Key takeaways of the call

Production in Q4FY16 and FY16 stood at 46399 MT (down from 51324 MT in Q4FY15) and 189449 MT (down from 200215 MT in FY15).

Sales in Q4FY16 stood at 53502 MT (of which 28594 is mining volume) compared to 50626 MT (of which 25326 is mining volume) in corresponding previous period. The sales volume for FY16 was 185844 MT (mining volume is 100684 MT) compared to 186656 MT (mining volume of 106056 MT) in FY15.

Marginally lower sales volume in FY2016 can primarily attributable to certain strategic and conscious decisions i.e. restricting sales to Ukraine, reduction in South African market volume owing to currency uncertainties, and volume reduction owing to closure of one particular iron ore mine in Brazil.

Expects decent volume growth in FY17. The confidence for volume growth for current fiscal comes from happening of new opportunities. Developmental activities of new mines in several key locations in full swing. The company target an incremental volume growth of 120000 MT over next 3 years.

Greenfield expansion at GIDC Kerala, Phase II that envisage a capacity addition of 100000 TPA taking the total installed capacity of the company to 440000 TPA is expected to be commissioned by Oct 2017. The total capex cost is Rs 350 crore.

Capex incurred during FY2016 is Rs 178 crore and capex estimated to be incurred in FY2016-17 is Rs 150 crore.

Order book as at April 1, 2016 was Rs 534 crore.

The opportunity landscape over medium to long term horizon remaining unchanged with the total addressable annual mining replacement market estimated at around 3 million TPA coupled with a very low penetration of high chrome consumable wear parts in mining. Bulk of future growth is expected to come from outside India and that too mainly in mining segment.

Apart from significant cost reduction due to much lower wear rates, high chrome solutions also bring about benefits like improved process efficiencies, reduction in other consumables (other than high chrome consumables), improved environmental benefits, etc. which are other key growth drivers.

Outstanding foreign currency forward contracts as of March 31, 2016 stand at USD 26.25 million, Euro 4.75 million.

Cement sector outlook continues to remain flat with no near term signs of recovery visible either in India or outside India.

The supplies of high chrome mill internals to Indian thermal power plants, although flat as of now, are expected to pick up from this fiscal, but the growth rate will be pegged to the growth rate achieved by thermal power segment in India.

For the time being, AIA has a limited presence in China limited to the VSMS high chrome mill internal parts.