AIA Engineering hosted a conference call on August 09, 2022. In the conference call, the company was represented by Mr Kunal and Mr Sanjay.

Key takeaways of the call

Volume

In Q1FY2023, the company produced 68,336 MT as against 70,391 MT in Q4FY2022.

In Q1 FYFY2023, the company sold 67,898 MT as against 72,976 MT in Q4FY2022 down 5,000 tons.

Of the total sales, 45,710 MT was mining and the balance was non mining as against 44,395 (mining) and 28581 non mining in Q4FY2022.

Realization was more than Rs 150+ mainly due to inflationary pass through of both raw material cost and freight cost. The company expects the shipping cost to normalize in next 2 quarters. Also it says that this is the peak realization. If the prices of Ferro chrome and freight cost reduces on a sustainable basis, then average realization will decrease.

Revenue from operations stood at Rs 1064 cr for Q1FY2023. Other income stood at Rs 20 cr of which Rs 14 cr was from treasury operations and the balance Rs 6 cr from gain from foreign exchange fluctuation.

US $ realization stood at Rs 77.32/per US $.

PBIDT stood at Rs 267.8 cr with margin of 24.8%. The company expects the margin as a % to remain at similar levels.

PAT for the quarter stood at Rs 190 cr.

Expansion:

The Company has completed setting up a manufacturing plant of Mill Liners with a capacity of 50,000 MT capacity. The same is expected to be commissioned in the last week of August or first week of September, 2022. The company is waiting for some statutory clearances. Total market size of metallic mill liners is 3,00,000 MT.

The company also plans to undertake Brownfield expansion of grinding media with a additional capacity of 80,000 MT and the same is expected to be commissioned in second half of FY2024.

CAPEX:

The company plans to incur a total CAPEX of Rs 400 cr in FY2023 and FY2024. Of the total Rs 400 cr Rs 250 cr will be towards brown field expansion and the balance towards maintenance and other CAPEX.

Of the total Rs 400 cr CAPEX, Rs 250-275 will be incurred in the current financial year and the balance in FY2024.

Competition with Forged media players: The company approaches miners with a multi factor approach. Forged media players cannot compete beyond a point. However with a multi product approach the company expects to gain significant market share as it offers more solutions than plain forged media players offer.

Cash Balance: As of now the company does not have any plans to distribute the available cash in the balance sheet and plans to retain it to fund growth including working capital requirements

Outlook:

The company does not provide guidance however from the directional perspective the company expects to do additional volumes of 30,000 MT in FY2023 and additional 25,000 MT each year thereafter. (FY2023 and FY2024 volumes do not include export volumes to Canada).

Demand is absolutely fine for the company''s products from market. There are headwinds; however, most of the headwinds have been addressed by the company. Once freight cost comes down, the company expects that it will become more competitive in comparison with local players in the export market.

Order book stood at Rs 700 cr.