APL Apollo Tubes Limited — Q2 FY26

Apl Apollo Tubes Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=28C_f45iHnE Published: 6 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Apollo Cubes Limited Q2 FY26 0:08 8 seconds Investors Conference call hosted by Access Capital Limited. As a reminder, all participant lines will be in the 0:16 16 seconds listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:23 23 seconds Should you need assistance during the conference call, please signal an operator by pressing star 10 on your 0:30 30 seconds touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dashan Mata 0:39 39 seconds from Access Capital Limited. Thank you and over to you sir. 0:44 44 seconds Thank you Sophi. Good evening all. This is Bashan Bam here and I welcome you all on behalf of Capital to APL Abul Limited 0:52 52 seconds Q2 FI26 result conference call from the management side we have Mr. Sanjay Gupta chairman and managing director Mr. Rahul 1:00 1 minute Gupta director Mr. Deepak Goyel director operations Mr. Anub Gupta chief strategy officer and Mr. have chosen Kandelwan uh 1:09 1 minute, 9 seconds CFO. I will now hand over the call to the management for their opening comments. Thank you and over to the 1:21 1 minute, 21 seconds Thanks Dashan and thanks uh Xray Securities for hosting us for our quarter 2 earnings call. Good evening 1:28 1 minute, 28 seconds everyone and uh thanks for attending the call today. We are glad to announce uh 1:35 1 minute, 35 seconds uh our all-time uh highest quarterly volume ITA packed uh financials for the 1:41 1 minute, 41 seconds quarter 2 in a very uh challenging uh environment. Why I say challenging? As you all know that uh the businesses in 1:50 1 minute, 50 seconds India they suffered from um heavy monsoon extended monsoon and especially construction material sector uh uh which 2:00 2 minutes uh remained pretty weak because of low construction activity across the country. 2:06 2 minutes, 6 seconds APA performed on uh two fronts uh which uh which is quite commendable. Number 2:14 2 minutes, 14 seconds one is the sales volume recovery in quarter 2 versus uh Q1 uh which was 2:20 2 minutes, 20 seconds supported by strong capacity utilization in our Raipur and Dubai plants and secondly was the expansion in IITA 2:30 2 minutes, 30 seconds margins which uh took our ITA spread above 5,000 rupees per ton for the quarter. Now this was on account of uh 2:38 2 minutes, 38 seconds three main reasons. Number one was uh the uh the brand power of APL Apollo which we are able to demonstrate uh in 2:47 2 minutes, 47 seconds the IBITA spreads of general categories uh which have almost doubled to 3,400 rupees per ton in last uh two to three 2:55 2 minutes, 55 seconds quarters. uh the um uh the the selling price for this product we increased uh 3:02 3 minutes, 2 seconds in January of 2025 wherein we uh were brave enough to take a call that we need 3:08 3 minutes, 8 seconds to increase our pricing uh um by 2 to 3,000 rupees per ton which we did and the market has absorbed that over the 3:16 3 minutes, 16 seconds last 9 months which is clearly visible uh from 5th to September financials of this calendar year. Second uh reason for 3:26 3 minutes, 26 seconds margin expansion was uh the the value added uh mix improvement which is mainly coming from our Dubai and Rifle plant 3:34 3 minutes, 34 seconds where the IBITA per ton on u uh for these plants is above 5,500 6,000 rupees 3:41 3 minutes, 41 seconds per ton and lastly the operating leverage gain as uh the uh company is uh 3:48 3 minutes, 48 seconds company is uh is uh generating 850,000 ton plus volume there are lot of uh 3:54 3 minutes, 54 seconds costs which get optimized at all the fronts. Um so which also aided our spreads. 4:03 4 minutes, 3 seconds Um now first half into uh financial year of 26 we are fairly confident that we 4:10 4 minutes, 10 seconds will be able to meet our guidance which we gave in the quarter one call which was 10 to 15% volume growth and um and 4:19 4 minutes, 19 seconds uh and I spread off of 600 to 5,000 rupees per turn. Second half normally um 4:26 4 minutes, 26 seconds is always better compared to H1 as monsoons are over there is lot of certainity coming back on the global uh 4:34 4 minutes, 34 seconds trade front as well. Uh so um so given that second half should be better than H1 and if GDP of India surprises 4:42 4 minutes, 42 seconds positively or performs better than expected uh who knows we may uh even do better uh than uh uh our guidance uh when we close the financial year. 4:54 4 minutes, 54 seconds Um uh the another positive we want to highlight is uh that India is seeing adequate steam supply in last four to 5:03 5 minutes, 3 seconds five months which is uh good for uh downstream companies like APA polo especially when we are country's largest 5:11 5 minutes, 11 seconds steel buyers. Um our uh strategy to expand capacity in international markets and eastern Indian 5:20 5 minutes, 20 seconds markets remain intact. um which gives us confident that we will be able to grow our volume in uh double digit over the next 3 to four years u on CHR basis. 5:33 5 minutes, 33 seconds Lastly on working capital front uh our working capital days remain in single digit in fact zero as September 2025 5:42 5 minutes, 42 seconds uh which boosted our ROC upward of 32 33%. And uh we believe that uh this is a 5:49 5 minutes, 49 seconds sust sustainable ROC number which we will keep on flowing um in years to come. That's all from our side. Um um happy to take questions now. 6:04 6 minutes, 4 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 6:12 6 minutes, 12 seconds star and one on the touchstone telephone. 