The first question is from the line of Jai Chauhan from Trinetra Asset Managers.

Yes, so my question was pertaining to management has highlighted the margin is expected from both secured price increase and lower input costs. Could you provide some color on the balance between these two drivers, specifically how much of the anticipated margin improvement in Q2 and Q3 will come from sustainable price hikesAnd how has the competitive environment evolved to allow for these price increases now as I remember management mentioning that it was challenging just a few months ago? This is my question, sir.

Yes. So basically, the market is still very commoditized, and it is not easy to get price increases in commoditized market. We have some 4 PRO solutions as me and Azim was also talking about this full solution business where we add value to the customer in those areas, we are getting price increases where we are also adding value to the customer and the business is not that much commoditized? So if you talk about Q2 and Q3, I would not be able to give you the number, but I can say it will be upswing. It will not be hockey stick, but it will be upswing quarter -by-quarter. Our intention is this full year, if we could manage to the last year's EBITDA, that will be ultimate satisfaction to us. Hopefully, I'm clear to give you the answer.

Right, sir. Understood. So sir, can we assume that this lower cost RM, alumina prices that you might will be -- is sitting in the inventory will be consumed from Q2? And what kind of margins can we expect in the coming quarters?

That's what I'm saying. I cannot give you the margin percentage. I'm saying it will be upside. By September, this high-cost inventory should be consumed. And Q3 will see,Q2 will also, I assume from Q1, there will be some uptick on Q2 and Q3 will still be better. That's what I can say.

So we can talk to our full year guidance that, as Parmodji mentioned that our aim is to achieve the profitability percentage that we had last full year results. So this is what we are aiming for you can use that probably for modeling for sure, but we don't want to give a QoQ guidance at the moment.

The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.

Congratulations for a really good set of numbers, keeping aside the margins, which will definitely recover. Now my question is regarding the 4 PRO model. I mean, just wanted some more details about what new are we doing in this model? How different is it from the total refractory management contracts that we had earlier? And is this something which gives us more margins than the usual way of selling these products?

Okay. Sahilji thank you very much for your kind words and support. The thing is this 4 PRO earlier was TRM. So TRM was total refractory management. So it was more focused on maintaining inventory and running the steel plant or cement plant on a per ton of steel basis. But now we add a lot of other elements where we provide them robotic solution, scanning solution, checking their erosion patterns. We provide them slab detective systems, We provide them artificial intelligence, digitalization of their processes. There are many things, and apart from this, even we are providing or talking with them about their metallurgical problems and how refractory can contribute in that also. So this i s a wholesome solution for any steel plant. So this differentiates us from our competition, and as far as margins are concerned, yes, automatically, if we will go in this model, the margin will be better in long term. But as I'm saying this, don't expect that next quarter, it will happen. For this robotic s solution for JSW, it took almost 2 years to really did feasibility study, has a tough competition with our competitor who is also very strong in flow control, you know to whom I'm talking about, and we had to showcase our capability to JSW management that we can do it, then we got this contract, which is a 5- year long contract, and now JSW is asking us to do feasibility study in another two plants and similar groups are also asking us to do feasibility study. But it will happen if we start now, probably after a year or so, we will have upswing of this type of solutions. It is not immediate solution. But long term, this will differentiate us from our competition. This will add value to customers, and they will b elieve us as a partner, not a supplier.

Sahil, you can look at our investor deck on Page #14, we have provided a link wherein you can click on to understand the 4 PRO model. What does it mean? A lot of details have been provided with customer testimonial not only for India, but across the world. As Parmod Ji said, it's the next evolution of TRM model , it's a new business model. That's the way you need to model it.

Sure, sure, sir. Sure, sir. This is helpful. And good to hear that we are doing something over and above how the industry works. Secondly, on exports, do we have sort of a new understanding as to how we want to ramp up exports? I mean, I believe we were wo rking on some new ways of doing it. I mean, maybe through our entities or something else, but anything on -- any progress on the export front?

Yes, there is a progress, but still, I would say we are at advanced stage of trials for outside world apart from India. So it should happen in '2026. We have quite a reasonably good plan to increase our export in flow control in 2026.

So another 6 months or so.

The next question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited.

I have a specific question for Mr. Azim Syed. Are you there online?

