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00:00Today, we are joined by the Chairman and MD of Jai Balaji Industries, Mr. Aditya Jajodia
00:05to talk about the Q1 numbers in the quarter went by. Good afternoon, Mr. Jajodia.
00:09Good afternoon, Ma'am. How are you?
00:11I'll start off with congratulating on a strong Q1 numbers. I want to start off with asking what
00:16drove growth this quarter and what's the kind of revenue and growth outlook for FY25 as a whole?
00:22See, the revenue outlook for the growth in this particular year would be in the region of around
00:2620-25%. So, we are looking to finish with the average revenue around say 8000-8500 crores for
00:32this year. And as far as the growth was driven, the growth was driven mainly by higher volumes
00:38of the value-added products in this particular quarter.
00:42Yes. You know, margins have also expanded to 18.37%. Now, the goal mentioned previously has
00:48been around 18-20%, but the FY25 guidance in the presentation also said 17-18%. So,
00:55what's the final FY25 margin guidance for the company?
00:59See, the margin guidance has always been between 18-20% and we are absolutely sticking to it. So,
01:05we have achieved 18% in this particular quarter and going forward, we hope to be in the same range
01:10of 18-20%. Got it, Mr. Jajodia. And coming to the operational performance now, Sponge Ion,
01:16Peg Ion, Ferro Alloys also saw, you know, all saw production growth over 32%. However,
01:21DI Pipes has had the lowest growth when you compare to the other products, 5%.
01:27Was there any particular reason for that? No, DI Pipes also has grown if you compare
01:31to the last 12 months, if you compare over the last quarter, because of this being the election
01:37year and the election quarter. So, slightly the uptake was slightly slow, but overall,
01:42there has been no deceleration in the growth of DI Pipes. All the products have grown, I will say,
01:46as per the plan. And are there any certain products
01:49that you see driving the road for FI25 in the near term?
01:53Yeah, the certain products would be the specialized ferro alloys and the ductile iron pipe,
01:57because whatever new investments we have made into enhancement of the ductile iron pipe capacity,
02:01a portion of that will be available for sale from the month of September. So,
02:08we will have six clear cut months of the advantage of the enhanced production.
02:12Okay, got it. And Q1 realizations also fell across the board, you know.
02:16What's the outlook in terms of pricing going ahead for FI25 as a whole?
02:22As far as our product profile is concerned, we are not so much concerned as per the pricing of
02:27the commodities like SEPIG iron or sponge iron or TMTs or HR, because our product profile will
02:32be more towards value-added products. So, as far as the realizations are concerned,
02:36we are not very negative on the realizations. In fact, I will say that we are extremely confident
02:42that barring a couple of percentage points here or there means the realizations will be
02:45maintained for our products. Okay. And, you know, let's also talk about
02:49Jayabala G2.0 especially. I want to first touch upon the capacity enhancements for DI pipes and
02:55ferro alloys as you mentioned. I want to know what is the current capacity, the future target,
02:59and what's the progress looking like right now? See, the plan for expanding the DI capacity,
03:06right now we are at around 3 lakh tons. So, we are expanding it to 6.5 lakh tons.
03:14So, in this, we hope to achieve 4 to 4.5 lakh tons of production in this particular financial
03:19year itself. And in the next financial year, we will be reaching rated capacity of 6.5 lakh tons.
03:24As far as the ferro alloy capacity is concerned, we will be raising it to 1.9 lakh tons and we are
03:29hoping to achieve a production level of around 1.5 lakh tons by the end of this financial year.
03:34Next financial year, we will be at 90-95% capacity utilization.
03:38And when will the entire capacity enhancements for both these segments be completed and how
03:43much of CAPEX has been allotted for the same? See, the total CAPEX allotted for these segments
03:48and for the other cost-cutting measures like enhancement of the plant furnace capacity,
03:52enhancement with the captive power plant, modernization of the plant, etc., it is around
03:55a thousand crores out of which 600 crores has already been spent entirely out of internal
04:00electricals. And the balance 400 crores, we are planning to spend over the next 12 months.
04:05Okay. And could you maybe give us a breakup of how the 400 crores will be spent?
04:12See, we have a breakup of the thousand crores. Amongst the 400 crores, the majority of 300
04:16crores, this will be spent towards the addition of capacity in the ductile alloy and pipe segment
04:21and in the ferro alloys. The balance around, say, around 100-215 crores, it will be spent
04:28for revamping the blast furnace and for modernizing the power plant.
04:32Okay. And I also wanted to get more perspective on the current revenue breakup and what's the
04:37targeted mix going ahead. I did see, you know, you all do want to increase your revenue
04:42contribution from DI pipes and ferro alloys specifically. So, what's the strategy there?
04:48The strategy here is that currently the share of value-added products
04:51in the entire product mix, it is around 50-55%. By the end of this financial year,
04:57we are planning to raise it to around 65%. And by the end of the next financial year,
05:01it should be in the range of around 80%. Okay. And if we just talk about, you know,
05:09the DI pipes and the ferro alloys, what's the breakup there in terms of revenue contribution?
05:14Currently, the DI pipes is around 32-35% and ferro alloys is around 20%. Going forward over
05:23the next 18 months, DI pipes will constitute for say around 60% and the ferro alloys will be around
05:3020%. Got it. And you know, the company's net debt has also seen a significant decline. So,
05:35what's the strategy on becoming net debt free and when will most of the repayments be made?
05:42See, the strategy is that we want to be net debt free over the next 12 months. That is a commitment
05:48which we have made to ourselves. So, the strategy is that every month payments are happening,
05:52every month payments are being made. So, by the end of the next 12 months,
05:56means there will be a substantial reduction. And by the end of the next 12 months, the amount of
06:00debt will be very, very insignificant. And at that particular point of time, means a bullet payment
06:05can be planned also. The current debt, the net debt, it is only in the region of 385 crores,
06:10which is less than around a month and a half, which is even less than a quarter and a half of
06:16the beta.