Midwest Limited (MIDWESTLTD) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Midwest Limited Q1F527 Earnings Conference Call hosted by GoIndia Advices LLP. As a reminder, all participant lines will be in the lesson-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal and operate the weblessing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Anakapur from GoIndia Advices LLP. Thank you, and over to you.

Thank you, Anusha. Good afternoon, everyone, and welcome to Midwest Limited's earnings call to discuss Q1 FY27's performance. The financial results have been uploaded on the exchanges. I hope you have had the opportunity to review the same. We have on the call Mr. Ram Kolaredi, promoter, whole-time director, and CEO, Mrs. Uma Kolaredi, promoter, and whole-time director, and Mr. Dilip Kumar Chalasne, chief financial officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Ram Kolariri to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, Sam.

Thank you, Sana. Hi, everyone. Thanks for dialing in the call. I'm happy to share that we have started the year with a strong note in terms of numbers. In terms of growth, revenue, we have a growth of, compared to Q1 last year, to this Q1, we have a revenue growth of 35%, EBITDA 25%, and a PAD growth of 27%. We also have to note our major cost factor is coming from diesel, and we have faced a lot of volatility, especially higher prices on diesel for the last quarter compared to the Q1 of previous year. In spite of that, I'm happy that we are posting these numbers, and most of these numbers are coming from the granite. The, in terms of courts, we have, have the. Production for the last quarter, which is, we generated around 5 crores of revenue, and we have stabilized unit this quarter will be a big jump from that number, and then a month-on-month, a quarter-on-quarter, it will be increasing until we reach a throughput of 15,000 tons per month eventually, and we will stabilize the plant at the eventual number. And we are in line to reach the target for the year-end. The other development I would like to bring is an important MOU signed with Indonesia state-owned company, Perminas. So Perminas is a state-owned company of Indonesia, which is designated to explore, mine, and value-add all the critical minerals in Indonesia. Including Rare Earths, and we have the first private company to have an MOU with them, where we get access to all the resources in the entire country, and our focus being Rare Earths. We already identified the first two projects, which our team will be starting to work on. Now, this MOU will be translated into an agreement. To form a JV along with them, and I think you'll find developments on that during this quarter, which we'll update you in the next meeting. The other important update I would like to bring during this quarter is for Sri Lanka project, the policy which we're waiting is finalized, ratified, and it is in place. And post that, we have received the necessary communication from the government to... To complete the data points wherein we are confirming our production, our investment, and our... Before we receive the... This is the big milestone where there's a progress, and they're ready to start finishing the last leg. So I think we should be looking at developing the project starting sometime next quarter. So these are the important updates. We are in line for our long-term growth, and in fact, we are getting more opportunities that we see. For example, permanence was not. A plan, it happened to happen, and we happened to be at the right time. Given where we are, we will be taking all the relevant opportunities where our margin profile is maintained. And our goal is right now we're looking at projects that we take up right now that start delivering numbers and revenues in the next 12 to 18 months. And we are... A lot of projects coming up in terms of error, but I think we are looking at early commercial projects as a priority, and that will be a priority. Apart from that, I think the updates on the last quarter are continuing where we are the second phase of plant. inclusion all remain in line to what has been discussed. Yeah, so I think that's the update from my side.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants may press star and 1 on their touchtone telephone to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchstone telephone. The first question is from the line of Arvind from EquiVenture Capital Advisors. Please go ahead.

Hello, sir. Good afternoon. Am I audible?

Yes.

Okay. Sir, I would like to understand, we have a sister concern in Midwest Advanced Materials, right?

Hello. Yes.

So, I would like to understand that nature of, primary nature of business. So, can you elaborate?

So, Advanced Material has been into production of permanent magnet. So, their business is from oxide to rarest oxide to permanent magnet. That's where their focus is.

Okay. Okay. And sir, I would like to understand what was the volume with regards to quads in this particular pot of Q1?

Volume approximately 5000 tons is what we have sold.

Okay, okay, and by what time, probably by end of Q3, can we expect us to be producing around 15,000 tons per month?