Mr. Patil can you please be a little louder? We can't hear you properly.

I have a specific question for Mr. Syed, so is Mr. Syed online?

Yes, yes, I am.

My name is Sucrit Patil, and I just want to understand your view, and my question is, as RHIM is trying to scale its India operations, how are you evolving your capital allocation framework to balance refractory capacity expansion, sustainability linked investments and potentially inorganic growth, especially in light of margin volatility across e nd markets? And do you think this will have some positive impact on the company in the next 2 to 3 years?

Yes. So your voice was not clear, but let me see if I got your question correctly. You're asking about our capital allocation strategy in conjunction with inorganic growth and what would be the impact of it in the medium term on the profitability. Is this correct?

Correct. 100% correct.

Okay. Exactly. So let me explain how we think about our capital allocation strategy. So first thing, we will do capital allocation if we have a positive cash flow. That's the first requirement. If it is there, our first investment would be on the maintenan ce capex because we believe in safe operation. Second is to provide dividends for our shareholders. Third thing, we always link our capex investment within our plants where we can enhance, and after that is where we think about our mergers and acquisitions or joint ventures based upon our strategic fit, okay? So this is how our capital allocation strategy comes in, and after that comes buybacks and so on and so forth. So this is the order of priority for us. To kind of give you some color on this aspect, one thing is that we will invest if it is fitting in our strategic initiatives, which we think we did it in the last 2 years quite effectively. So we wanted market share in cement and in industrial. So that's kind of justified our acquisitions with Dalmia. And then we wanted to kind of have stronger presence in the flow control market, especially in the thin slab. So that's where we went for Hi -Tech, and we did the Ashwath Technologies current acquisition, completely funded by our balance sheet because this kind of fitted in our strategic investment in terms of how we can strengthen our flow control on the machinery side. So this was a good linkage for us. So that's the rationale for the past. For the upward looking, we believe that at the moment, our investments will be more towards capex in terms of plant modernization and productivity -related investments. So this is where we'll do much of our investment. That's where you see a little bit of a capex increase from last quarter to this quarter, almost by 90%. Again, we are trying to kind of improve our input cost improvement. That's where we are kind of focusing at the moment. So profitability, more than profitability, we always measure KPI called ROIC. This is what we try to check for investment capability. If our ROIC is passing certain threshold that we have internally, you can assume to be -- it depends on business segment to business segment., On an average, you can assume that if it's more than 10%, this is where we kind of put our money there because we believe not in a quarterly profitability game because of our broad and wide portfolio, we look into a long-term investment in terms of what's the payback period and how -- if the ROIC is meeting a very stringent internal criteria that we have. So that's how we kind of come to this decision-making of if it's a good investment or a bad investment. By the way, it's not only for acquisition, we do the ROIC decision -making. We also do for any kind of a capex initiatives that we deliver, even for maintenance capex as well. I hope that clarifies and answers your question.

The next question is from the line of Arijit Dutta from Kotak Mutual Fund.

Congratulations for a good set of numbers. I have three questions, starting with the first one, which is on the volumes. Sir, this quarter have seen some bit of volumes growth, which is admirable. I just want to understand in the volumes, if we have any one -off kind of thing, which is related to commissioning of a blast furnace, which will not be kind of repetitive, which will come after a while again.

So first question, the answer is it will continue like that. So we have a very strong order book, and as in my last investor call, I said we expect 8% to 9% volume growth. So this is in line with that.

And onetime it was actually the Q4 numbers to answer your question more specifically. So in this Q1, we didn't have any.

Perfect. Good to hear that. Sir, second question is on the pricing part. Domestically, how you are seeing the competition level because there are a lot of overlapping capacity with everyone entering each others territory. Last quarter, you have given a ve ry, very categorically answered that the competition is increasing. How we are seeing on the overall market scenario now undercutting the prices and the intensity of competition, sir?

You are absolutely right. There's overlapping, undercutting pricing, everything is happening in market. Only solution is or you can differentiate yourself from the competition or you can provide additional service or support or quality, the competition is not able to provide. So we are -- as I said, as Azim was also talking about 4 Pro. So we are working on differentiation and also how much we can be more cost competitive, how good we are in our plant production cost management, how we can reduce our rejection levels, how we can increase our circular economy. So we want to be ahead of our competition by many initiatives which we are taking. But of course, 80% of the market is still commoditized, and we have to be step ahead if we want to maintain our growth -- volume growth with sustainable margin.