6:16 6 minutes, 16 seconds If you wish to remove yourself from the question queue, you may press star and two. 6:22 6 minutes, 22 seconds Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment 6:29 6 minutes, 29 seconds while the question assembles 6:50 6 minutes, 50 seconds The first question is from the line of Sukrit Dartil from Isite Fine Trade Private Limited. Please go ahead. 6:58 6 minutes, 58 seconds Uh good evening. Uh my question to Mr. A is as as APL AO continues to scale 7:04 7 minutes, 4 seconds volume, what strategic vision do you see driving the next phase uh beyond just growth uh towards uh deeper market 7:13 7 minutes, 13 seconds leadership or ecosystem in influence? Yes sir. 7:26 7 minutes, 26 seconds Thank you gentlemen. Thank you Shukran. 7:34 7 minutes, 34 seconds Our strategy is very clear. Right now we are close to a capacity of 5 million t and in the next two or three years we 7:43 7 minutes, 43 seconds are going to build up the capacity of four 7 million t. Out of 7 million t there is 1 million t capacity in milist. 7:52 7 minutes, 52 seconds We are putting one more plant in. 8:01 8 minutes, 1 second We are putting one plant in uh Golafur and offer capacity of two lakh 10 perom and uh one plant inuri cap of three lakh 8:11 8 minutes, 11 seconds perom. So almost this five lakh 10 and five lakh 10 in Dubai 8:22 8 minutes, 22 seconds seven lakh in Dubai and five lakh in east market this is totally new area for us so we we don't see any challenge in 8:31 8 minutes, 31 seconds this area number two is the existing setup we are doing almost close to 3 million t 8:39 8 minutes, 39 seconds and uh we are targeting to our to 10 this quantity group 5.5 million t. 8:46 8 minutes, 46 seconds So in this we have a lot of strategy product mix we are developing the lot of 8:54 8 minutes, 54 seconds product mix lot of new type of products like recently we started about 1,000,000 square mill 9:03 9 minutes, 3 seconds roofing we are building some capsule roofing product also 9:11 9 minutes, 11 seconds just we needed we achieve this cap very soon. 9:23 9 minutes, 23 seconds I don't feel Okay, great. Uh and my second question to Mr. 9:30 9 minutes, 30 seconds uh Kelwan I I believe he's on the call today. Yes. 9:36 9 minutes, 36 seconds Yes sir. Uh so my question is regards to uh mar regard to margin uh es especially in 9:44 9 minutes, 44 seconds a volatile input cost environment looking ahead uh what internal levers or 9:50 9 minutes, 50 seconds cost management uh plans do you uh see most important and or do you have in 10:05 10 minutes, 5 seconds Power we are working on the most on the three front mode. What is the power? 10:13 10 minutes, 13 seconds Power how we release the unit per turn also and the cost of the unit also both the area is the on the freight factor 10:22 10 minutes, 22 seconds where we subute the like we are all across the 10:39 10 minutes, 39 seconds like00 we are targeting 10:47 10 minutes, 47 seconds and number three on the front of the our salary cost we are targeting 10:57 10 minutes, 57 seconds minimum My target is to bring down to 600 rupees per ton. 11:17 11 minutes, 17 seconds Okay. Thank you for the next best of luck. Thank you. Thank you. 11:28 11 minutes, 28 seconds Thank you. The next question comes from the line of Niha Talija from Noama. 11:34 11 minutes, 34 seconds Please go ahead. Hi, good evening team and many many congratulations and great set of numbers. Just couple of questions from my end. Firstly wanted to 11:43 11 minutes, 43 seconds understand the Eida increase on a quarteronquarter basis. While we understand is of course this is missing but if at all you all can quantify what 11:51 11 minutes, 51 seconds are the other reasons for you know margin improvement. So Sneha uh it's a mix of three things. 11:59 11 minutes, 59 seconds One is the gross margin improvement which is around 200 rupees per ton. Now that's on account of our brand premium 12:07 12 minutes, 7 seconds uh brand premiumization and uh and improvement in value added mix u products right. Um so 200 rupees per 12:15 12 minutes, 15 seconds turn is coming from there and then uh 200 rupees per turn is coming from operating leverage benefits as we um 12:24 12 minutes, 24 seconds surprised 850,000 t of quarterly sales volume and 100 rupees per ton was on 12:31 12 minutes, 31 seconds account of lower u um expense which we booked in quarter one for ESOP in Q2 it 12:40 12 minutes, 40 seconds was not there. So, so this is the breakup of 500 rupees per improvement in ETA. 12:48 12 minutes, 48 seconds An extension to your answer and above, so you are also estimating your second half to be better. That means your operating le should further kick in. So 12:56 12 minutes, 56 seconds if this is a base level EIDA per ton of 5,200, you're still guiding for a number of 4600 to 5,000 on the EIDA per ton level on an annualized basis. 13:08 13 minutes, 8 seconds any reason why you would want to maintain that or not upgrade the EVA per number. I'm not asking for volume number because while I understand you know 13:15 13 minutes, 15 seconds environment is not such but on the pattern purely where you already hit 50 and assuming there's no one off here 13:26 13 minutes, 26 seconds we have lot of pressure so we don't want to increase 13:36 13 minutes, 36 seconds but this I very sure almost 3.5 million plus 13:44 13 minutes, 44 seconds almost God is great. 