half was a INR100 crores odd.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

No, INR400 crores. I said in my commentary that about INR700 crores was given for — in the first half of the financial year. INR800 crores was to build capex. I [Technical Issues] So, I’ll repeat my statement. For the first half of financial year ’22, we incurred a total capex of INR838 crores, of this approximately INR700 crores has been spent on the new capex program. So we are now saying that for this financial year we will spend about INR1,100 crores. So that means about INR400 crores will be balanced.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Okay. Okay. INR1,100 crores was the projective will be maintenance. And one last question on the logistics side. So freight rate seems to be coming down after seeing a substantial spike. But are we also seeing any improvement in the availability of container?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So firstly the price hikes have been — we are seeing stability. We are not seeing the price going higher now, but we don’t see it coming down at least in this quarter and we have some availability has improved, but yet it is a challenge to get the containers that we desire and the volume that we look at, but he has shown before it is slightly better in terms of availability.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Got it, thanks. I’ll come back in queue for additional questions.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next is from the line of Joseph George from IIFL. Please go ahead.<\/p>\n

Joseph George<\/strong> — IIFL — Analyst<\/em><\/p>\n

Thank you for the opportunity. I just have two questions. One is, on the ASP, you mentioned that the ASP for the quarter is slightly inflated because of the freight cost. So what I wanted to understand is, in the December quarter and possibly in the March quarter if the freight rates remain at these levels, so the 2Q level of ASP should be expected to continue of course, I mean if you take other price increase well further, but the freight element in 2Q would be expected to repeat in 3Q and 4Q as well or did 2Q include some freight elements from the previous quarters as well because of which this quarter is artificially inflated?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

There was no, Q2 did not have anything from Q1. So it was that. Q3, we expect it to be at the same level. Q4 may go up marginally, because we are suggesting.– I mean we are going to look at a price increase in the last quarter. So that impact may come in, but shipping cost will maintain itself if there is no further increase.<\/p>\n

Joseph George<\/strong> — IIFL — Analyst<\/em><\/p>\n

Understood sir. And second question that I heard was in relation to capacity. So you mentioned that currently it’s about 285 and — with the two phases coming in the new. And I mean the refurbishment of the old Waluj. And then you Bhuj total is 360, but would it be right for — if you assume that for the next say four quarters till the OLD Waluj refurbishment happens your capacity will stay at current levels of 70 to 75, which is 85 divided by 4?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes, yes. You’re absolutely right. We will start seeing some increase from Q3 and Q4 of next financial year.<\/p>\n

Joseph George<\/strong> — IIFL — Analyst<\/em><\/p>\n

Understood. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Vimal Gohil from Union Asset Management. Please go ahead.<\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

Yes, thank you for the opportunity, sir, and congratulations on very strong volume performance. Sir, my question is on basically you’ve sort of given out volume guidance — volume growth guidance almost 25% for FY ’22. Just wanted to get a sense on how much has the industry grown or what is your expectation of the industry to grow. And the connected question would be, if you could just share what is then your market share globally in the OTH tires. I just have a follow-up question after that, one more.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So you want to go ahead with other question too?<\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

Yes, I’ll just go ahead. Yes, sure. So if I heard you right, on the capex, you mentioned that you will spend INR1,100 crores plus maintenance capex for FY ’23 and ’24 each, right?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes.<\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

Okay, fair enough. Sure.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So, coming to your first question, there is no authenticated data on market growth per se, but our estimated market has grown about 2.5% [Phonetic].<\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

Okay. And what would be your market share in agri and other segments?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So overall, if I look at it globally on off-highway, we are about 5.5%, 6%.<\/p>\n

Vimal Gohil<\/strong> — Union Asset Management — Analyst<\/em><\/p>\n

5.5%, 6% is your market share. Okay, fair. Thank you so much. And all the very best.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. Our next question is from the line of Mr. Arun Subramaniam from Ambujan [Phonetic] Capital. Please go ahead. Arun, your line is in talk mode, may I request you to go ahead with your question, please.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Sorry we can’t hear.<\/p>\n