Perfect, sir. Sir, third question is on the OCL part of our operation. Sir, do you see that there is -- there were challenges in the cement industry per se or even we are planning to upgrade the infrastructure in OCL plant because I believe that's a very o ld machinery and in absence of a better word, it's a bit inefficient also.

I think it's a combination of both. We have increased our market share from 12%, 13% prior to acquisition of Dalmia to almost 42% -43%, but there's too much commoditization. Everybody enter into this and there's a price cutting,etc. etc.. So then we start working on our product optimization how we can be more competitive. We have market share. Now we have to improve margins. So we are working on that. At the same time, as you said, the infrastructure in Dalmia plants are too old, and as Azim said that we are putting up almost double the capex, what we were doing in these plants to modernize these plants so that we have more efficient operations and reduce our in -house rejections, improve quality, et c, apart from product optimization.

Perfect. Nice to hear that. Sir, last question is on export part. In the export market, what we understand that there are a lot of Chinese competition and the lucrativeness of that market is slowly going away, like we see in domestic and export also, the situation is same because of the Chinese presence. Any update on that, how you are looking at it?

I don't see China as a threat or challenge because our export is based on flow control products, and China is mostly into magnesia carbon bricks, et c. So I don't see them as a challenge for our export initiatives.

Understood, sir.

The key factor on export would be the demand must pick up in the export market. So as you can see that there's quite a bit of geopolitical challenges. So there's not a lot of production happening in the key export market in Asia, so I think this is also -- needs to pick up apart from our own capability as well. So that's where you will see quite a bit of an upswing. But yes, I think we are ready, as Parmodji mentioned, that our trials are going on pretty well and in advanced stages. But yes, this also is a key factor as well.

Sir, this -- right. On the magnesita part, do you see there has been Chinese import that is happening because China has been pushing on the magnesita off late a lot?

It is magnesia, you are trying...

Magnesia. Yes. Yes, sir. Magnesia based refractories.

Yes, absolutely, almost 50% of the commodity business if we talk about the ladle business or so, the Chinese traders are coming because China is having overcapacity, and their aspiration is very small. So they undercut the pricing. They are traders, if they get some 2%, 3% margin or so, even then they are happy to get orders, And at the same time, many Indian players have jumped into magnesia carbon brick ladle business. So almost, I think, 8 or 9 small players, which probably you never heard the name of, are now producing magnesia carbon brick. So there is overcapacity, particular for this commodity business. So we are working on our way how we can be more competitive in this segment and keep our market share not intact , but improve. Now we are very confident we will be able to maintain this growth, what I'm talking about 8%, -9% volume growth.

Right, sir. The last one is on Hi-Tech specifically. What I believe that our hopes on Hi-Tech products were very high. In absence of better word, the result is disappointing what we are seeing in Hi- Tech. Do you feel the same that it has not delivered as p er our original estimate and it is still struggling, the scope that we envisage for Hi -Tech has not actually materialized?

I would say we are not disappointed. It is a bit slow. I can tell you one thing, one of the plants, I just got this information today morning. In thin slab caster, we delivered 26 hour casting time, which is equivalent to the best in the market, who is in thin slab caster, so from Jamshedpur plant. So it means now the results are coming. So it is an initial stage. If we are able to sustain or give consistent product at this level, probably next year, we will be equal for competing in the tender, So it will be replica in our plants as well. The confid ence of other plants will also go up to go for a trial or for a commercial trial because in India, we were not having the reference. Now we are creating reference with the very good results. Secondly, when we have this Hi -Tech in mind, we are thinking a lot of export from this plant, which due to geopolitical situation could not happen. And as I said, in 2026, there will be quite a big upside because the market was not responsive. It wa s a bit slow. European market is almost 40% down.Only West Asia, East Asia, and African countries where we are targeting, we're getting a very good response of our trials. And hopefully, next year, we will be able to fill up Jamshedpur plant when it comes to iso static. We have already ramped up slide gate production capability in Jamshedpur plant. We have created this -- creating this excellence of iron making in Jamshedpur plant. We will be putting up all our machinery division in Jamshedpur plant. So all in all, we have an infrastructure, we have a capability to turn around this plant to the desired level in coming days or months.

