Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Jonas Bhutta from Birla Mutual Funds. Please go ahead.

Couple of questions. Firstly, if you can quantify the sort of impact across multiple P&L line items, firstly on the volume front and the corresponding impact of that on revenue. So, what we see is, there is a negative delta of roughly 52 crores on the volume front in the bridge that you have given on page five of the presentation is that the entire impact of the curtailment of volumes to one of the clients or there is more firstly, secondly if you can quantify the impact of one offs, if the employee cost which seems to have jumped and on the interest cost, again, because of the FOREX fluctuation So, these three sort of, if you can just call those out in terms of numbers. That's my first question.

thanks for the question. As far as volume is concerned, this was mainly shipments were impacted due to implement of credit block our global processes and this was mainly two to three main customers, but they all are highly profitable and cash rich customers. So, there is nothing to worry about their credit worthiness and we are not seeing the impact in the current quarter that is what I want to say, but this was required to bring in discipline and improve our working capital and our cash flow that is one , which led to this drop in shipments . Then on employ cost actually, it has gone up.

So, ma’am the quantification is what 52 crores?

Yes.

And the sales happen, we would have been closer to 975 odd crores?

So, volumes would still would have been flat sequentially then , there would be no growth in volumes. Had this credit block not happened, is that understanding correct?

Yes, that's right. And as r egards employee cost 1% of revenue is because of the higher YTD provisions we had made, because we had met global bonus criteria. So, that led us to provisioning for the full year in this quarter. So, this 1% impact will not be there in the next quarter. And higher interest cost is because of revaluation of the debt, the external commercial borrowings, which we had 33 million, because the closing rate of Euro to rupee, rupee had depreciated to 92.58 there was a 22% depreciation, but now rupee has come back to normal 90 levels. So, we will see this benefit in the next quarter.

How much was the impact ma’am 16 crore. Would it be around eight, nine crores of Delta?

Yes, the delta is.

Or eight and a half crores of interest cost in Q2?

Yes, that's right.

Got it. Parmod sir my second question was on, DOCL, this track the nine months performance in terms of sales. We've done about 750, 760 odd crores worth of revenue and we are in line to do roughly 1000 crores of revenue this year. This is more or less sort of flattish in that sense on a Y-o-Y basis despite having some improvement in capacity utilization at least in the first two quarters of the year. What explains this sort of flattish top line is there a higher-than- expected price impact in this in DOCL. And, how should one think of FY25 volumes and revenue in just that subsidiary?

So, again there is a combination of the two, three factors so one is, we have about nine days strike in Rajgangpur, it was unreasonable, so we stood firm , and they have to come inside unconditionally. So, it drags up to nine days and then they agreed to whatever we said. So, that was a good sign, but we lost some production and subsequently some revenue as well. Apart from this, not only this quarter, but last quarter also from DOCL two, three plants where the payments were not coming as per commitment of the customer. So, we squeezed the supplies to have a right balance of working capital, this has impacted a lot. The third one is, the business of DOCL and RHIM in SAIL plant we were having two order and now with the combined entity, we remain one company. So, in SAIL plants, it's the policy of Steel Authority of India to have two or three vendors for every order. So, earlier put together our L1 in RHI Magnesita and DOCL is L2 so we run away with 40% RHIM and 30% or 25% L2, but now with a single entity, I can get 40%. So, there is a business loss in Steel Authority of India also, which we are now looking at to add products which we were not supplying to Steel Authority of India during this year. And, in FY25, we shall be able to recover that losses.

Got it and quickly the last one sir. So , if you can remind us the installed capacity at RHIM standalone, Hitech and DOCL individually. And if you can reflect the capacity utilization at these three entity levels that's my last question.

So, roughly RHIM is 180,000, 175, 180, 000. And Dalmia is about 300 and Hitech is about 36, 37,000. It was 62,000 reported earlier, but we stopped some production in Jamshedpur, that is to see the scale of economies, but put together everything, roughly its about 5,37,000.

And the capacity utilization if you can repeat at these three entity levels separately?