Yes, so this quarter, we're looking at around 20,000, and the next quarter, but by the end of this quarter, we'll be able to touch a run rate of 10,000. So next quarter, we can go 10,000 to 12,000. I think Q4 will be exceeding 15,000. That's the plan.

Okay, okay. All the very best, sir. Thank you.

Thank you. A reminder to all the participants to press star and one to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question is from the line of Archit Agarwal from Step Street Capital. Please go ahead.

Hello. Yeah, hi. Yeah, my question is like what utilization level do you expect parts to release editor break-even?

So, this financial year, I think we are planning a profit, not break-even. We'll be making some profit out of the operation. So, I think the optimum profitability of optimum EBITDAs we'll be seeing next year. So, for your question, break-even will be achieved maybe in Q3, and then at the end of the year, you will see profits, sub-profits.

And my question is, one more question is about the Belangra plan. So then they will start contributing.

So, Sri Lanka, there is technically a delay of almost six months due to the policy. So, I think we can start, internally, timelines, we can start breaking the ground somewhere in October. So, I think from that point of time, we should look at 12 to 15 months for the plant build-out and start operations.

Okay, all this attention.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. A reminder to all the participants to press star and 1 on the touchstone telephone to ask a question. Participants who wish to ask a question may press star and 1. The next question is from Yash Purbe from InVet Research. Please go ahead.

Yeah, hi. Good afternoon, sir. My first question is on the recently signed MOU. Sir, can you give more details about it and the timeline that by when can we expect? So, why we are looking at Indonesia, interestingly, is I think I'll give just a brief. In rare earths, there are heavy rare earths and light rare earths. So, NDPR, which is a neodymium, persilium, are light rare earths, and the heavy rare earths that we are looking at are disposable and terbium. Now, India, Indian monocyte, which is there in Indian states, Indian coastline, has only light raiders. We don't have the heavy raiders. Heavy rare earths are only in certain geographic areas, which are already mostly contracted or acquired by the Chinese companies, which means there are very less territories where we can access to DYTB. And the reason DYTB is important is every powerful magnet which goes to defense, aerospace, or any critical applications need heavy rare earths close to 4% to 5%. As a coating or onto the rare earth material, without which you cannot make those products. So for strategic and critical industries, it is essential. And Indonesia has deposits called ionic clays. They are geological deposits, different from monazides, which have the heavy rare earths. So this... MOU is giving us access to not only light radars, but also heavy radars. So the initial deposits being targeted are ionic clays, which are not there in India or many geographies. They are there in Indonesia. So we will be converting the MOU to agreement or this quarter itself most likely, and next quarter we'll be forming a JV. The percentage and the equity share of the JVs is just being discussed. Now, the Perminas will be contributing capital. We will also be contributing capital in the share that the JV is formed. And we will be operating this JV for a long time, maybe. So, the activity... The mining lease, then we will explore, we will be starting to mine, extract the... Initial JV that we're forming. And this JV is not just one project. It can be for multiple projects across the country. But obviously, we'll start with one or two, and then we'll try to increase as we go. There could also be projects where we are building out and we are still doing exploration. But geolistically, it's very interesting. And the light raiders are already, the light raiders are expensive, and the heavy raiders are four times to five times more expensive than light raiders. So it is strategically important, and also margin profile-wise, heavy raiders are much more attractive in the overall scheme of things. So I think once you form the JV, from there you should look at 12 months. 12 to 15 months again to plant, build out, and then operate those mines and get into cash flows. And sir, what kind of return of payback period can we expect from this project? It's still an initial stage. We cannot, but usually the cost of extraction is very similar to what we get in monocyte, but you get added heavy rare earths. So usually heavy rare earths are significant in terms of margin profile, but the key is there needs to be enough volume, and luckily in Indonesia we're finding enough volume of the clays to build a plant. And sir, can you put some light on what kind of KPEX would be needed for this project? And this will be apart from the 300 KPEX we are already doing in our existing project. So, it will be similar. It will be more because of overseas projects. Though the project profile is similar, we're taking the difference between Kerala and here is Kerala, the tailings are already ready. Here, we'll be mining the clay from the earth and then taking it to the plant. So, the CAPEX will be higher and also overseas projects, usually CAPEX is higher. So I think the CAPEX will be close. If the first project will be higher than Kerala, but the absolute number I think we'll be able to give you during next call because we're still doing a lot of work on the project report right now, which will be ready in the next 45 to 60 days. Okay, thank you. Those are my questions.