Since the technology in this plant is pretty old, that time it was one of the best, but after -- this plant has been underinvested. We are planning for a major overhaul in terms of technology also here?

I would not agree to that, the technology is still very relevant, but at the same time, our R&D is also working on upgrading the already established quality and technology, so it is not, even in the Bhiwadi plants, we keep on doing upgrading innovation, R& D activities happening across all our plants in the globe. And Hi-Tech also, we are doing that, but still Hi-Tech has a very stable, established quality and technology.

The next question is from the line of Rajesh Majumdar from B&K Securities.

I had a few questions. The first one, sir, is on the employee cost. We've seen a 9% decline in the employee cost. Now we saw a large jump in the employee cost in the last 2 years due to the acquisition and some one-offs as well. So are we to assume that the employee costs will be stable this year or come down a little bit from last year's levels? That was the first question.

So it will be hover somewhere about 10 % employee benefit cost is what you can model, Rajeshji.

better than last year.

No. So last year, we did 11.5%, right, last quarter. This quarter, we did 9%. So I'm talking about that number. So it will hover around 10 %for full year.

Okay. That's great to hear, and secondly, sir, we also talked about the fact that the revenue growth will be along these lines, and also, we've got a little bit of a price hike in the alumina refractories as well. So if you take that and the 14% kind of ma rgin that you've guided for the full year, it would mean that the EBITDA for the year would be somewhere close to FY '24 levels or even slightly better, not FY '25. Earlier in the call, you mentioned you plan to achieve FY '25 levels. But if you do the math, on a 9% growth and 14% margin, it comes to somewhere around FY '24 level. So are we missing something here?

Yes. We have already missed first quarter, and it was 10.8%. So we already missed it. So now if we have exponential growth, price increases, everything, you average out everything, and if we will match the 13.7%, I think it will be a great satisfaction, at least for me.

And also, right, I mean, the alumina prices are.

And we should be happy, Rajeshji with this.

No, no. Yes, Azimji please continue.

No, I was basically saying that another factor is that alumina cost raw material in our P&L, it will flow through until September also, right? So it will be a steady state growth, even we get price increase and other thing and you suddenly go into quite a bit of comfortable margin. So yes, for full year, that's the reason for our guidance.

Okay. And sir, my last question is that are we doing anything on the industrial refractory side because you've talked about steel, we talked about cement. And we haven't seen anything on the industrial side. Is there any initiative there? Are we going to see something happening on that side?

Actually, we are desperately looking at projects. Unfortunately, for non -ferrous or glass, all the projects are shifted to ' 2026-2027. So unfortunately, there is no project in the pipeline for this FY, so unfortunately, we can't do much. But at the same time, with the Resco in our portfolio now, this American company, which we acquired in the beginning of this year, they have many products, a very niche product, very high-end products, which they are selling to even Reliance industry. So they are very strong in petrochemical, and we are now leveraging it on and not only limited to Reliance, but we have many PSU refineries also petrochemical companies. So that is where we are working on, and it will yield results in the coming year or so.

Okay. This is going to be imported products or products locally made?

Initially, it will be imported, but we will try to localize it with a period of time.

Okay. And sir, last question is, what is the kind of total capex you're planning per annum now with the Dalmia plant and everything, maintenance capex included?

We'll almost double the last year's capex full year to this year.

It is about INR150 crores, total.

The next question is from the line of Patanjali Srinivasan from Sundaram Mutual Fund.

Sir, I have a couple of questions. So this refractory management service business, how much would have been the share in this quarter for us? Has it gone down meaningfully?

If we talk -- it is primarily limited to steel industry. So we have roughly 32 %-33% market share in this niche business.

No, sir. In our share of top line, how much is it?

You are talking about the revenue percentage?

Correct, correct.

So this time, our steel was about close to about 81%.

So out of this 81%, you have to take out 32%.

Exactly.

Right, it's full 32%.

We did not get you. From where you get this, we have not reduced, it has gone up by 1% or so.

Exactly.

No, I think from Q3, I'm talking about, but okay Yes. And I wanted to know like volume growth between sectors?