Operator<\/strong><\/p>\n

Arun Subramanian?<\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Hi, sir. My question is that at the end of quarter one, you had said that your cost is higher, but still for the actions that you are taking, you will be able to maintain your EBITDA margin at 28% level. And — but you have seen it the falling below that. So do you think that your full-year guidance still can be achieved?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So as we have always maintained our endeavor has always been and will be during the long-term to maintain an EBITDA margin of 28% to 30%. And long term, sustainable basis. So that is what we tend to do and quarter-on-quarter is very difficult to see, but we are close to the 28%. We are not very far off, and we expect that for the year, we should — we will make our best endeavor to maintain 28% to 30%.<\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Understood. And sir, now that you are testing all this capacity constraint, forget about the shipping side, your own capacity you have issued there in terms of meeting higher demand. Do you have a flexibility to improve your product mix that is give preference to higher margin product or something which can help you achieve better margin?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

We normally don’t do that because, eventually, you have to serve the market. Every product of ours is important, and it’s all needed. I can’t only give the tractor front tire — rear tires and not give the front, because you need all tires to operate the equipment. So we have to service the market also. It’s very difficult to do those changes for a quarter or something in that sense, because eventually in the long term, you have to give customer care and customer service also.<\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Okay. And lastly, sir, if I can just understand that your total capacity, you’re increasing it by just about 20% and — which means that you may end of again facing capacity constraint very soon and it looks like you have underestimated the market demand for your products or whatever. So it is — it looks like you are running behind the curve in terms of your ability to push out more sales. So are you kind of thinking of doing something so that such a situation were not recurred too frequently?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So firstly, I think we estimated the market to come like this. And that’s why we started our projects about a year back now, where we started planning and we made announcements and we started working on that. And that is the reason by the we time we are hitting our full capacity, our new production will be up. So, as we say Q3 onwards we will start getting more products with us towards our estimation, which we had done. And in the long term, we are again looking at what is the possibility in working and that will be our next round of capex which we will do as soon as we start completing this round of capex.<\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Okay. Okay. Okay. I know you have enough land, and are all those things in place?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes, yes.<\/p>\n

Arun Subramaniam<\/strong> — Ambujan Capital — Analyst<\/em><\/p>\n

Thanks sir.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead.<\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

Hi, good morning and thanks for taking my questions. Sir, one, I wanted to understand there is a sharp increase in other expenses on a sequential basis, also. And so, just wanted to understand is that related to the shipping cost or is it — is there some other factor?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So the other expenses, has risen by about 70 basis points Q-on-Q, which is mainly on account of shipping cost, which we were not able to pass on to our end users. Okay. And just on the shipping cost, I mean what portion of shipping cost can we say ballpark you’re passing on? How much is pass-through for you? Hello.<\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

Okay. No. Where I’m coming from, is that, I mean like right now, we’re seeing a very high increase in shipping costs and that is means that you have like you mentioned in your realizations also seen an improvement, because there is some pass-through of the shipping costs. So, I mean, but these things can change sort of rapidly. So I’m just saying that — so once the shipping cost comes down those charges to the customers will also come down right?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes, yes, 100% it will come down. So I mean approximately — very approximately, about 50% of the shipping cost has been passed on.<\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

And what could be the total shipping cost. Any number you can give?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

One second. Approximately 6% to 7%. This is at current rates of this. I mean like it could have been lower in the past, right. It has been lower, it’s been about 2% in the past, 2% to 2.5%.<\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

Okay. And just my last question, I mean like more from a longer term perspective. Like you mentioned that, I mean the current expansion is taking place. But are there any product lines or new product areas that you want to get into or I mean like, I understand we have a significant runway in terms of the market share gain that you can achieve. So it’s just more of market share gain or do your product lines also need to change a little bit as you try and expand further?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So it’s mainly the same product line in off-highway tires, so meeting all the demands of — in these geographies and the segment. Got it. Great, thank you, sir. Thanks a lot.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Kaushal Maroo from DSP Mutual Fund. Please go ahead.<\/p>\n

Sonal Gupta<\/strong> — L&T Mutual Fund — Analyst<\/em><\/p>\n

Hi, sir. You’ve talked about a very strong demand environment. Can you give us more color between agri and mining and in different geographies what gives you the confidence in the volume guidance?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So I think the overall, we are seeing strong demand in all sectors. So it’s difficult to say Agri or industrial or construction. So all sectors have been — all segments have been good and robust. And also the H1 performance has been strong enough, so where we clocked nearly 140,000 metric ton. So with that — on those basis is what we are saying that we can probably get these numbers of what we are talking about.<\/p>\n