A reminder to all the participants to press star and 1 to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is on the line of Chirag Gandhi from Astrid Investments. Please go ahead.

Yeah, hi. Can you hear me?

Yes. Yes, I can.

Yeah, thank you for the opportunity. Actually, I joined the call bit late, so I missed out on the opening remarks. I wanted an update on the Quartz phase 1 plant. Have we already started the commercialization of the plant? Are all the treating issues with this phase 1 project behind us? Just wanted to check that.

Yes, we'll start the commercial operations. The teasing issues are behind us. I think that will be shown in the numbers this quarter. And as indicated earlier, we'll have a month-on-month, quarter-on-quarter growth. We'll be stabilizing by the year-end at around 15,000 tons plus above per monthly. And by then, we'll not only be breaking in, we'll also be generating some profit by the year-end. That is the plan.

And what would be the update on phase two of this plant?

Phase two, we have already started building up. The only changes, some machinery was going to come from China. We are looking at alternate options now. So we will be in line to commission the phase two within the next 10 to 12 months.

Understood, understood. And what would the CAPEX outgo for this year? And for the next year as well?

CAPEX on quads would be approximately 125.

Okay, this will be entirely for phase 2 of the project, right?

Yes, but it will split over current year and next year.

Okay, so our total Capex outgo will be 125 crores between this and the next year, right? Or it will be a higher number because we have other projects also in the phase of build-out, right?

Yeah, this is for quads.

Okay, and what will be the Capex for the Sri Lankan project?

Sri Lankan project for plant building is around 120 crores.

And the last question is on our granite business. Can you explain this? How did the quarter went by and how is the demand shaping up for the rest of the year?

Demand is good. You can see from the numbers of 35% top-line growth. I think if you remove the quartz part, we are still above 30. So I think the demand-wise is good. The pricing-wise, we have had a better realization. The attention is on the cost factor, though we showed growth on all the fronts. The fuel is something which we are working aggressively on. Luckily, if you look at current quarter compared to Q1, the fuel price has rationalized a bit, but are still far from what they were previous year. We hope that once the volatility is set, we go back to the previous levels, then all that will directly flow into the numbers without us doing much than what we are doing now. Apart from that, I think from cost factors, the electrification is something we are in line, and we are aggressively pushing that most of the electrification expenditure is done this year itself.

Understood. Are you giving any revenue and EBITDA guidance for FI27?

Granite-wise, we will be achieving whatever we have recorded in the last few years. It will be more or less in the same lines, except unless we have this diesel price impact, we will be like maybe a 50-beats, 200-beats kind of range. We will be in the same lines as last year.

So, on overall basis, what will be the revenue growth and EBITDA margin that we are, let's say, guiding for FY27?

FY27, we will be close to, we are estimating around 840. Again, it is the past year's number of 645.

Okay, and EBITDA margin will be upward of 26-27% for this year, comfortably?

Yes, it will be in the same range, except the quads-related weighted average factor, if at all, there is a little impact. To that extent, there will be an impact on the EBITDA. For the current year, next year, there will be full-fledged volumes coming in from the quads. I think the EBITDA would be better, but this year, there will be a little weight factor on that.

Understood, understood. Thank you. Those were my questions. Thanks.

Do I do this? The diesel cost is almost 13% for us as a cost head. So to add to this, the diesel went from 85 rupees to 125, 130 rupees a liter. So you can see a lot of manufacturing industries that are heavily dependent on diesel. Their EBITDA margins were heavily under stress. Ours were down 190 basis points. And that's it in this quarter with this kind of impact, diesel cost impact. The reason being that we were very proactive and we got our fleet electrified from – and, you know, whatever vehicles we are sweating, we electrified that fleet and then we back it together with solar. So OPEX costs are less dependent now on diesel fluctuations. So that's the, and we are going to electrify, continue electrifying the feed to further reduce the diesel impact. So war, no war, we will not be affected on the granite margins going forward. And we've also increased the prices slightly.