He is talking about TRM. Q4 was 35% and first quarter is 32%. That's what you are talking about?

Yes, yes, that's correct.

Okay. Okay. So actually, this is why because in last quarter or so, we were not able to get price increases. So prices were under stress, and we got now price increases, and it will be on the same level. In fact, we are in a very final stage of having two more 4 PRO o contracts in the pipeline.

Understood, sir. Okay. And in terms of volume growth, we've reported 13% volume growth. So which segment has grown faster here? Like is it like more of a commoditized business, which has grown faster, which is why there's a drag on the margins? And that's -- is that also the reason why the gross margins have also fallen?

Yes, you can say it is a combination, but yes, mostly it is a commodity business, cement bricks or magnesia carbon bricks, etcetera, and also iron making.

What is the margins there, sir, in iron making right now? And what is our aspiration long term?

Margin is about 18% to 20% , standard margin, and it is under stress, I would say. We have just entered 2 years back and the leaders, 3 big leaders are there. So we aspire to still grow in this market, and we will not be looking at margin as of now for another year or so, but we want to take this from last 2 years when we started, we were having 2% market share, and now we have 13% market share, and aspiration is 25% to 30% in next 2-3 years' time. So it will not be very lucrative business so to say, but we have to first establish our selves and then margin will automatically come.

Exactly. When we say we will not look at margin percentage doesn't mean that we'll go for any price. I just want to clarify that. We are very focused and disciplined on the right customer -- selecting the right customer strategy and what is the long -term partnerships that we can have where we can add value to the customer. So that's what we will target. As you can see, even with the market share penetration strategy we have, we have not bad margins comparing to our commodity business.

Understood, sir. So what would our contribution of this segment to our top line be currently?

Iron making somewhere around 10%.

The next question is from the line of Kaustav from BAMPSL.

I had a question on your capital efficiency, because of your intangible assets, right, your capital employed, if I include the intangible assets has swelled up, and so your net worth is also around INR 4,000 crores. So even if you more than double your PAT, right, it's 2 -3 years down the line, even if you do INR 350 crores of PAT, you're still at single -digit ROE and very low double -digit ROCEs. So what's your view on this? And how do you plan to readjust your capital structure to get better capital efficiency?

It's a very good question, first of all. Thanks for asking this question because this is what we talk about it in our monthly reviews and everything. So we -- you need to think of this in four different initiatives, how we are going to improve the ROIC or ROCE for our shareholders. So number one is our market share. So what we are planning to do here basically is that the first pillar, let's talk some specific numbers here in the area of iron making. As Parmodji said, we grew from 2% to 15%. The next tangible thing for us to do -- I'm talking 3-year time frame, please keep that in mind, will go to 30%. So this is an underrepresented market. With the acquisition, we have these capabilities, and we are very confident with the proven track record that we can take it to 30%. So that's the first thing. The second thing is to import some of our product transfer from our group acquired entities, primarily being Resco. Second, also with the PDrefractories. So these are two very high-margin products, which we will domesticate to meet our Indian market needs, and we believe that this will add quite a bit of improvement in our profitability. The third thing basically also is that in some of the product transfer, especially in the cement segment, where we have this high -margin technologies that we will also improve -- introduce, especially on the MGG side or magnesia side, which we believe that, that will also quite a bit increase our profitability. So this is what we want to do to outgrow the market. The second lever is -- and this is the most important one is our new business model introduction. This is your 4 PRO. The advantage of 4 PRO basically is that is to kind of -- we want to expand our robotics offering. What it ensures is two things. One, it is our fixed cost improvement because we have long-term contracts and commitments, and this basically will yield us customer stickability and also will ensure that we have steady -state gains, and most importantly, the biggest -- one of the biggest weakness in refractory business is the volatility due to commoditization of this product. We aim to eliminate this with the 4 PRO model. So we believe that with this introduction of business model, it will help us to achieve consistent profitability, not a sign wave that we normally see in our profitability. The third and the most important lever, what we are doing is that to improve our competitiveness. So here, what we are trying to do is that we are -- one of the biggest lever that we utilize through our R&D center is -- yes, so one of the things that we do is that through our recipe harmonization and through R&D improvement in terms of adapting our product portfolio. For example, in case of product -- in case of segments like cement, which has low margins, we are in the process of revamping our product offering to our customer, which meets the needs of today's customers' production. And second, basically is that how we can optimize our recipes to meet this to us -- for us to be competitive in case of the most commoditized segments, which we can't attract to 4 PRO. The third thing basically, already I mentioned the localizing much of our production. This will improve our capacity utilization. We used to about 55%. Last quarter, we did 66%. We believe that this will -- localizing the acquired entity product portfolio will help us to achieve our production efficiencies and drive even more further more profitability. Now let's talk about the balance sheet item, which is focused mostly on the working capital item. Parmodji has given a very stringent target that consistently, we should be able to reach 25% as working capital intensity. We see a lot of opportunities in our overdues. We also are launching one of our corporate programs called Everest. Everest is introduction of a supply chain planning tools, which is aiming towards improving our customer service without compromising or without trading off with our cost or on our investment in our inventory. So this, we believe that it will help us to improve our balance sheet further. On top of it, we also believe that the pricing initiatives and the new contract mechanism we have, which will kind of give us even quite a bit of upside in our profitability. And on the capex side, we will be absolutely disciplined. This is our highest year of capex investment, which we are using to modernize our Dalmia plant. Next year, we'll go back to FY '24 run rates. So this will also give us quite a bit of a breathing space on the working -- on the capex side as well. With this, if we have modeled it, these are the initiatives that we are completely banking upon, and we are seeing some progress quarter-on-quarter. It's a long game, as you know, in the ROIC stuff, and we are very confident that we can easil y enter into double digits based on our internal modeling. Hopefully answers that question.