Kaushal Maroo<\/strong> — DSP Mutual Fund — Analyst<\/em><\/p>\n

How has been the demand in US per se and in mining? US overall?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes. US has also been good and our — we are gaining market share also over there. So it’s been a good quarter.<\/p>\n

Kaushal Maroo<\/strong> — DSP Mutual Fund — Analyst<\/em><\/p>\n

Overall on mining side efforts. It’s the new product lines that we are sorting around, is there visible improvement in market share on the mining side?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes. So if you see our form of product basket, earlier was what was 8% is going to 13% in OPR and mining. So there is an increase from 8% to…<\/p>\n

Kaushal Maroo<\/strong> — DSP Mutual Fund — Analyst<\/em><\/p>\n

So is that basket going up sir?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So from our share of product in segments 66% came from agriculture and OPR contributed to about 13% 1-3, which was earlier about 8% to 9%. So there is a significant gain in that.<\/p>\n

Kaushal Maroo<\/strong> — DSP Mutual Fund — Analyst<\/em><\/p>\n

Got it. Okay. Thank you, sir.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from line of Ronak Sarda from Systematix Group. Please go ahead.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Hi, sir. Thanks for the opportunity. Sir, firstly in Q2, can you just give us a ballpark number of how — what was the cost of [Indecipherable] and the other parts in terms of per kg?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So, natural rubber average cost was around INR137 a kg for the quarter. And synthetic rubber was around INR152 a Kg.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Okay, thanks. The other question was, I mean, after almost like [Indecipherable] we are operating at 100% plus in utilization now. So excluding the shipping cost, can you highlight where are we seeing the operating leverage benefits, because despite utilizations margin, both in terms of per kg or percentage, it looks to be on the lower side?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

No I think if you see the thing, you know the staff cost etc is all down, but they unfortunately be RM cost and shipping cost has gone up so significantly that they have overshadowed the cost benefit that we have got. But if you see, where the RM cost should have been impacted in the shipping cost, if we had passed on that without having the weather improvements. the margins would have been on a different page. So because we were able to get those gains, it is not down to the extent that they have impacted us.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Got it. Got it. Sure. And just a clarification on the previous question. When you — our mix on OTR is almost 31% odd. You meant mining of that has gone up probably 13%.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

OTR, industrial and construction contributed to 31%, of that 13% came from mining business.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Okay. And that used to be 8% in two years.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

8% to 9%.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Sure, sure. And is there a possibility, given all the demand scenario is you will have to start prioritizing the sales to different geographies right now or are we able to manage the production for the next two or three quarters?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

We are managing that customers knew that we are at these levels. So they have been placing orders based on their requirement. So at the moment we are managing it.<\/p>\n

Ronak Sarda<\/strong> — Systematix Group — Analyst<\/em><\/p>\n

Okay, so thank you and all the best.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. [Operator Instructions] The next question is from the line of Pramod Amte from Incred Capital. Please go ahead.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

Yes, hi. So the first question is with regard to the European agri demand situation. So if I could look at ETRMA data, so it shows a 16% decline for September quarter, for the replacement market. What is happening on the European replacement market for tire — tractor tires, and do you see this deceleration to continue?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So, I mean, we are seeing a good demand in European tractor replacement market and we expect it to continue.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

But if I were to look past the last two, three years trend, where it was such a prolonged on things happen. You also usually follow the industry, right? So what are you doing this time which can make you to outperform consistently forward?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So I think all the branding efforts that we have been doing, the marketing and branding in Europe is coming into play now. So that is one aspect, which we have been doing differently. Our channel partners have also been planning better. So I think the combination of lot of things put together is what is that.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

And would you be able to give what is the market share increase you might have had in first half in especially European replacement market.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

No, it’s difficult to give those numbers because there is no authenticated data to what is the market share and what does that but — so it is difficult to give those numbers.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

And with regard to Waluj plant, with the new capex, is there going to be a product profile change which is going to happen from the same plant?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes. Marginally, it will be different, what they were doing earlier and also what the tires are required, so very marginal. But it will be in the same segment. And that’s why these capex is required to adhere to that production capacity.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

Am I right in understanding it was earlier, India Agriculture Cost Like tires. So you will continue to make the same from this one?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

It was not — it was cross-play, but not for India, it was for export also. And now it will be Agricultural as well as industrial tires for India and abroad, both overseas.<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