The price height would be in the range of what? Upward of 5% or it's like around 3-5% in the granite?

Around that range.

So we will be able to recoup the margin decline that we witnessed in this quarter by let's say 2Q, given we have seen some rationalization in fuel costs.

Yes, yes, we should be, and also fuel is come down by a certain extent, that is also helping, and the currency also helps, so yes, we will be able to more or less go back to the norm.

Yeah, I mean, another war and another really big hike is really, you know, can't be predicted, but, you know, we are on, in the journey of electrifying the fleet, so. Whatever we can, reduce the impact consistently compared to, you know, even the worst quarter is down 190 basis points. You can imagine the minimizing we are doing efforts to minimize.

The biggest lever in this is the volume growth, right? Revenue growth. So, revenue growth is able to absorb most of the other costs, fixed costs. And I think that revenue growth, we'll be able to meet, we feel, as of now. So, I think it should not be a big concern right now.

Understood. And really, the last question is, what is the average relation we're able to get it in the quartz business?

Around 10,000 per ton, rupees per ton.

Yes, yes, yes. Okay, thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. A reminder to all the participants to press star and 1 to ask a question. The next question is from the line of Dipesh J from Mania Finance. Please go ahead.

Yeah, am I out of here? Yeah, many of my questions have been answered. I just wanted to understand what are the key factors of the Q1Q decline in performance? Was it at some seasonal impact during the quarter? Yeah.

I mean, in essence, ideally one compares Q1 of last year, last fiscal, to Q1 of this year. Because usually across the industries, Q4 has the highest peak sales usually. So, ideally, instead of comparing Q1 to Q4, if you compare Q1 of this year to Q1 of last year, it's grown by a 35% revenue. Revenue is grown by 35%.

And adding to that, for our specific industry, we are most of the materials being sold to China and exports are to China. And Chinese New Year is the biggest influencing factor in that timeline. It's like Diwali for them, where they reset all their stock and start buying in bulk, in volume immediately after to stock up for the year. And that typically happens during January, February time. So, historically also, our Q4 revenue has ranged between 30% to 38%, 40%. I think last year it was 35% of the overall year revenue. So, that is also historically constant for us. So, this year also, I think it will not be any different.

Right. And what is the, how is the phase two expansion of Quads for business progressing? And could you provide some details about that?

Yeah, we have spent around a very marginal amount, and we have finalized now the suppliers' orders and all. Q2 and Q3, you will have significant outflow that we have planned for. Out of 125 crore, approximately 60 to 70 crore would be spent in the next two quarters. And the remaining amount would be like the fourth quarter or the early next quarter of the next financial year.

And when do you think the segment of course will reach the breakeven?

So, quads break even, I think we'll be breaking even when we touch a production of 10,000 tons on a monthly basis. I think that is what we'll be doing sometime end of this quarter, next quarter for sure. So, 10,000 tons is, but our aspiration is 15,000 tons per month, around rate. So, I think we'll be ending up making profit this year.

Right, and that would not need the phase two expansion also, right?

No, no. In the current plant, we can go up to 18,000. I think 15,000 is optimum average that we are looking at, and then setting that as a base and then going higher than that.

Right, and could you provide any FY27 guidance for production, sales, volumes across the key business segments?

I think we have absolute numbers and not the unit numbers, but we can do that. Estimated revenues for EFI-27, approximately 840 crore, and out of which 720 will come from granite and 100-120 will come from quartz. EBITDA levels, granite-wise, will be in line with our EBITDAs of the previous years, and quads this year would be a little low than expected because, you know, it's the first year of stabilization. Then the volumes are also a little low. The absorption cost, I mean, the overhead absorption and all are, I mean, taking the bite off it. And next financial year, there will be a full-fledged contribution coming in from quads.

Right. And also, that would increase the operating margins also when the calls business were working? Yes, absolutely.