13:56 13 minutes, 56 seconds Perfect sir, I think that answers just one or two more questions from my end. 14:00 14 minutes Firstly on the demand front are you seeing any improvement happening with respect to government capex any on ground green shoots that you can see 14:07 14 minutes, 7 seconds because compared to other companies result we can make out that there is market share gain at this point of time but purely on the demand perspective any 14:16 14 minutes, 16 seconds green shoes even at this point of time where you can see and secondly with respect to spreadsh just just finishing it because your spread has further gone 14:25 14 minutes, 25 seconds up between the primary and the secondary team which doesn't seem to be impacting you at this point of Fine. But how we how do we you know see the spread going 14:34 14 minutes, 34 seconds and impacting you any on ground in any way first of demand 14:43 14 minutes, 43 seconds very frankly I'm saying but due to our brand due to our size due 14:52 14 minutes, 52 seconds to our systems we we are sustainable 15:02 15 minutes, 2 seconds is very bad all three demand steel prices. 15:13 15 minutes, 13 seconds Number three. 15:15 15 minutes, 15 seconds Number four, whatever the holidays, middle of the week, beginning of the week. 15:40 15 minutes, 40 seconds because we are going to rock I'm just giving my guidance I'm just 15:49 15 minutes, 49 seconds giving sorry one minute I'm just giving my guidelines with the existing like in this month also we are going to 15:56 15 minutes, 56 seconds do 270 like 270 275 265 270 75 like but from number we are taking a target 16:05 16 minutes, 5 seconds of 3.75 five lakh per month and December this quarter we are going to 16:13 16 minutes, 13 seconds system I think we hit 9 lakh but we are very sure 16:26 16 minutes, 26 seconds understood so that flavor was really very helpful lastly so on the spread front primary and secondary car that has been 16:34 16 minutes, 34 seconds a thing anyway way impacting us on ground. 16:37 16 minutes, 37 seconds Yeah, we we have made some strategy on this point in this subject. Now our APO brand is not going to talk with the secondary material. 16:50 16 minutes, 50 seconds We launch another our brand premium 10000 17:15 17 minutes, 15 seconds today Apollo is higher than almost with all the other banks. 3,000 minimum maybe 17:22 17 minutes, 22 seconds maximum 5 to 6,000 per ton of product is costly in the market or secondary 17:29 17 minutes, 29 seconds product like crime all over the India. 17:45 17 minutes, 45 seconds I think this is a good signal for Apollo. 17:50 17 minutes, 50 seconds Perfect sir. Thank thanks an author for all the questions for the best team. Thank you. 17:59 17 minutes, 59 seconds Thank you. The next question comes from the line of Agrin Kunga from AT investments. Please go ahead. 18:08 18 minutes, 8 seconds Um hi sir. Uh congratulations for a good set of numbers. 18:14 18 minutes, 14 seconds Uh I would like to uh ask that as it was mentioned in the PPP that we plan on 18:20 18 minutes, 20 seconds spending 1,500 crores to expend expand the capacity. Uh so just a question that 18:27 18 minutes, 27 seconds how do we plan on financing this uh that is it going to be through internal approvals or external sources? 18:37 18 minutes, 37 seconds 100% will be funded from internal cash flows. 18:41 18 minutes, 41 seconds If you look at our operating cash flow to I beta that's like above 90%. So this will um help us to fund the 100% of KEX. 18:51 18 minutes, 51 seconds Yeah. 18:54 18 minutes, 54 seconds Okay. Uh and just one brief followup. Uh my second question is that uh what's the long-term vision of the company and what 19:02 19 minutes, 2 seconds would be the predicted a better margins that we can expect over the next five years. 19:11 19 minutes, 11 seconds Because for 5 years we are talking if the everything is well the 19:18 19 minutes, 18 seconds maybe we touched 10 million t right now we are preparing for 7 million t which we are going for outsourcing also and 19:28 19 minutes, 28 seconds when we cross 5 million and margin I don't think max000us 19:40 19 minutes, 40 seconds I don't know what is the senate. 19:44 19 minutes, 44 seconds Yeah. Uh just one last question. Uh what is the current capacity utilization across uh our different plants and yeah 19:52 19 minutes, 52 seconds that's awesome like 70%. We are right now 5 million t cap we are going to do this year 3.5 million. 20:02 20 minutes, 2 seconds So 70% cap we are running. Okay. Yeah. Uh thank you sir. 20:08 20 minutes, 8 seconds Thank you. 20:12 20 minutes, 12 seconds Thank you. The next question comes from the line of Adita Walakur from Access Securities. Please go ahead. 20:20 20 minutes, 20 seconds Yeah, thanks for the opportunity. So my question is with respect to the safeguard duty which was proposed by 20:27 20 minutes, 27 seconds government. So with the 12% safeguard duty, the downside to the HRC crisis is 20:34 20 minutes, 34 seconds slightly now limited. So does that help us in means uh whatever we see the inventory restocking and restocking so 20:43 20 minutes, 43 seconds with the volatility to the downside limited uh will it help us uh going for because these safeguard duties for next 3 years 20:51 20 minutes, 51 seconds so this is a positive read through for us is that understanding correct yeah 100 collected like right now the HR 21:00 21 minutes coil of for the month of October is close to 46,000 rupees per ton landed Gary or anywhere in the country 21:09 21 minutes, 9 seconds or if we do any import with the duties it's cost us to 52 or 53,000 per ton so 21:17 21 minutes, 17 seconds this is not possible to import anything outside of the country 21:25 21 minutes, 25 seconds there is a steel cap is more local. 