Okay. Sure. Thanks a lot.<\/p>\n

Operator<\/strong><\/p>\n

The next question is from the line of Chirag Jain from DAM Capital Advisors. Please go ahead.<\/p>\n

Chirag Jain<\/strong> — DAM Capital Advisors — Analyst<\/em><\/p>\n

Yeah, thanks for the opportunity. Just a clarification in terms of capacity from a medium to long-term perspective. How much more let’s say headroom we have in terms of brownfield expansion beyond let’s say 360 ton capacity that we are doing? And when probably we would have to go for greenfield expansion? Any color on that.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So we are all working — already working on that. We don’t have the details of that yet ready, but for the timing, we have sufficient space to do brownfield before we can think of — before we do another Greenfield. We suspect — I mean, our estimate is that we could do another round of capex in the — as a brownfield, before we need to start searching for greenfield.<\/p>\n

Chirag Jain<\/strong> — DAM Capital Advisors — Analyst<\/em><\/p>\n

Okay. So even beyond 360 we have, let’s say, reasonable headroom for a brownfield expansion before going for a greenfield expansion.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes.<\/p>\n

Chirag Jain<\/strong> — DAM Capital Advisors — Analyst<\/em><\/p>\n

Okay. Okay, that’s helpful. Second on the RM cost inflation, any number or data point that you can share, but compared to last year or last quarter, how much increase we have seen and how much price hike, let’s say, we have done and the kind of underecovery so far?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So in the quarter, we did about 2% to 3% of price hike in July. And on the RM your question was? So in terms of the cost increase and maybe the under recovery, so price hike has been 2%, 3%. So how much, let’s say more price hike we would be needing to pass on let’s say the fully let’s say RM cost, I mean hypothetically.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So raw metal price increase overall on the total cost was approximately 2.5%, but shipping cost was much more higher. So material costs we have covered almost fully, but shipping cost there is deficit.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

For which are planning to take a price hike in the first quarter of — I mean in the Q4 of this year, financial year. So that should get covered. If there is no further increases we should give those, cover the basis over there. So by and large we are passing on the cost impact from raw material, it just that on the shipping side partially we have covered and partially, we plan to do it in January.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes, correct. At today’s level, if there is a further increase then that may lag by another quarter.<\/p>\n

Chirag Jain<\/strong> — DAM Capital Advisors — Analyst<\/em><\/p>\n

Yes, understood. Yes, that’s it from my side. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Ankit Kanodia from Smart Sync Service. Please go ahead.<\/p>\n

Ankit Kanodia<\/strong> — Smart Sync Service — Analyst<\/em><\/p>\n

Thank you for taking my question. My question was related to the kind of expansion, which we are doing in terms of the capacity. Do we think that there could be a scenario maybe late FY ’22 or FY ’23 that our capacity remains a constraint compared to the demand, which we would witness? How much of that risk we would prescribe to it today?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So, as you know, you’ve been seeing, we are already starting to plan a year in advance for this go around. So as and when we start reaching, capacities coming up, we will start planning the next quarter, next round of capex also. So because we have the — so that’s — brownfield it’s always like that where once you hit a certain number. Once that is up and running. You start planning further. So that’s what’s going to happen, but we can easily do another round of capex over here in these brownfield waves before we need to start looking out.<\/p>\n

Ankit Kanodia<\/strong> — Smart Sync Service — Analyst<\/em><\/p>\n

Any number you can put in. I mean how much it will take? How much time it will take to bring up the brownfield and up to what capacity in terms of metric tons in case of…<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

In terms of Q3, this round of Q3 — from Q3 of next financial year. This round of capex will start kicking in and will be completed by the end of financial year, ’23. So you will have that and by the time we will see the scenario and we can start planning, because the brownfield will take us about 12 months to come. So by the time this is getting ready and getting utilized, we will be ready for next round of capex and also starting to work on that.<\/p>\n

Ankit Kanodia<\/strong> — Smart Sync Service — Analyst<\/em><\/p>\n

Thanks. And second question was related to our market share. So as we have discussed in earlier calls as well, in the period when the overall global tire market was pretty staggering. We still continue to grow our volumes. Now, when generally there is the buoyancy seen in the market, so how do we see our market share moving in the next, say two, three or maybe five-years?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So as I said, our current market share is about 6%. Our vision is to go to 10% and that’s what we have been working towards. And we are aiming to get to those numbers.<\/p>\n