Yes, I said earlier also, that capacity utilization in RHIL plant is about 70% last quarter and DOCL 52%, Jamshedpur 58%. Earlier it was 88%, 59% and 48%. So, Jamshedpur capacity utilization has gone up by 10% whereas , in the DOCL about 7% less And also in RHIM plant . So, it was a deliberate decision to reduce our inventories.

But do you believe this was the last bit of it as an order there is some more inventory destocking or management still left in the system that will come in Q4 or Q1 of next year?

I don't think this last quarter. We will not have that issue probably January , we still are in the process of controlling and Feb, March we will be back to normal process. But , I can only say one thing. We still have pressure of overdue payments from some customer, and we will be quite strict with our supplies, and it will be linked with this, irrespective of top line.

Thank you. Next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead.

I ha ve a few questions , first one was on the top line. So, you mentioned the fact that one alarming thing actually , that because of the merger now, we are one company and will not have two entities to bid for projects. Does that actually mean going forward we will not be able to gain market share because whatever say the steel production growth is 6%, 7%, we will be able to grow only at that rate or will not be able to outperform the growth rate of the steel market because of this reason, is that a concern?

No, Rajesh I said only Steel Authority of India, SAIL is having tender system. Earlier there were three companies participating Hitech, Dalmia and RHI Magnesita. And now we are a combined entity and at the same time, if we become L 1 everywhere, we will get maximum 60% share. And if three, three companies are L1, L2, L3 we were 100%. So, this SAIL part, yes we have an impact and it will remain. So, that's what I said we are trying to mitigate the product which we were not selling in Steel Authority of India or only one party was selling for example, I will give you an example of say Jamshedpur plant or Hitech plant, it was the only supplier for ladle opening compound. So, now we are going all out to increase share of that product. So, there are similar three, four products, where only one party was there, it will not have impact we will be increasing the share but where three parties are bidding for one product there will be impact and we will try to mitigate but overall revenue of say 3800 crore for this year, there will be maybe 12%, 13% total revenue in SAIL. So, out of the 12%, 13% there will be some impact, not the overall.

Okay, thanks. And sir I wanted to also ask that for Tata Steel there is Kalinganagar expansion and NINN expansion is going on, are we in a position to increase our market share there or are we getting a significant part of this expansion project other than JSW expansion which we are aware of?

Yes, you are right.

Okay, so we can get some traction from that, is what you are saying?

Absolutely.

Okay. And on this 5% less shipment, I couldn't get Vijaya ma’am correctly, is that number going to reverse this quarter or what , because we are already in the middle of this quarter, that 5% lower shipment which happened because of credit conditions , we are going to reverse this quarter or is it going to be not there at all?

It is totally linked with the payment behavior of these customers. If the payments will come, we will not have any revenue loss and definitely ship up everything.

And sir this YTD bonus provision, in which quarter was there last year similar time, was it there in the same quarter was it there in the fourth quarter, this bonus provision and was it of a similar magnitude or much lesser?

It varies year-on-year basis, there are global KPIs which is applicable for our region for India as well. So, if we achieve those KPIs, we achieve 100% of the provisions. So, in the beginning we are considering that we are going to achieve 100% of whatever is the bonus percentage. So, if we underachieved, we have a surplus money, provision is more we are going to pay out to the employees less because we have not performed well or we have not achieve our KPIs. If we over achieve, so then there is a bonus more than 100%. So, this year, we are going to get more than 100% bonus for the employee . That's why this impact otherwise we have distributed in 12 months based on 100%.

That's right.

So, it is around 9% of revenue.

9% of revenues is 350 crores?

Yes.

Okay, so employee cost will be annualized about 350 crores now, is that the right figure?

That’s right.

Thank you. We move to the next question. The next question is from Lakshmi Narayan from Tunga Investments. Please go ahead.

Couple of questions, first if I look at the top five integrated producers in India. What's the kind of sales you get from them, which include JSW in them, ArcelorMittal and Tata Steel?

Can you repeat your question, it's not.

Number one, what percentage of your sales comes from the top five steel companies in India?

From the top major customers, it's 65% to 70%.

Five or six major customers.

Got it. And in that if you just demarcate between flow control and non -flow control, which is one of them is sold per tonne basis, one is not sold by heat basis. So, what is that mix, to these top five?