21:38 21 minutes, 38 seconds Understood sir. And my uh next question is on the long-term means you have touched that we may go up to 10 million 21:46 21 minutes, 46 seconds in capacity and uh in the slides also we have projected that the structural instin market will grow by 10% CGR by 21:54 21 minutes, 54 seconds 2030. So means what are these long-term demand drivers? Do we really foresee that this market will go up to that 22:03 22 minutes, 3 seconds quantum uh by 2030 means consistent double digit growth 10% CAGR from FY24 22:12 22 minutes, 12 seconds market is already already there but in India there is a biggest problem there is a secondary material is there which 22:19 22 minutes, 19 seconds is a very low quality material and low cost 22:26 22 minutes, 26 seconds people 22:37 22 minutes, 37 seconds Maybe that's good to hear sir. Thank you. 22:46 22 minutes, 46 seconds Thank you very much. 22:50 22 minutes, 50 seconds Thank you. The next question comes from the line of Kumar Swamia from Ambit Capital. Please go ahead. 22:58 22 minutes, 58 seconds Hi sir, good evening. Uh so couple of questions from my side. So firstly on the Ibida pattern in the German structure we have seen Ibida pattern 23:06 23 minutes, 6 seconds move up from 2700 to 3,400. If you could please help me understand what is driving it and how sustainable they are. 23:16 23 minutes, 16 seconds Right now I think from January 2025 we are total focusing on our brand leverage and the 23:23 23 minutes, 23 seconds size leverage we spread our margin or pricing from others. 23:55 23 minutes, 55 seconds Okay. So we expect% 24:08 24 minutes, 8 seconds good and so could what is the average premium volume that we are doing within the general structure 24:14 24 minutes, 14 seconds 10 to 15 10,000 to 15,000 between per month per month per month. Yeah. 24:22 24 minutes, 22 seconds Okay. Okay. And in this SG premium what would be the beta pattern that we usually make? Yeah. 24:29 24 minutes, 29 seconds I think we are in almost n or maybe 500 minus. 24:36 24 minutes, 36 seconds Okay. 24:38 24 minutes, 38 seconds So on the blended basis we're doing 3,400 then that means the rest of the portfolio is you can 24:45 24 minutes, 45 seconds you can price 54,000 price 24:58 24 minutes, 58 seconds 49 49500 and sir uh lastly just bookkeeping 25:07 25 minutes, 7 seconds question uh what is Dubai capacity today and capacity as of today. SU Dubai capacity is almost three lakh permap. 25:27 25 minutes, 27 seconds We are we are very bullish Europe and warehouse 25:35 25 minutes, 35 seconds one in Liverpool and one inap 25:45 25 minutes, 45 seconds 1.2 2 million APL or.3 million total capacity of 1.9 million 25:54 25 minutes, 54 seconds okay and at sir 70% 26:00 26 minutes and similar 70 85% 26:07 26 minutes, 7 seconds okay just for understanding when we sell our products in Liverpool sorry same Europe uh from the Liverpool and 26:15 26 minutes, 15 seconds warehouse house. How is the profitability in this market different from the Indian market? 26:21 26 minutes, 21 seconds Yeah, we are already supplying from Dubai. 26:35 26 minutes, 35 seconds 50. Thank you. That that is all from my Thank you. 26:43 26 minutes, 43 seconds Thank you. The next question comes from the line of Omar Gare from Shi Investment. Please go ahead. 27:07 27 minutes, 7 seconds galvanized coils and pipes. 27:12 27 minutes, 12 seconds I don't think black 27:24 27 minutes, 24 seconds but I never go to this type second type of material. 27:29 27 minutes, 29 seconds Second problem. 27:55 27 minutes, 55 seconds What item? 28:13 28 minutes, 13 seconds electric friendly 28:29 28 minutes, 29 seconds product. Number two, I don't know. 28:47 28 minutes, 47 seconds 37,000 375,000 300 28:56 28 minutes, 56 seconds 43 already 45 46 29:15 29 minutes, 15 seconds galvanized black. Okay. 29:27 29 minutes, 27 seconds category. 29:38 29 minutes, 38 seconds Sorry. 30:02 30 minutes, 2 seconds presentation. Okay. 30:21 30 minutes, 21 seconds the American tsunami. Okay. 30:26 30 minutes, 26 seconds Thank you. Question next four years grow. 30:56 30 minutes, 56 seconds situation as of nowhere. 31:04 31 minutes, 4 seconds Okay. 31:27 31 minutes, 27 seconds Similar volume 31:40 31 minutes, 40 seconds At least 31:58 31 minutes, 58 seconds 9.2 9.5 32:08 32 minutes, 8 seconds Minimum volume. 32:32 32 minutes, 32 seconds But to answer your question, growth should be higher than volume growth model. 32:39 32 minutes, 39 seconds Yeah. So that's what I was asking. The growth should be higher than the volume growth 15 to 20%. 32:51 32 minutes, 51 seconds Okay. All right. Thank you. Thank you. 32:58 32 minutes, 58 seconds Thank you. The next question comes from the line of Aka Cha from Canada Roberto Mutual Fund. Please go ahead. 