Ankit Kanodia<\/strong> — Smart Sync Service — Analyst<\/em><\/p>\n

Okay. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Suraj from Compound Everyday Capital. Please go ahead.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Good morning, sir. Thanks for the opportunity. So my first question was on the average borrowing cost. You mentioned the average borrowing costs and non-convertible debentures. But overall, if I were to ask average borrowing rate for which you are availing the borrowing facility?<\/p>\n

Pramod Amte<\/strong> — Incred Capital — Analyst<\/em><\/p>\n

So for working capital is about 30 basis points.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

30 basis points?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Perfect. And sir, secondly, could you please again elaborate the raw material cost inflation as what was the reason that our raw material cost inflation has been more than as compared to the other company?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Sorry, could you repeat your question?<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

This is a question on the question asked by some other analyst. So the question is, why our raw material cost has been increased by a bit more percentage than other companies? I just wanted to understand that we have seen a more raw material inflation comparatively.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

So we are continuously buying in inventory. So we are stalking up for longer as my colleague mentioned. So all those things have also come into play and it gets calculated and that’s why.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Okay. So what is the lag time if I may ask for the increased raw material price to reflect?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Time means approximately two months.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Two months?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes.<\/p>\n

Suraj<\/strong> — Compound Everyday Capital — Analyst<\/em><\/p>\n

Perfect. Thank you, that would be all.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Siddharth Bera from Nomura Securities. Please go ahead.<\/p>\n

Siddharth Bera<\/strong> — Nomura Securities — Analyst<\/em><\/p>\n

Yeah, hi, sir. Thanks for the opportunity. Sir, my question is on the competition side in Europe. So now we have to raise prices because of the freight cost. So generally we have maintained a sort of a price gap with the larger players like I think in the range of 10% to 12%. So now with these price increases, do you think that gap is coming down or you think that we are still very competitive from that to the tier one players in Europe?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

No, I think everybody is increasing the price.<\/p>\n

Siddharth Bera<\/strong> — Nomura Securities — Analyst<\/em><\/p>\n

Okay. But the some peers might have their operations in Europe, so even they are also getting — taking that type of price increase?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes, because they also — I mean the raw materials and all also coming by from overseas. So if not finished good the raw material aspect will come in for them.<\/p>\n

Siddharth Bera<\/strong> — Nomura Securities — Analyst<\/em><\/p>\n

Okay. Okay. But in the scenario when demand is so strong, so what restricts us from passing on the entire fleet cost. Why are we looking at like nearly three to six months lag in the passing on the entire cost?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

It’s also you’re servicing market where you have to ensure that it’s a customer-friendly approach, because when markets are buoyant, you can do anything you want. But you also need to take care of these people because they will stick with you when markets are flat or down. So it’s a give and take kind of scenario. So it’s been passed on so that even they adjust to it and they can also pass it on further. So it’s a gradual approach as opposed to being aggressive when the market is up. Yes, you can do in today’s market scenario, you can do it, but if you look at long-term business sustainability, having more customer care and customer friendly approach is always better.<\/p>\n

Siddharth Bera<\/strong> — Nomura Securities — Analyst<\/em><\/p>\n

Okay, sir. Understood. Okay, sir, I’ll come back in the queue.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Abhishek Jain from Dolat Capital. Please go ahead.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Thanks for taking my question. Sir your revenue mix was 23% for the year last year and it has come down to something like 16%, 17% in Q2? How is the outlook ahead?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Sorry, your voice is muffled. What came down?<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Sir, your revenue mix was 23% for — from India last year. And it has come down to something 16%, 17%. So how is the outlook ahead for India?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So, I’ll tell you, if you see, India has come down to 17%, you’re absolutely correct. There were two things, which has impacted us in India. One is in the Q1 of this year, most of India was hit by second wave and was under lockdown. And Q2 being with the monsoon period there is less agricultural activities, which are being done and hence this has impacted us. But we foresee this to come back to our normal terms in the next half of this year and going forward, we see India as a very, very good opportunity for us to continue to make headwinds here.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Most of the OEMs are guiding FY ’23 would be a muted year because of the high base. So, and we see that you will follow the industry thing?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