25% roughly it is in line with previous quarters, 25% of revenue came from flow control and on a consolidated basis.

I was just talking about with these top five players, which account for 65%, 70% of the revenue, what is the mix of flow control and non-flow control?

That's what I'm saying 25% is flow control, rest is non-flow control.

Got it. I thought that you mentioned for the entire company, but I was just asking for the flavor of top clients.

Got it. And you mentioned that there has been some issues in terms of labor, can you just elaborate which plant was it and which customers we couldn't serve because of that, like we chose the nearest one?

It was DOCL plant in Rajgangpur and the customer impacted, out of these five customers, what we are talking about maybe three customers are from that bigger customers.

Got it. And the next question is that , what has been the exports so, for us on a consolidated basis, what is it now and what is the plan for the next three years or so?

As of now, it is about 9%, 9.5% of consolidated basis and the standalone is around 11-11.5%. We earlier said that we want to increase our export, but unfortunately because of this geographic and political situation outside India, we are not able to push as hard as we could like to, Ukraine and Russia war and all these sections and all. The impact is heavy. So, we are almost at the same level which we were last quarter.

And for the products which you are making for export market , what proportion of that is for the RHI network is solely manufactured in India that you are the sole have the dominant export hub?

As of now, I would say no, we are not export hub, we are supplying to many customers 100% also, but still we have various locations , various plants of flow control, they are contributing throughout the globe. So, I would not say we are still a export hub we want to be, but it will take time, but in our region we have larger region like west Asia, we have FLS contract, full line contracts, management contracts, where all these products are going from India.

Got it. So, with the industry is consolidated on your customer side when the top five are actually leading the key production of steel capacity expansion in India. On the other side there is also consolidation of players in terms of RHI and the other two or three competitors. So, how this equilibrium has changed in terms of pricing for industry from a refractory point of view, whether your, things have become more competitive or it has become more rational when compared to what it was like three years earlier?

I would say since India is the only growth market, so everybody wants to come to India or increase their pr oduction capacity in India. And, I would not hesitate to say that if the way people are expanding, if everybody keeps on expanding we will have our capacity very soon. And then it will put a lot of pressure on everybody's margins. We as industry should be very cautious when we are adding capacity.

Because what I see is that , for you the margin is going down either it is because of internal reasons like employee cost, or is it also because of the fact that the other competitors is also putting the price down , is it I am trying to understand whether the competition is good competition or bad competition to have now?

I will not say the competition is good. I would say yes, everybody is under pressure to deliver. But, I don't agree with you that our margins are going down continuously. It is abrasion only this quarter what we said earlier, we still believe we can deliver 14%, 15% on a consolidated basis.

14%, 15% EBITDA?

Yes.

Thank you very much. The next question is from Riddhi Panchal from Chanakya Capital. Please go ahead.

Sir, I have only two questions. So , how steel company selects refectory players and what are RHI competitive strength over the other and the second question is what is the CAPEX per tonne of RHI?

What is second question?

CAPEX per tonne for RHI?

CAPEX cost?

Yes, CAPEX per tonne?

Okay, so what we have incurred CAPEX so far, so, our CAPEX this year, So, far we have done 50 crores and of which this quarter is 20 crores.

Earlier about criteria of selecting, whenever a new steel plant comes up we are at advantage if steel expansion goes on, because of our all convert , electric arc furnace , for RHD gasser, for ladles they prefer us over anybody else. So, they will commission their plant with RHI Magnesita products, when it comes to flow control, it is divided between us and Vesuvius, sometimes a little bit of IFGL but, when it comes to lining, converter, furnaces, ladles, RHD gasser, we are the preferred suppliers.

Thank you. Next question is from Chetan Doshi who is an Individual Investor. Please go ahead.

I have a couple of questions. The employee cost on standalone basis is gone up from 39 crores to 64 crores. Now, that is almost 50% of the earlier quarter what we were paying , that bonus of 1% will not increase this much. And the second question is, how much raw material we are buying from our principles. I hope it is at arm's length, but what is the amount what we spent from our principles, and this traded goods, are these trades goods also bought from our principles?