33:07 33 minutes, 7 seconds Yeah. So, so thank you for the opportunity. So, just Oh, sorry but again on this a bit only 33:14 33 minutes, 14 seconds actually 300 rupees of sequential improvement well taken because of the GP uh because of the operating leverage and 33:21 33 minutes, 21 seconds the ESOP absence. So but then again on this GDP per ton has also improved sequentially by 200 rupees. So what 33:29 33 minutes, 29 seconds defines that? Was there an element of inventory gain in this quarter because sequentially the product mix was adverse 33:36 33 minutes, 36 seconds and uh then uh uh I mean sequentially the product mix is adverse. So then and even the ASP has declined frequentially 33:44 33 minutes, 44 seconds still there is an expansion in GP per term. So was there any element of inventory gain or what justifies this sir? 33:52 33 minutes, 52 seconds actually in fact uh um I mean there was some inventory loss only in this uh GP per ton which you are seeing because 34:00 34 minutes fuel prices came down okay in the second quarter versus uh Q1. So uh so there is uh no inventory gain in fact there is 34:08 34 minutes, 8 seconds some inventory loss right um minuscule not too much now this GP peran expanded 34:16 34 minutes, 16 seconds because of our value added mix portfolio right plant and Dubai plant they both 34:24 34 minutes, 24 seconds performed pretty well uh the volume expansion came maximum from these two plants and they all uh and these two 34:31 34 minutes, 31 seconds plants carry I beta per turn of 6,000 rupees So, so that um helped the improvement in GP pattern. 34:41 34 minutes, 41 seconds Okay. 34:41 34 minutes, 41 seconds And plus and plus our general category product which we are selling at higher realization 34:49 34 minutes, 49 seconds where we got 3,400 rupees per turnita versus 2800 rupees per ton in Q1. 35:00 35 minutes Okay. 35:07 35 minutes, 7 seconds Thank you. The next question comes from the line of Andre Purusham from Cog Advisers. Please go ahead. 35:16 35 minutes, 16 seconds First of all, congratulations for an excellent performance with all the tail headwinds against you. Really well done. 35:22 35 minutes, 22 seconds Thank you. And uh my question I just want to understand Anuba see uh from quarter to quarter your realization per 35:31 35 minutes, 31 seconds ton has come down right in line with what you also said that feed prices have come down. Now you also said that you took a price increase on your general 35:39 35 minutes, 39 seconds category in January 2025. So does that mean that the increasing IITA per ton is 35:47 35 minutes, 47 seconds also explained by uh uh a further drop and a more benign raw material price environment that's why it has happened 35:54 35 minutes, 54 seconds so I'm just trying to reconcile these numbers and get an explanation uh no uh because um see whatever steel 36:04 36 minutes, 4 seconds price movement is there it is like 100% pass through okay uh so MSR in increase 36:11 36 minutes, 11 seconds or decrease is uh is u um it um um the 36:20 36 minutes, 20 seconds the the NSR increase or decrease is uh 100% linked to steel prices. Now, for example, if you look at uh Q1 versus Q2, our MSR decline by 5,000 per ton, right? 36:33 36 minutes, 33 seconds Um and the steel our raw material cost also came down by similar level, right? 36:39 36 minutes, 39 seconds The only improvement in GP per ton is 200 rupees. 36:43 36 minutes, 43 seconds Correct? So um so in our uh business model you will uh you will see that steel prices um um drop or increase 36:53 36 minutes, 53 seconds leads uh to same uh decrease or increase in our NSR. Whatever gap is there that is on account of our improvement or 37:01 37 minutes, 1 second deterioration in GP in that particular quarter. So you improved profitability is for the reasons you spoke about 37:09 37 minutes, 9 seconds earlier. The final 500 improvement on account of operating leverage no uh eop cost and um there was 37:19 37 minutes, 19 seconds one more factor that you mentioned so and and of course your slight change in value product. These are the essential 37:28 37 minutes, 28 seconds three main yeah just to reiterate three main factors. Number one brand minimization which you see improvement in data curtain in our general category. 37:37 37 minutes, 37 seconds Number two is operating leverage gain as uh we do more and more volume and u and 37:44 37 minutes, 44 seconds uh number three is improving value added mix portfolio which is coming from our Raur and Dubai plants. 37:51 37 minutes, 51 seconds Right. And I just had one more question and this is a more general question. If we were to uh uh arrive at a deal with the US on tariffs and tariffs were to 38:00 38 minutes come down to reasonable levels let's say 20% etc. How will that impact our business? 38:07 38 minutes, 7 seconds No impact as such uh because u our international sales to us is u taking 38:14 38 minutes, 14 seconds place from Dubai plant. So from India it doesn't impact. 38:21 38 minutes, 21 seconds Okay. So you you don't see any real risks in the next 6 months to 12 months in this business 38:28 38 minutes, 28 seconds except uh further deterioration in uh GDP uh from existing levels. 38:34 38 minutes, 34 seconds Okay. So as long as demand remains roughly at the same level as it is now there is no significant downside that you see. 38:42 38 minutes, 42 seconds That's right. Thanks. Thanks very much. Thanks a lot. 38:51 38 minutes, 51 seconds Thank you. The next question comes from the line of Sor Petra from Ask Investment Managers. Please go ahead. 