Okay.

So, there will be an improvement on ROE with that?

Yeah. There will be deployment, and the revenues will start coming in, and this current ROEs are basically because we have raised fresh capital and zone that is sitting there. That's deployment, and the revenues coming out from that deployment should scale up the ROCs or ROGs.

Okay. What about the overhang of the promoter holding of 77%? Are you planning any fundraise or any, I mean, is there any other plan which wherein this promoter holding will come down to 75%? We have enough time. Selling from the promoter would actually be seen as negative. That's the reason I'm asking this.

No, we have enough time, and I don't think we're looking at it in near term to get down to 30%.

Yeah, I think three years is what we're told, and we're not even done with one year.

That's right. Thank you so much, guys. All the best. Thank you.

Thank you. A reminder to all the participants to press star and one to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchstone telephone. The next question is from the line of Alok Diora from Motilal Uswal. Please go ahead.

Hi, good afternoon. Just had a couple of questions. So, first things on the revenue guidance which you just gave. So, just wanted to understand like we have already done around 190 crore in 1Q. So, even if you just go and extrapolate it for remaining quarters and assuming second half is better. We should be doing 850 crore or so. Plus, you know, the quads will also be ramping up. So, just wanted to understand more on the FY27 revenue guidance. You know, how are we seeing it? Because it seems to be a little on the lower side, considering the current run rate and things will ramp up in the 2H.

Yeah, Alok, we basically, as a company, we want to... Promise less and over-deliver. So, these are considerable estimates. I mean, conservative estimates.

Right. But, so, if we just, you know, on the realistic side, it should be like 200 which we are doing could kind of continue for the fourth quarter, for the fourth quarter and slight bump up and plus. What would be the quads revenue in this? 120 crore, is it?

So, yes, 120 crores for the course. And, of course, when it gets to optimum level, then the overhead costs will be optimized. And then, you know, it'll cross the break-even mark. But then, usually, the rains are slightly delayed in quarter three. And usually, you know, the production will be slightly lesser compared to quarter one also. So, those factors will play out, but ultimately, this is a conservative estimate from our side.

So, whatever number one, they're very confident, is what I would say, and if things go as planned, like Q1, we should definitely beat that.

Got it. And the, sorry, I joined call a little late. So the margin profile, which we have been doing over the efficiency of this quarter, we have been doing 27 to 29% sort of a range on a blended basis. That should kind of continue or, I mean, it should be or it would be more like on the lower end of that range.

So, Q1, we faced all the challenges that we could face. Uncertainty, sudden spike of fuel. And so, I think Q2 is tapering down in terms of uncertainties and on the cost. In terms of realization, we are more or less in line with Q1. So, given that we are more relaxed in Q2, Q3, whether we can expect surprises, we don't know. We are prepared for flooding, we are prepared for rains, much prepared for rains than last quarter, that angle. Operational side, we are strong. Any external factors, we don't know, but if things remain as they are, I think we are quite comfortable.

Sure. And just a last question. So, you know, we have seen other companies where, you know, because of the increase in the cost, they have taken some price increases. Have we also taken that selectively in our segments or we are still in kind of a wait watch mode and then we'll take appropriate calls? Because many companies, you know, we have seen basically the cost being passed on to a certain extent. So, just wanted thoughts on that.

We already have done price increase. That has helped us. And the second thing which has helped us in maintaining our margins overall is more or less is the volume increase. So I think we are focusing on the volume increase, which is in our control, and delivering good value to the customer right now. And the price has been done. And if further fuel there is uncertainty, we have option to do that again also. But I think for now, for this year, we will be maintaining where we are if the costs are in line to this.

Sure. Just a last question, if I may. So, the quartz business in the phase one will be doing this 120 crore revenue this year. So, from this phase, what could be the revenue next year? Assuming by end of this year, it's almost at fully rent up in terms of, you know, the capacity. So, what could be the revenue from that in the second, in FI28?

Around 180, around 180 to 200.

180 to 200.

That actually is the range once you have touched the 15,000 ton mark per month.