I will touch base with this raw material path. So, we are not buying any raw material from our parent company, though we have backward integration, but it is again a matter of economies if we buy from say for example, China as product at Rs.100 and if we bring it from Europe or from Brazil it is Rs.105. So, I prefer to buy from the market if it is cheaper than our own company. So, we are not buying any product raw material from our parent company as of now, but if given a situation if somethin g goes wrong with the geography, China , et c we have a backward integration we can bring material and we are the only company who can bring material from Europe, America and keep on catering to all our customers. When we talk about trading products, yes there are some products which is coming from parent company which we are not producing as of now, in India. We are trying to shift many products from Europe or America or from China to India, but still there are many products which are coming from parent company to India.

I will take this question, see coming to employee cost you said it has gone up from 40 crore on standalone basis to 65 crores. This is because Hitech has got merged in standalone and the number of employees we have around 500 people from Hitech. So, the number of employees is one and half times that from the previous year. That is one reason why the employee cost has gone up , plus the bonus provision which I have said, so this two together has le d to increase.

How much your bonus provision is there on specific because next quarter you said it will not come in the balance sheet but what is the amount?

So, it’s around five crores on standalone.

And one last suggestion, in the presentation, no mention as to what benefits we have derived after taking over Hitech and Dalmia. See basically when we see t he margin going down on quarter-on-quarter basis, whether it was a wise decision to take over these two companies or not because, going to the presentation we don't come across anything as to what benefit we have derived and when you intend to improve the bottom line this same thing prevails.

We have mentioned on slide number #8, strategic progress it is not clearly mentioned in numbers of how many crores we save here and there, but we have outlined what we are doing maybe next time we will come up with some more granular information.

Yes, because as a lay person, how as a shareholder, how do we know what benefit we are deriving after these two big takeovers which has taken place, we understand that some time is required when anything is merged into the main principle company and to get the 100% output from the new entity it takes time definitely, but we are interested in , ultimately say from second quarter, third quarter, we need to know when this fruits will be on the balance sheet.

Next step we will come up with this information in coming days.

Thank you. Next question is from the line of Vipul Shah from RW Equity. Please go ahead.

So, a couple of questions, to Ms. Gupta. This ECBs which are there on our books. The understanding was that, they are on a fully hedged basis. So, this quarter -on-quarter fluctuations because of the IndAS standards, this should even out over the duration of the ECBs am I correct or are these ECBs open?

You are absolutely correct your assumption is correct this is fully hedged thing is , the hedge rate which we have taken there was a Rs.1 gap between the hedge rate and the SAP closing rate, which we get from the group the closing rate. So, the rupee had depreciated 22% in this quarter. That is benefit of, the seven crore, 10.6 crore, what is here in December quarter we get the benefit in the next quarter.

That is, irrespective of the rate I'm saying the benefit will come over the duration of the ECB am I right?

That's right.

Second question was, on the last call also, I have made a suggestion on this capital structuring, where one could look at scheme of arrangement to offset the goodwill on the books with the reserves which premium, et cetera which we have, last time you mentioned, the management will consider that to make our ROCEs much more efficient. Just wanted to understand, is there any update on this or is there any thought process which has gone through?

We take your suggestions very seriously sir. So, we have taken a legal opinion also because, what the legal opinion says that reduction in securities premium by adjustment of goodwill will lead to a reduction in capital and this is not allowed for a solvent organization. So, we cannot go ahead that.

So, basically, the balance sheet will actually remain a little elevated till the time we find a way out of this?

That’s right. We cannot reduce our capital

Fair enough. One more question, which I had, for Mr. Sagar was that, sir you mentioned in your initial remarks that, the credit tightening measures which were undertaken on the customer side, that led to reduction of volume, we also mentioned that, essentially these are credit worthy customers and there is no issue as far as this receipt of any pending news is concerned. So, my question is sir, this volume loss which has happened, and you alluded that it may not be reversed if the credit cycle doesn’t, if the customers don't come in as per your credit cycle. So, has it led to gains for our competitors , has the volume shifted there or how does it work sir?