We are also looking at replacement market, where the demand seems to be reasonably okay. So we are quite buoyant on India for the next couple of years. And sir, how much increase in the NPS expenses in the first half, and how would be the trend going ahead? How much increase in the…<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Ad and promotion expenses in first half.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So our ad and promotion for this — you’re talking about global I’m assuming.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Yes, yes, yes.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So globally, we have taken about INR130 crores to INR140 crores and that will — annually, and that will continue to be at that level. That’s our budget, annual budget also.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Okay, sir. And my last question is relative with the inventory level at the dealer level. How much is the current inventory?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So there are about 1.5 to 2 months.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Okay, thanks, sir. That’s all from my side.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from Shashank Kanodia from ICICI Securities. Please go ahead.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Yeah, good morning, sir. Sir, could you share the outset carbon black sales volume, both in terms of volume and value? I would say it is approximately, 5,000 metric tons for the quarter.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Sorry for the — for the half year, it is about just about 9,000 odd tons at about in terms of value, it is about INR88 crores.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Okay. Second, you have been alluding to you hitting probably one of the peak [Indecipherable] by the end of FY ’23 and have an expression to 10% kind of the global market share. So is it — then given point that we will have this capex savings years of good amount of good three, four years hence as well, where we will spend something like INR1,100 crores, INR1,200 crores each year.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So, yes, that’s what we’ve been…<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

We’ll wait for market, because market demand might not be that linear right? So how do you see that?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

At the moment we are during this round of expense. And then going forward, we will see, if we need to — when we need to start doing our next round of capex and we are already working on that.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Generally, just one last thing, what is the difference in payback period between brownfield or greenfield?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So brownfield is much lower. It’s faster to build it up your other cost of land infrastructure is not there so it is much lower than a greenfield. Your team is also there. So all those things take care of it.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

So I think I believe right now a payback period is of four years in the brownfield right?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Absolutely, correct.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

So in the case of greenfield it will be five years or it will be six years?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Between five to six years. I mean, difficult to put exact number but between five to six years.<\/p>\n

Abhishek Jain<\/strong> — Dolat Capital — Analyst<\/em><\/p>\n

Understood, sir. Thank you so much.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Sunil Shah from Turtle Star Portfolio Management Service. Please go ahead.<\/p>\n

Sunil Shah<\/strong> — Turtle Star Portfolio Management Service — Analyst<\/em><\/p>\n

Yeah, sir. I’m referring to the Slide 6 of the presentation. Sir, we are talking about a capital expenditure of INR2,250 crores and in that INR2,250 crores, we are having the Carbon Black expansion for which we’ll be doing INR450 crores. So technically it is INR1,600 crores for our tire expansion as well as modernization. Now that INR1,600 crores, will increase our capacity by 75,000 tons, is what I understand. Roughly if I understand what we have done in this quarter is, let’s say, 75,000 tons on which we have generated an EBITDA of INR550 crores. So with this capital expenditure of INR1,600 crores, it results into incremental EBITDA of INR550 crores. Is my understanding, correct on this? Assuming same price everything remains same, is it fine?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Theoretically, yes. Assuming all the other factors don’t change, this is absolutely correct.<\/p>\n

Sunil Shah<\/strong> — Turtle Star Portfolio Management Service — Analyst<\/em><\/p>\n

Okay. So it’s some incremental capital expenditure will generate about 30% return on investments for me going forward as well.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yes. That’s why if you see, that’s why we are talking about [Indecipherable] if you put the math together, it will come to four years.<\/p>\n

Sunil Shah<\/strong> — Turtle Star Portfolio Management Service — Analyst<\/em><\/p>\n

Okay, fine, sir. Thank you very much for this clarification. Thank you, sir.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yeah. Perfect numbers there.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Yeah. Sir, you mentioned that this inventory dealer level is around 1.5 to 2 months. So is this normal inventory that we see or this is lower or higher than normal?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Slightly lower because of the demand. They have also reduced their inventory slightly.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Okay. And you said the euro hedge rate is around INR89 something going ahead. So this is like, say for how much period, because if I remember correctly, in annual report as of March, your hedging levels have come down versus what it were last year. So this rate is for what period?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

The three months.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

For the next three months, you’re saying. Okay. And lastly on the India’s sales volumes, what would be the mix of OTR?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So on the euro hedge rate for the forward hedge rate going is 89.70 that’s your question.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Yeah, that’s for the next three months you’re saying.<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Yes.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Okay. And last question is that in terms of — in the India volumes, what would you mix in terms of equity agri and OTR?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