Got it. And from the phase 2, we will be getting in FI28 any material contribution?

Phase two, I think we are looking at sometime Q2 next year, right? So, yes, next year we will be getting some numbers. But you need to keep a buffer of water for stabilization and streamlining production. So, I think you will get production for about four months for the next year, what we should be planning around four months.

Got it. Got it. So if we end up doing say 840, 850, which you are guiding for FI27, so in that approximately 720 is for the granite, so whatever growth you get on 720 will be there for FI28, and the 120 of course will be more like a 180 to 200 in FI28. Is that understanding correct?

Yes, so 180, let's say, from phase one and some part from phase two, let's say, another 50 or 40, 50. So I think we are targeting 200 plus to definitely for next financial year. That number could be anywhere between 200 to 230 to 40. I think by the end of this year, we'll be able to throw more light on more accurate numbers there.

Right. And the 740, 750 could be more like whatever, 10, 12% growth.

Yes. So, if you remember in the last call, last week also, we have guided 12% on the granite. So, we have beaten that by good margin. And whether that momentum will continue in terms of order book and production, yes, it is for this year. Next year, let's say we maintain the same 10-12% as a comparative estimate.

Got it. And margins, when you say the quads will stabilize, so the margins will start inching up. So, FI28, you know, I mean, if we are doing 180 crore, which is almost the peak. The revenue which could be, which we could get from the phase one. So what could be the blended margin looking like? I mean, would it be more like inching towards the 30% mark or it would still be slightly lower than that number because quartz is expected to have a much higher margin profile as compared to the granite business.

Yeah, Quads, I mean, there will be a little better contribution in the next financial year because the number which is coming from Quads would be a little higher. I mean, in terms of EBITDA, EBITDA would be close to 30, 30, little about 30 percent. And over a blended EBITDA might be around 29, 30 percent.

Got it. Got it. Got it. Yeah, fine. I think, yeah, that's all from my side. Thank you and all the best. Yeah, thanks.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchstone telephone. A reminder to all the participants to press star and one to ask a question. The next question is from the line of Archit Agarwal from Step Trade Capital. Please go ahead.

Hello.

Yes, sir, your audibles.

Yes. So, my question is, in the previous phone call, you have guided the runway 50,000 terms of parts production in 8x27. However, Q1 8x27 sales is around 5,000 terms only. So, is it still achievable, runway 50,000 terms, or what are the challenges on the back? It's the production side or demand side?

So, first, the challenge is on the production. We have been facing some challenges last quarter to streamline the production. It's a technical issue. That technical issue is sorted. We will not be able to do – we are not doing 150,000 tons. We will be doing around 120,000. So, that is the effect of that. And all the guidance and numbers that we have just discussed until now is based on 120,000 tons.

Okay. And what will be the mix of engineered stone and solar in this quarter?

Engineered stone and solar mix. Around 60 to 65% engineered stone balanced solar. I think 65-35 is a reasonable assumption. 65% engineered stone, 35% solar.

Okay, and are we on... When the Phase 2 Quartz commencement will be done, it will be in 2-4-5-27. Is there any graduation? Phase 2 Quartz.

Phase 2 Quartz?

Yes.

Phase 2 Quartz we just will take another 10 months. Next year we will be commissioning the plants. So I think you will see the numbers only coming in from next year. We were also waiting a bit to stabilize this plant. So, now that is done. So, we are going ahead, and I think next year, whether it's 10 or 12 months, we'll commission that plant. As discussed on the call previously, we'll see some revenue from that next year.

Okay. Okay. Thanks.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. A reminder to all the participants to press star and 1 to ask a question. The next question is from the line of Manish Gupta from Equinox Investment Advisors. Please go ahead.

Good afternoon. I'm sorry I joined the call a little late. Could you talk a little about your Kerala JV with the Kerala JV?