So, I don't think the volume has shifted because, so fast they cannot do it, the products which we were supplied to them, we have annual orders. So, they have depleted their inventory in a way I would say, they were running at three months inventory, now maybe they are running at one month inventory, overall more than half month of inventory. So, at the same time, we don't want to stop any customers, their production, but it is a two way traffic if customer is obstructing us to deliver quality product on time delivery, we also expect money should come otherwise, this top line, bottom line is just a number I will show 50% EBITDA and average is in my inventory and overdue payments, then economic profit is zero.

Fully agree s ir, fully understand, ultimately the cash generation has to be there. So, the takeaway sir is that, since you alluded that the customers are sort of using up their inventory, as and when they return to our credit cycle and their old levels of inventory, there could be a bump up in the coming quarters?

Yes, it is possible if they pay us at handsomely, we will supply.

Thank you. The next question is from the line of Harsh from Marcellus. Please go ahead.

For the quarter, I understand that the top line was impacted because we tightening our credit norms. However, even if we remove that , the quarter -on-quarter sales growth or volume growth is sort of flat from what Vijaya ma’am said. However our customers like JSW and Tata Steel, they have reported like 5%, 6%, quarter -on-quarter production growth at their plants. So, I am not able to reconcile that why did we also not see such order per growth rate number sir?

One is, if you add these credit blocks, then we are at the same level or a little 1% more than that, about 4%, 5%. But if you take out only Jindal’s and Tata’s, which is about 40 million tonne of steel, out of 130 million tonne, so it is 5% of their growth is actually 1.5% growth in an overall scenario. So, there some stating the reason you need to take some time looking at the pricing, you are looking at credits and all those things, but I can reiterate that we will be growing at least with the market, if not more than, internally we believe we can grow better than market because all these new plants as I said in my earlier comment they will go with us for all critical items.

Have you lost some share of business with Tata or JSW?

Have we lost any share of business with Tata or JSW as well?

No, we have not lost any business, we are their preferred partner.

And could you repeat the calculation for SAIL, how much of the quantum has been lost because of the merger?

It is very complex calculation, I cannot explain to you in one or two minutes, what I'm trying to say is, see if our market share overall whatever is our revenue, if it is 13% 14% in SAIL plants. So, out of that, some products which Hitech was also producing , Dalmia was also producing, we were also producing, those products are combined together, we will get only one not three company with order, but there are many products which only Hitech was producing not Dalmia or RHI Magnesita I gave the example like Nozzle Filling Compound or Tap hold clay, et cetera. So, there are many products which only single party was producing that will not have any impact. So, we are trying to increase our market share by bringing other products which we were not selling to SAIL.

What was the net impact of this?

Out of say 13% if I say is our total market share in SAIL plant that will be about say 3%- 4% minimum.

Okay, so our share of business would go down from 13% to 10%. Is that understanding correct?

Yes, but it will be temporary as we are trying to mitigate these risks by introducing new products.

And this happened recently like in the last quarter or it has been the case since April?

From the acquisition, we had some orders in place already. So, when these orders are in place, we were enjoying all three companies’ orders, when a new cycle comes in June, July, then the impact will start coming.

Okay. And we don't see this happenin g at other steel plants because why s ir, why can’t JSW and Tata can also have the same sense?

Sorry, can you come again?

In one or two cases yes, if these are only the product and only two companies for example, RHI Magnesita and Dalmia were suppliers. So, definitely now they are left with one company. So, they will try to develop some alternate source, so it is a natural phenomenon.

So, according to you, how much do you reckon that we will be impacted more by this?

I don’t have a number it is very minimal in percentage.

Okay, got it. And sir regarding the strike and the overall integration with Dalmia, could you throw some remarks where are we in that space, where are we in that space, this integration already happened and why did we see a strike happening at Rajgangpur?

No, the integration is still ongoing though it's almost a year, it is a cultural thing, management style, we are thoroughly professional company, multinational company, those were family driven company, whether it's a Dalmia or Hitech, so, there way of working was different, our way of working in different of bringing the cultural change, it takes time. Secondly strike, there is a union from last 30 years that strong unions, so they were handling it differently, union has come up with something they stop ped the production, they will say come let's discuss and resolve. So, we don't want to do that , so we said there's a way to discuss without stopping production and we will not accept this. We have a good relation with them now.