38:59 38 minutes, 59 seconds Uh thanks a lot for for uh this opportunity. Just wanted to have just a bit broader question on uh understanding 39:06 39 minutes, 6 seconds on the IITA pattern uh trajectory. uh if I seen the company from last 10 15 years history uh till precoid our margins used 39:14 39 minutes, 14 seconds to be uh around like 3,000 3,500 range postco I think as the capacity increased 39:22 39 minutes, 22 seconds and our volume started to pick up uh significantly from close to 1.2 2 million to close to 2 million uh our 39:30 39 minutes, 30 seconds margins improved very sharply uh in the upper terms uh subsequently I think while the capacity kept on increasing uh 39:38 39 minutes, 38 seconds I think the utilization level uh were again didn't kept pace because the capacity addition was much faster and 39:44 39 minutes, 44 seconds that's when the improvement sort of uh the the other improvement could couldn't kick in in terms of operating leverage 39:53 39 minutes, 53 seconds or uh or gross margin improvement and also we got impacted by the uh the macro 40:01 40 minutes, 1 second environment uh in terms of realization product mix at some quarters etc. uh how do you see some things changing there 40:08 40 minutes, 8 seconds because it in this quarter uh see some I I from the commentary which you have highlighted so far it appears that you 40:15 40 minutes, 15 seconds believe that worst in terms of your macro would have been behind the capacity utilization has reached a recent number and uh the operating 40:23 40 minutes, 23 seconds business should start kicking in much faster than it would have done in maybe last two years or so. Uh is this a fair understanding sir? Uh would would uh be happy to have your thoughts on that sir? 40:34 40 minutes, 34 seconds Sure. 40:37 40 minutes, 37 seconds That's why we always demonstrate this confidence uh in our business model that it has the ability to generate uh IITA per turn of u 6,000 rupees per turn. 40:50 40 minutes, 50 seconds right now. Um we may not uh removate uh these uh u this number throughout four 40:57 40 minutes, 57 seconds quarters in a year but on a on a blended basis for full year um we always wish uh 41:03 41 minutes, 3 seconds to have 6,000 rupees per ton of pita spread. Now, now, now why we say so? 41:10 41 minutes, 10 seconds Because if you look at like you said 10 years history, right? Before COVID, we were around 3,000 rupees per ton, right? 41:17 41 minutes, 17 seconds Between 2016 to 2020, our spreads were around 3,000 rupees per ton. And and if 41:24 41 minutes, 24 seconds you look at our capacity expansion speed at that point of time, it was uh doubling every 3 years, right? Uh we 41:32 41 minutes, 32 seconds were expanding our capacities every 3 years. Now a lot of upfront cost used to come come up right which used to depress 41:40 41 minutes, 40 seconds our margin and u and three years uh u continuously there was demonetization there was uh uh there was a uh slowdown 41:49 41 minutes, 49 seconds in GDP um uh then covid came right so that uh put pressure on uh our uh 41:56 41 minutes, 56 seconds capacities and we had to downell our product right we had to offer discounts uh to our channel partners that's why 42:04 42 minutes, 4 seconds per turn couldn't didn't go up. Now what has changed after uh co one is that slowly gradually Apollo brand has 42:12 42 minutes, 12 seconds started to become strong right uh and uh and uh and uh we and we have lowered the discounts which we used to offer earlier 42:20 42 minutes, 20 seconds and now we are not doubling our capacity every 3 years okay u like earlier we used to look for 25 30% volume growth 42:28 42 minutes, 28 seconds now we are seeing mid like double digit volume growth and uh now we are running or we turns we are chasing profitability 42:37 42 minutes, 37 seconds we are chasing ITA per turn because that's what we have built our brand now right so we have to leverage on that um 42:44 42 minutes, 44 seconds and secondly all the new capacity which is coming up that's for uh for markets where we are not present so we don't have to go and offer discounts u uh 42:53 42 minutes, 53 seconds secondly they are towards the value added products okay um so so so that's why we are confident that the trajectory 43:01 43 minutes, 1 second from 3,000 to 5,000 rupees per turn in last six seven And the next four five years definitely trajectory could be from 5,000 to 6,000 rupees per. 43:11 43 minutes, 11 seconds Thanks. Thanks a lot for detailing on this just quickly. Uh so so last three years the profit growth which was 43:18 43 minutes, 18 seconds slightly below what you would have miss despite sharp despite a good revenue 43:24 43 minutes, 24 seconds growth. uh uh do you think do you assume uh do or do you firmly believe that things would not be the same uh in the 43:32 43 minutes, 32 seconds coming uh next three years probably it should be much much higher right uh definitely for 43:39 43 minutes, 39 seconds yeah because last two years again um we were ramping up our Dubai plant we were ramping up our rifle plant right so there was some negative operating 43:47 43 minutes, 47 seconds leverage coming from there and then um 25 quarter 2 we took a hit of mass 43:54 43 minutes, 54 seconds massive loss right yeah so um so if we ex assuming like steel prices cannot fall again by 8,000 rupees per ton from 44:03 44 minutes, 3 seconds current levels right um so so so we may not see the same kind of inventory losses right um and uh and 44:12 44 minutes, 12 seconds dry Dubai plants which were our major capacity expansion in last three four years so now they have stabilized the 44:19 44 minutes, 19 seconds utilization rates are above 70% we uh we will not uh have a negative operating leverage again right for the new 44:26 44 minutes, 26 seconds capacities coming up so so that's why we are confident that ITA growth now will be superior than the volume growth 44:36 44 minutes, 36 seconds great great uh thanks a lot and all the best thanks 44:45 44 minutes, 45 seconds thank you next question comes from the line of Nishita from Safire Capital please go ahead Hello. 44:57 44 minutes, 57 seconds Hello ma'am. Please proceed. 44:59 44 minutes, 59 seconds Yes. Uh so uh I uh had a question. So what is the uh like split between the 45:06 45 minutes, 6 seconds Dubai plant and the India plant currently the volume as 45:15 45 minutes, 15 seconds so Dubai plant is contributing around 8% to the total volume. 