Roughly about 40% agri, and 60% industrial construction, OTR.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Okay. And in India, basically, while agri was weak OTR and construction would have done better?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Yeah. But first half was under lockdown practically whole of India in the first quarter and that’s why the impact is there.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

So if you look at Q2 numbers, how much growth would have happened in say OTR and mining volume in India? Any color on that of numbers?<\/p>\n

Madhusudan Bajaj<\/strong> — President (Commercial) and Chief Financial Officer<\/em><\/p>\n

No I don’t have the break up numbers for that as of now.<\/p>\n

Ashutosh Tiwari<\/strong> — Equirus Securities — Analyst<\/em><\/p>\n

Sure. Okay, thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal. Please go ahead.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Hi, sir. Just wanted to clarify the explanation is the next thing to mention almost 5,000 tons will quarter what could be revenues for this?<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So just about — just under 3% of total revenue.<\/p>\n

Jinesh Gandhi<\/strong> — Motilal Oswal — Analyst<\/em><\/p>\n

Okay. Okay, thanks, that’s all from my side. Thank you.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you very much. I now hand the conference over to the management for closing comments.<\/p>\n

Rajiv Poddar<\/strong> — Joint Managing Director<\/em><\/p>\n

So yes, thank you to everybody for taking out time and coming to this concall. Till next quarter, please take care, stay safe and be careful. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

[Operator Closing Remarks]<\/p>\n","protected":false},"excerpt":{"rendered":"

Balkrishna Industries Ltd (NSE:BALKRISIND) Q2 FY22 Earnings Concall dated Nov. 12, 2021 Corporate Participants: Rajiv Poddar — Joint Managing Director Madhusudan Bajaj — President (Commercial) and Chief Financial Officer Analysts: Nishant Vass — Analyst Ashutosh Tiwari — Equirus Securities — Analyst Nishit Jalan — Axis Capital — Analyst Jinesh Gandhi — Motilal Oswal — Analyst […]<\/p>\n","protected":false},"author":107,"featured_media":49402,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6349,12],"tags":[9163],"class_list":["post-125983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-transcripts","category-other-industries","tag-consumer-products"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2020\/02\/EarningsTranscript.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":129586,"url":"https:\/\/alphastreet.com\/india\/balkrishna-industries-ltd-q4-fy22-earnings-conference-call-insights\/","url_meta":{"origin":125983,"position":0},"title":"Balkrishna Industries Ltd Q4 FY22 Earnings Conference Call Insights","author":"Praveen","date":"May 17, 2022","format":false,"excerpt":"https:\/\/youtu.be\/5ZH1ze-EJCE Key highlights from Balkrishna Industries Ltd (BALKRISIND) Q4 FY22 Earnings Concall Q&A Highlights: Ashutosh Tiwari from Equirus asked about the realized hedge rate for 4Q22. Rajiv Poddar Joint MD said the realized hedge rate was 86.5. 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Rajiv Poddar, Joint MD said the company has not taken anything in the Q321. 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Presenting below its Q1 FY26 Earnings Results. Q1 FY26 Earnings Results Revenue: \u20b92,760 crore, up 1.69% year-on-year (YoY) from \u20b92,714 crore in Q1 FY25. Total Expenses: \u20b92,473\u2026","rel":"","context":"In "AlphaGraphs"","block_context":{"text":"AlphaGraphs","link":"https:\/\/alphastreet.com\/india\/category\/infographics\/"},"img":{"alt_text":"BALKRISIND Q1 FY26 Earnings Results","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2025\/08\/BALKRIS.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":130743,"url":"https:\/\/alphastreet.com\/india\/international-conveyors-ltd-q4-fy22-earnings-conference-call-insights\/","url_meta":{"origin":125983,"position":3},"title":"International Conveyors Ltd Q4 FY22 Earnings Conference Call Insights","author":"Praveen","date":"June 21, 2022","format":false,"excerpt":"Key highlights from International Conveyors Ltd (INTLCONV) Q4 FY22 Earnings Concall \u00a0 Q&A Highlights: Muzammil Usmani \u2013 Paramount - Analyst Replacement and the new demand from the revenue generated and outlook? 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