AIA Engineering Limited

Kunal Shah

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Kunal Shah

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Kunal Shah

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Kunal Shah

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Sanjay Majmudar

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Sanjay Majmudar

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Bhumika Nayar

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Sanjay Majmudar

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Sanjay Majmudar

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Bhumika Nayar

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So couple of things if I compare first quarter to second quarter there has been an improvement in raw material that just reflects the lower raw material consumed in this quarter compared to the first quarter and raw material continues to be volatile.

— Kunal Shah

Ferrochrome has been between 120 at its peak, it went down to about 100 it is back to 110-112 level so it continues to be volatile and there will continue to be a pass through going forward when we see the fluctuation coming on so this quarter a reduction and we will have a pass through mechanism built on it.

— Kunal Shah

We work with a very complex set of parameters where it is very difficult to explain to you from a layman’s perspective that what exactly as you know over last 10 years our journey is to keep on strengthening our technological progress and our solution giving capability.

— Sanjay Majmudar

And we live in a very volatile world right?

— Kunal Shah

It is very difficult to do a math and say that X is the contribution of Y factor etc, so it is a mix of all these three factors which keep on fluctuating but overall a sustainable margin at this point in time definitely looks to be upward of 22 to 24% as a pure operating EBITDA.

— Sanjay Majmudar

The idea of sharing raw material price was only to say that it continues to be at an elevated level and volatile otherwise your raw material is rare from an accounting reported number will be our average raw material price to our selling price.

— Kunal Shah

Not yet right and just a last bit so we obviously in our business model we pass on the impact of raw material and freight but what happens to the currency depreciation so is that a benefit that we as a structure retain that or we also pass on some benefit of the currency depreciation.

— Ashish Shah

My first question is how difficult it is to manufacture high chrome grinding media and what prevents any new player from manufacturing and scaling up the same.

— Puneet Pathani

I understand that it is very difficult to persuade and convince a minor to switch to high chrome grinding media and is there a possibility that once a minor adopts high chrome media or competitor could employ undercutting strategies to cannibalize our customer base.

— Puneet Pathani

Theoretically it is always possible practically it is very difficult because Magotteaux operates under different operating circumstances.

— Sanjay Majmudar

Sir I want to know is there any update on the Peru subsidiary and as well as the Canadian operations and the second question is the volume guidance which you are reducing now is that got anything to do with the impending global slowdown.

— Raja Kumar

Okay and Sir this global slowdown is not going to impact us from a growth standpoint.

— Raja Kumar

There is hardly any impact of overall European slowdown on our operations.

— Sanjay Majmudar

Frankly there is no impact of the global slow down as such.

— Sanjay Majmudar

Q

Thank you so much. A very welcome to everyone and good evening. Thank you for joining our call for second quarter result update for AIA. I will dive into numbers and then we can get into Q&A. I also have Sanjay Bhai here with me. I think second quarter has largely been in line with the first quarter with 77,725 metric tonnes of sales which converts to around 1273 Crores of revenue, total EBITDA comes to 444 Crores which is 34.32% and profit after tax at 323 Crores and EBITDA and profit numbers are higher sequentially and also compared to second quarter last year. Same numbers for the half year

Sanjay Majmudar

Well good evening to everyone and thanks for joining this call. While Kunal has taken you through all the relevant highlights just quick one or two small clarifications. I think what Kunal meant was that we acquired a 30% stake in that Australian company as announced on the stock exchanges as well. That is pretty strategic in the sense that it is a high technology design capability company and it will help us to significantly push our penetration into the overall mill liner opportunity that is point number one, point number two as you would have seen we have done fairly decent in terms of marg

Q

Yes good evening Sir and thank you for the opportunity. Sanjay bhai what you mentioned right now that there has been from an incremental tonnage perspective we are looking at lower number, if you can just give some more clarity around this that why are we seeing this kind of a slippage into the next year and what is the reason for the delay in the acceleration of volume or slower pace of conversion, if you can just talk about it.

Sanjay Majmudar

Bhumika what I wanted to convey that from a conversion process opportunity as well as the number of mines on which we are working it remains absolutely the same or rather more we are a little bit more aggressive. The only problem is that the time is exactly not under our control so today when we were evaluating first half vis-à-vis our earlier target of 23-25,000 the indications available that there could be for this year maybe a shortfall of 10 or 15,000 tonnes just because that conversion is taking more time. You just cannot control the time. What we wanted to convey was that there could be

Q

Hi thanks for the opportunity and congrats for a good set of numbers. My question is on the sales realization side, what is the range expected for second half?

Kunal Shah

The sales realization. Right. It will vary between 150 and 165 depending on like I said a variety of factors rupee weakening was not part of this estimation when we have done last year right and the product mix changes so closer to 155-160 over next four quarters is what we can estimate right now. I think earlier it was 165 to 170 right. No it is the same more or less because factors keep changing today it is this. I mean I do not recall when it was 165-170 but for now where we stand 150 to 163 is a fair estimation of where it could be. Understood and what is the exact reason means why these d

Q

Yes good evening and thank you for the opportunity. Sir could you help me with what was the average raw material prices like say steel and ferrochrome for the quarter versus May last year so how has been the Y-o-Y movement.