I mean that answers the question on the -- on you growing your profitability, but the point is that the beginning of my question was that even if you grow your profitability 150% from here, which -- so your question answers you -- how will you grow your profitability more than double from here, right? But more on the side of the capital employed, yes, you spoke about improving your working capital efficiency, but what about write -offs on goodwill on intangible assets to reduce your overall capital employed based on non-performance of the acquired asset?

So we did this already in the last financial year. If you recall, I'm not sure if you are aware of it. Last -- we took a write -off of EUR 35 million worth of it because we believe that the export business that were embedded in the business plan of the acquired entity, we were not able to fulfill and because of the currency as well, which the business was valued when we had done the acquisition. At the moment, based upon -- we did -- as you know, that one of the stat requirement is that we need to do this goodwill study on a yearly basis, and last year, we did a very comprehensive study on it. So one of the things I'm not sure if you're able to follow that our capacity utilization in the acquired plants also have increased quite significantly in the Dalmia plant. This is introduced because we started to have an optimized recipe for a magnesia carbon which have started to produce at Rajgangpur already, and we don't expect any kind of an impairment because of these kind of initiatives that we already said. So yes, I don't foresee it at the moment.

The next question is from the line of Amit Agicha from HG Hawa.

Sir, my question was coming to the order book. Like can you just brief us about what is the current order book size in its segment on a geography aspect?

Your audio was not clear. The question, let me see if I got it correctly, you want to know if our order book is good and where it is good. Is that the question?

Yes, sir.

So we have a very strong order book in iron making area and also in the steel area as well. Steelmaking, especially with our integrated steel plants on the TRM side. I think you guys are aware that because of the 12% safeguard tariff, there is quite a bit of a positive momentum on the steel customer side, which we're able to correlate, which we can see in our order book. Second, we have regained some of the market share that were from L2 to Level 1 supplier in the public sector unit plant. So here also, we see quite a bit of a very strong order book to be fulfilled. Now the question remains is the function of if they are a ble to produce as they have committed and because we have this long-term TRM contract, which we supply based upon the exhaustion of our -- of their refractory materials, we see a strong order book, just to simplify it. Do you want to add something to it?

Nothing.

So yes. So I think that would be the final question, right, operator?

As there are no further questions from the participants, I now hand the conference over to Mr. Parmod Sagar for closing comments.

Thank you very much, shareholders and analysts for your continued support and very engaging discussion, questions. I hope me and Azim are able to satisfy you, give right guidance to you. But in fact, if you have any further questions, please reach out to G eeta, and she will be able to reply you back for any clarification. Thank you so much. Have a nice day. Bye-bye.

On behalf of RHI Magnesita India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.