Okay. And have you seen any loss of share of business because of this strike, the three customers that we missed out the supplies too, have they approached other suppliers like any, any thoughts there?

As I said, if the plant is closed for a 8, 10 days, yes there will be shipment impacted or revenue impacted temporarily, but the customer cannot reach out to any other supplier and the other supplier cannot also supply the materials, they need to make a mold, they need to produce the need to ship it is a cycle of maybe 45 days. First they need to float an inquiry then there is offer, then negotiation then honor, any big plant will take maybe a month time to even placing the order on another supplier. So, this didn’t have an impact.

Next question is from Sahil Sanghvi from Monarch Networth Capital. Please go ahead.

Sir my first question is regarding the Red Sea issue, since we are sourcing a lot of raw material from outside, is that a really concerning factor the freight cost going up , the container availability being affected, leaps time increasing and would that really impact our RM cost and margins going ahead?

You are talking about this Red Sea issue?

The freight is going up and that timing because the rerouting so it is a impact of almost two weeks. And freight is almost sometimes double, sometimes even triple. So, that will have that impact and in coming days, we will also be reaching out to our customers to tell them the fact and some of the customers are also worried about how they will get that inventory in time, material in time. So, we are working on it, we are very committed market leader , we will not allow any steel plant to stop because of this issue. We are taking various steps at a global level also.

I have heard that some of these annual contracts may not revise in January and some of these steel plants have been asking for price guards up to the magnitude of 5% to 7%. Are we seeing a similar pressure on price cuts and would that come in from Q4?

There is a pressure on price cut but now with this Red Sea situation even the container availability will be an issue in coming days, because then you are rerouting two weeks, two and a half weeks delay that container availability will be an issue whether it's in Europe or in India or in China and there will be congestion at ports and all. So, now the first clarity of steel plants given to us will be to have refractory instead of talking about pricing and reduction. So, we are under pressure but they are also under pressure because materials will not be coming as smoothly as it was coming. Our raw material suppliers are also asking for price increase because the freights has gone up.

Thank you. The next question is from the line of Mayank Bhandari from Asian Market Securities. Please go ahead.

Sir my first question is in the standalone excluding Hitech, what is our Y-o-Y growth if you can tell for this quarter and for the nine month?

See, in place of standalone we have integrated SAP system. So, we do not have numbers for Hitech separately, so that standalone numbers have to be with Hitech only.

So, how much would be your export from standalone then?

Export from standalone in 11%.

And this has declined Y-o-Y how much?

So, last year it was around 16%. So, it has come down as sir has mentioned that freight, Red Sea issues and sluggishness in overseas market is the reason for lower exports.

Okay. And ma’am in terms of export capability, how much you have ramped up so now, are we doing export for flow control products also now, what is your status for export?

Okay. So, within flow control, how many products?

How many products means?

Like isostatic is what you had highlighted.

Yes, mainly it is isostatic and slide gates.

Okay, because you are in the process of improving the export for three or four more products in the near future?

So, mainly this is flow control and from Vizag plant, there is a high alumina special refractory for export.

Okay. And lastly sir, in terms of Hitech capacity utilization, this year it is you said 58% right?

Right.

Any expectation for this year, next year?

We are working seriously on creating Jamshedpur plant rea l isostatic export hub . But, in exports it takes time, a lot of time, doing trials and becoming an approved vendor, it takes some time around one and a half year. So, I believe in this year, we will be doing better than the previous year and 25, 2 6 onwards we will have substantial export business from Jamshedpur plant.

During that in the export market, the situation has bottomed out now. So, is it related to some demand slowdown in the export market, or how long can you expect that?

Yes, naturally in general there is a depressed market, particularly you talk about Europe or because of this Ukraine, Russia war, and in general Europe is not performing well. They have their own issues. And I don’t see next three or four months anything is going to change.

Thank you very much. In the interest of time, we will have to take that as the last question. I would now like to hand the conference back to the management team for closing comments.

Thank you, everyone for taking time out to join us today. We look forward to interacting with you again next quarter. And whatever suggestion you people have given we will consider that to add to our PPT next time. Please get in touch with our Investor Relations team for any further queries. We will be more than happy to answer your question. Thank you very much.

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