Kunal Shah

Listen it will get little too granular to start sharing. The idea of sharing raw material price was only to say that it continues to be at an elevated level and volatile otherwise your raw material is rare from an accounting reported number will be our average raw material price to our selling price. We will be unable to share exact price. You can just look at a ferrochrome at a scrap benchmark to see how things have moved. Right fair enough second point Sir that while we have said that the freight rates and we can see that the freight rates have also come down historically, last few months th

Q

My first question is how difficult it is to manufacture high chrome grinding media and what prevents any new player from manufacturing and scaling up the same.

Sanjay Majmudar

My friend of course I will try to do a little bit of justice but for this I think you need to understand our business in a little greater detail. I will be happy to take it offline but just to very quickly give you a heads up we are 100% focused on providing customized solution so we understand a given application and design part to suit that particular application. We would have retrofitted hundreds of thousands of mills and equipments across the world in more than 125 countries. We have more than 100 different alloy combinations ranging from 5% to 32%. We have different heat treatment cycles

Q

Hello Sir thank you so much for taking my question so I had two questions one is about accounting so in the consolidated accounts you can see that there is a withholding tax provision of 8 Crores 33 that is there in the note four to the quarterly financials so I was just wondering that what it is about if you can tell us and secondly if this withholding tax in the other country then is not it available as a foreign tax credit to you in India why should we make a provision.

Sanjay Majmudar

See this particular withholding tax was in one particular country, I mean there was no withholding tax as such but the government has withheld the tax. Our claim is for allowing us the refund but that refund claim is pending this is an African country where there are certain issues and therefore this withholding tax has been kept as it. Probably in our accounts we would have written of this. I think we have written it off correctly. We are looking for a refund. We are working towards that but just to be conservative currently it stands as a as a write off but we continue to work towards gettin

Q

Hi thanks for the followup. Sir just want to know how economic activities are going on like what is the near to medium-term outlook in Australia as well as in Brazil in terms of mining.

Kunal Shah

Nothing significant to report. I mean the world continues as is copper and gold continue to be commodities of interest given end use that they have but nothing stand out to report in that sense. Okay Sir thank you.

Q

Yes thank you Sir. Thank you for the opportunity. Sir can you elaborate on this anti- dumping duty in Brazil. I missed some of your commentary on that part.

Kunal Shah

The five year period has just ended. They are going to do a reassessment there is a whole prescribed method to go about it and we are we are participating in that process right now by March of next year 2024 we should know the new regime that will come in once hey investigate and analyze data in last five years. And it is not disrupting my current supplies to Brazil it will continue. If it goes against us right I mean so what could be the volume profile that we are supplying to Brazil. Last year we did between 6 and 8,000 tonnes. This year we should be doing a little more. We do not expect a v

Q

Good evening Sir thanks for the opportunity. Sir I want to know is there any update on the Peru subsidiary and as well as the Canadian operations and the second question is the volume guidance which you are reducing now is that got anything to do with the impending global slowdown.

Kunal Shah

It is not linked to that no. What was the first question? Update on your Peru subsidiary and any update on the Canadian operations and do you think the current standoff between India and Canada will impact us in anyway. Not really ours is strictly a trade matter and in any case I mean it is a matter that is under subjudice meaning because we are party to that arrangement that is there as far as their last investigation was there and it continues. We are doing all we can to continue to sell in that market and nothing to report on that front right now. Nothing to do with the current standoff wha

Q

Thank you for the opportunity so any update on our capex expansion plan.

Sanjay Majmudar

Yes we are on track as Kunal explained. We have a capex plan of 500 Crores between this year and next year. This year we should do upwards of 300 plus that should increase our capacities the grinding media, Kerala JIDC Kerala plant of 80,000 capacity enhancement project should be over by December 2024 then there are some other debottlenecking or reorganizing plants which should add another 15-20,000 tonnes so we are absolutely on track so you should see about 440 going to close to 540 by end of next year. Okay thanks.

Q

Good evening gentlemen. Sir just I do not know whether you touched upon this, can you help us understand how the mill market opportunity, how big it is what are the key markets which are the key competitors, how we are positioned that will be of great help, thank you.

Kunal Shah

So mill liner market is about 300,000 tonnes plus of annual consumption and according to our information there are three or four organized players operating in that industry. We have set up a new Greenfield plant with a 50,000 tonne capacity and we have got about 25,000 tonne capacity in our existing plant so there is about a 75,000 tonne market opportunity that we looking in this segment and the whole opportunity is not just to sell more liners but it allows us to engage with these customers in offering them solutions around increase in through put, lower par consumption in sync with our grin

Q

Thank you for joining and Sanjay bhai and I remain available offline for any questions and we look forward to connecting end of third quarter. Take care and enjoy. Happy Diwali to everyone in advance.

Sanjay Majmudar

Yes happy Diwali thank you.