45:22 45 minutes, 22 seconds Okay. Okay. Understood. And uh so I just wanted to understand you mentioned that uh 9 lakh 9 lakh t is your target for Q3 45:32 45 minutes, 32 seconds and around 9.2 lakh 10 is the target for Q4 with the AITA per ton of around 5,000 to 5200. Is that correct? 45:43 45 minutes, 43 seconds That's right. 45:44 45 minutes, 44 seconds Okay. Okay. Understood. That is information. Thank you. If we miss our margin go up, I'm sorry. 46:03 46 minutes, 3 seconds We are not focusing on the volume. We are focusing on the margin. 46:08 46 minutes, 8 seconds Okay. Okay. Understood. Understood. So would you like to give any revenue guidance for market. 46:30 46 minutes, 30 seconds Okay. 46:33 46 minutes, 33 seconds 450 in quarter three and four each. 46:42 46 minutes, 42 seconds Okay. So in quarter three and quarter four the target is to beat 450 crores of 46:49 46 minutes, 49 seconds top line bottom line bottom line. Absolutely beta. 46:55 46 minutes, 55 seconds Okay. Okay. Absolutely. Understood. Thank you. 47:05 47 minutes, 5 seconds Thank you ladies and gentlemen. In order to ensure that the management will be able to address the questions from all 47:12 47 minutes, 12 seconds the participants in the conference call, we request you to kindly limit the questions to poll participant. Should you have a follow-up question, you may rejoin the queue. 47:23 47 minutes, 23 seconds The next question comes from the line of Angut Saluja from UBS Securities India. Please go ahead. 47:36 47 minutes, 36 seconds Yeah. Hi. Uh thanks for taking my question. Um so first question on you know SG premium launch like you know how 47:43 47 minutes, 43 seconds has the feedback been from the dealers on the launch and you know what is the larger strategy here that we are you know sort of uh trying to achieve uh you 47:51 47 minutes, 51 seconds know first question is around that 48:02 48 minutes, 2 seconds there is no logic because we have a spare capacity there we have a spare raw motor there and network. 48:15 48 minutes, 15 seconds They need 48:33 48 minutes, 33 seconds dealers feedback. There's no negative pullback or anything from DSbody000,000 48:53 48 minutes, 53 seconds 5,000 15,000 20,000 second 49:09 49 minutes, 9 seconds Second I beat up my system like that. 49:26 49 minutes, 26 seconds These 49:41 49 minutes, 41 seconds are the strategy. Got it sir. Okay. 49:44 49 minutes, 44 seconds Thank you so much. So the second question you know end market demand you know any 49:52 49 minutes, 52 seconds demand is slightly stable you know across the board you think demand is challenging you think 50:14 50 minutes, 14 seconds number At least 50:24 50 minutes, 24 seconds right Right. 50:38 50 minutes, 38 seconds Got it. prices stew. 51:03 51 minutes, 3 seconds I think that was also Thank you so much for taking my question. 51:10 51 minutes, 10 seconds Thank you. The next question comes from the line of Palaf Agarwal from Antique Shop Broken. Please go ahead. 51:18 51 minutes, 18 seconds Yeah, good evening sir and congratulations on a good set of numbers. Um just a question on this inventory you know we have had a positive uh impact of change in 51:27 51 minutes, 27 seconds inventory. So will any of this reverse in the coming quarters or uh you know um or this can there will not be any impact uh in in the in the second half. 51:39 51 minutes, 39 seconds So steel steel prices are down only. So there is no inventory gain in the first half. 51:46 51 minutes, 46 seconds No, I'm not talking about gain. I'm just talking about the accounts, you know, the change in inventory. So about 150 crores of benefit is there, right? So 51:54 51 minutes, 54 seconds either uh we have built up inventory or there's been a change in price. So what is actually you know what is led to this 52:00 52 minutes uh you know amount this uh inventory change. 52:08 52 minutes, 8 seconds So yes, chemical good stock um is down right and uh we have um uh we have bought some raw material right which is 52:16 52 minutes, 16 seconds uh which you see in the P&L better inventory. 52:22 52 minutes, 22 seconds Okay. So so we should not see any reversal of this uh in the in the next quarter. No. 52:30 52 minutes, 30 seconds Okay. And also if you could just share you know uh I think the capacity utilization you mentioned that uh Rahur has gone up I think on a blended basis. 52:38 52 minutes, 38 seconds So what was it you know in the let's say in the the previous quarters Dubai is at 85%. So what was the utilization maybe in Q1? 52:46 52 minutes, 46 seconds So Q1 Ripur was 55% um right now it is around 65%. 52:52 52 minutes, 52 seconds Um okay Dubai was 65% in Q1 and now it is touching 80% in Q2. 53:00 53 minutes Okay. Okay. Uh, okay. Yeah. Okay. Thank you so much. 53:07 53 minutes, 7 seconds Thank you. The next question comes from the line of Sesh Raja from BNK Securities. Please go ahead. 53:15 53 minutes, 15 seconds Yeah. Uh, thanks for the opportunity sir. Uh, you just mentioned uh uh we are focusing more on IITA than the volumes. 53:22 53 minutes, 22 seconds So in the same line I just wanted to know uh within general category is it possible to share the volume mix between 53:29 53 minutes, 29 seconds the products where a bit below 2013 and those above 2013 has that been any change in this mix compared to last year 53:38 53 minutes, 38 seconds same quarter or last quarter. So what is our long-term strategy here? 53:45 53 minutes, 45 seconds So that is already given in our presentation. No the product mix with 53:51 53 minutes, 51 seconds no so within general category I'm asking within general category. So we have reported around uh 3,200 in the first 54:01 54 minutes, 1 second half. So we can use the mix whereas uh we might have reported below 23 and above 2. 