Yeah. So, post signing the, post the last development, there is no development this quarter, primarily because there is a new government there and they're just settling down. In fact, there is no new MD also for KMML appointed yet. So, there are some bureaucracy and internal issues in deploying some offices. So, KMML, there is no activity post that. We are hoping that once the new MD and new team comes in place, we will start progressing that and in continuation to that. Now, a timeline on that, we frankly cannot estimate because it's a government thing. But one thing I would like to highlight here, the current administration is pro-development, and they are concerned about commercial activities in the state and increasing the state revenue. So I think once the team is set, we believe that things will move faster. But until I think, we'll have to wait a bit. Hopefully this quarter, that team should be there, and we should see some activity from next quarter on us.

Yeah, I fully understand that. And regarding Sriman ka policy, logjam, do you have any visibility when you think it should just settle?

Yes, so there is a development this quarter, which I updated. We were waiting for the policy. The policy is done, streamlined, ratified. All the box have been checked from policy, and also after we have received a formal communication to reconfirm our capacities, timelines, and investment into the country. So that is being done as we speak. And then I think that was the last milestone. So from their side, they have done. From our side, we are presenting all that information and presenting a project report, final project report. I think once that is there, we expect the documentation to be done sometime this quarter itself, and we can start. So, I think we are at the final stage. What we have been waiting for long is panning out now, this quarter.

That's great to hear. Regarding KPEX, correct me if I'm wrong, we have almost about 809 minutes Thank you. Thank you. You said 125 crores for Sri Lanka, 150 crores for POS. Kerala, again, I think 300 crores in Indonesia, a little more than Kerala. So, what are the plans for capital funding? Is it going to be more debt-oriented or are you planning to raise some equity also?

Yeah. If you look at Kerala, Kerala is basically pilot plant, unless we get into a kind of a commercial plant arrangement with the new government. It's basically a pilot plant which will not cost much. It's an insignificant cost. As far as phase two is concerned, it is a fresh equity that we have raised. It's not a capex. We just need to spend as per the timeline. And other capets that we have as of now, there's no regular replacements as far as granite is concerned, that's being met year on year from its regular cash flows. Sri Lanka, if that comes in, then we will be in a position to spend 120, 150 crore from internal ecovuls. Our getting ratio today is at 0.2 times. We have leverage on that front.

And so finally, I mean, of all the diversifications that the company is doing, Sri Lanka is there, or Kerala is there, or Quartz is there, and then Indonesia, Moyu is there. Which one, you know, excites you more to become, you know, a meaningful contributor behind the knife in times to come?

So, if you look at all these projects, independently, they're meaningful contributors. Now, what do you mean a meaningful contributor? If today we're generating about 700 crores odd or 800 crores in natural stone, something which is at least 50% of that size is meaningful, right? So, Kerala, once the Kerala commercial, it happens, it ticks that box. The Sri Lanka ticks that box. Indonesia could be much bigger, I mean, two initial times to talk about it. So I think all these are significant contributors. Now we'll have to see, and we are working in parallel, because as you have seen, the timelines when we're working with government agencies initially may be slow, but once you get all the permitting in line, it's in our control, right? So we're geared up for that. We have the team, infrastructure, all to get up so we can execute once we have all the ground clearance available to us. So I think we will take all the opportunities, whatever is mentioned, In parallel, we have independent teams. And each one is significant. Ideally, we want to see all of them come into numbers, translated numbers, in the next 18 months' time. So, that is the whole idea that we are working on.

Got it. Thank you and all the rest.

Thank you. A reminder to all the participants to press star and one to ask a question. The next question is from the line of Pratik Singh from IIFL Capital. Please go ahead.

Hi, thanks for the opportunity, and good afternoon. So, I wonder if I understand, maybe I mentioned in the opening remarks, what was the erroneous growth in absolute black and black galaxy in discover in terms of YY percentage terms? Have you given this idea?

So, I think overall granite growth, we have seen upward of 33% to 33%. Now, within that segmentation, black and galaxy, do we have the data?

Black and galaxy.

Hello?

Yeah, I was asking about volume growth, sir. Volume growth.

Volume growth, no, approximately 10%.

Okay, 10% in both of them, right?

10% in volume. Yeah, in both the products. Okay.

And just if you can remind me, you had a revenue share in two mines. That mine, the revenue share with the EP government, that is the Black Galaxy, right? Or is that the absolute Black one?