54:20 54 minutes, 20 seconds So price when we increase our pricing it was increased for the whole lot of 54:28 54 minutes, 28 seconds general category which starts from range 20 square to 100 square 54:39 54 minutes, 39 seconds okay okay sir uh one more last question one our cash generation is very strong uh even 54:46 54 minutes, 46 seconds after considering capex and dividend I'm assuming 20% payout uh we would be still generating uh average of 400 crores 54:55 54 minutes, 55 seconds peranom for next 3 years so we would be sitting with 2000 crores of excess cash so what is our uh strategy here is there 55:04 55 minutes, 4 seconds any plan to increase dividend or buy back also if you see our uh our payable 55:11 55 minutes, 11 seconds is 2300 and that grows. So instead of holding cash and we have I think it's a deposit also 55:20 55 minutes, 20 seconds uh so instead of uh getting yield of around four 5% uh can we pay upfront and get more discount. So what is our strategy here? 55:30 55 minutes, 30 seconds First our strategy is to remove the liabilities from the book and get some more discount from the supplied. 55:38 55 minutes, 38 seconds Okay. Number two, we go for the capex 1.5. 56:04 56 minutes, 4 seconds Okay. Okay, sir. Yeah. Thank you. 56:12 56 minutes, 12 seconds Thank you. The next question comes from the line of Vikas Singh from ICA securities. Please go ahead. 56:21 56 minutes, 21 seconds Thank you for the opportunity and congratulations on a very good set of number in the difficult time. Now my first question pertains to the fact that 56:29 56 minutes, 29 seconds you said uh a lot of capacity is coming in India. So will this facilitate you to gain more market share because of the 56:37 56 minutes, 37 seconds price gap differential coming down or there's still a leg room that you get uh uh incremental discounts from this 56:45 56 minutes, 45 seconds team's catch margin. So which should be the better way to utilize this opportunity 56:54 56 minutes, 54 seconds first both of the way this is 57:05 57 minutes, 5 seconds maybe they hit the secondary to sell this type of material 57:12 57 minutes, 12 seconds number two we are the largest So is there a more scope to get the 57:21 57 minutes, 21 seconds benefit out of this capacity situation 57:30 57 minutes, 30 seconds market we are focusing on that noted. So my second question pertains to 57:38 57 minutes, 38 seconds some of your competitors basically those smaller in size I haven't seen any volume growth because they didn't have the capacity they are also primary 57:46 57 minutes, 46 seconds producers now now going forward they would have the capacity basically cumulatively about a million tons. So 57:53 57 minutes, 53 seconds how should we look the primary competitive segment competitive scenario because you are saying that you are focusing on profitability but would grow 58:02 58 minutes, 2 seconds the volume both can't go hand in hand right in case of since the demand is not that great you yourself said 58:14 58 minutes, 14 seconds very how to we have to 58:31 58 minutes, 31 seconds build up some new type of products, new type of area, some different types of build 58:42 58 minutes, 42 seconds I don't really I don't compare 58:51 58 minutes, 51 seconds I the lowest cost producer in the world today. 59:04 59 minutes, 4 seconds Not sir. No sir. Thank you. Fine. The next question. 59:12 59 minutes, 12 seconds Thank you. The next question comes from the line of UDIT from your securities. Please go ahead. 59:20 59 minutes, 20 seconds Yeah. Hi sir, thank you for taking my questions and congratulations on a great set of numbers. So we clearly understand that you all have been gaining market 59:27 59 minutes, 27 seconds share. Uh just if you can throw some light in terms of the new uses that have been coming up. Uh is that also aiding to your volume growth and if so then 59:35 59 minutes, 35 seconds which sectors from where are you getting that incremental demand? 59:44 59 minutes, 44 seconds So there are uh two areas where we are working on. Number one is new markets like uh international markets we worked 59:51 59 minutes, 51 seconds upon right and uh now we're going to work on eastern markets um so eastern markets and international markets they 59:59 59 minutes, 59 seconds are they are giving us additional volume and in terms of new applications yes uh our products in the heavy construction 1:00:07 1 hour, 7 seconds uh with the launch of thousand,000 di tube and also some of the products for the 1:00:14 1 hour, 14 seconds renewable sector uh where we are able to sell for these structures. So, so these 1:00:22 1 hour, 22 seconds are the three new applications uh which have come up and uh and u and uh increase our sales volume. 1:00:33 1 hour, 33 seconds Got it. Thank you for the rest of the questions that we answered. Thank you. 1:00:42 1 hour, 42 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand the conference back to the management for closing comments. Over to you, sir. 1:00:54 1 hour, 54 seconds Thank you everyone and uh thanks to X for hosting us. Look forward to see you uh next time. Thanks so much. 1:01:07 1 hour, 1 minute, 7 seconds On behalf of Access Capital Limited, that concludes this conference. Thank you for joining us today and you may not disconnect your lines.