Yeah, Black Galaxy.

Black Galaxy.

It's not revenue sharing, actually. There's a kind of a consideration that we are paying to the lesser. That's a state-owned body. And they have a percentage of share only.

Understood. The last question was on this Indonesia JV. So, as of now, I mean, I assume it would be in pretty early stages, but as of now, have you decided in what share would Midwest Limited, Midwest Gold, RNG, and FPDC share with Capex?

So, right now, the structure that is evolving is different. There will be two, what we're discussing is there will be two JVs, and the first JV is from mine to oxide, where Midwest Limited will contribute. The second JV is from oxide to magnet, which energy is going to contribute. So, right now, it will be one JV, which will be with Padminas, where we start off, Because without the oxide, there is no meaning in producing the magnet, right? So I think there is a timeline difference also. We are starting off the first JV now. I think the other JV with energy, they are looking at sometime later. But our focus is we are good to go as of now, and our product will be oxide. So rare earth oxides, which are the ones mentioned, heavy and light rare earth. And if it is a technology partner, they will not be equity partners, nor they will be contributing in terms of the capital. So, the capital raise on this specific JV will be between Parminas and Midwest Limited.

Understood. And which of these teams is a bit more capex intensive, the O to upside top or the upside to battle top?

Oxide to magnet power is more capital-intensive, and ore to oxide is less capital-intensive.

Okay, so whatever oxide to magnet power work would be done, that would be contributed largely by energy.

Yes, yes.

I understand that the bulk of your exports go to China. Have we seen any rising freight costs due to the Anastasia war? And if yes, are we able to pass it on to our customers?

So, usually, most of our shipments are FOV basis. So, freight is always to the customer, historically. There are some instances where we do CIF also, where even if that freight, we pass it to the customer. So, usually, even a costing, we don't take it in a costing also. So, it's always customer scope, direct or indirectly.

Thank you. The next question is from the line of Pala Murali from Oman Investment Advisors. Please go ahead.

Hi, good evening. So, what is the contribution from this silicon segment in this quarter? What segment? Can you repeat the question? What is the contribution of revenue in this quarter from the past segment?

Yeah.

Approximately 5%. I guess, okay. So, under, I mean, Quad says to what we can expect in FF28. So, you think, I think you have an update on Sri Lanka HMS. So, what do you, how will this revenue shape up in the FF28 from this HMS? And can we assume that it would be at peak level or it can still, the peak can be hit in FF29?

The 527, we said that the number would be somewhere around 840 crore. And 528, there will be full-fledged revenue, which is coming from phase 1. That would be approximately 200 crore, 180 to 200. And there might be little revenue, which is coming from the phase 2 also. That's no, that number we are at to estimate. Probably by the end of this year, we will be in a position to estimate this better. And with that, and the normal 10% to 12% growth, even the conservative side, if we take for the granite segment, it will be close to 950 cross kind of revenue.

Yeah, thanks for that. So, I mean, I'm supposed to ask regarding HTML, the business, so how it will shape up in the FI 27, 28, 29, so whether we can achieve the peak potential in FI 28, or maybe we can get some optimum level in FI 28 and we'll go to FI 29 also.

Sri Lanka, this is in the licensing stage, and the licenses have to be granted, and we have to build out, I mean, the plan has to be built, and then the cash flows will start, and we are estimating this in the FY29, not in FY28.

Okay.

So, and this, I think, is in Indonesia part, so we partnered with some local government agency and also our promoter entity, one more listener entity. So, how do you, what is the visibility over there, and when do you think things get released, and we can have some revenue contributions from this?

So, that will also be in line with, I think, FY29, we should. Uh, uh, factors in some numbers. Any, anything progressing faster will update you, but right now we are conservative and very initial stages, so I don't think it's right to put, uh, timeline and numbers. Some, it can be faster, it can be longer. I think next, next call will give a more detailed update.

Yes, a small follow-up on that similar one. So, another promoter entity, so she's also partnered in the business. So, is it, do you think that we can match that entity, the listed entity, so that it can be a subsidiary at arm's length rather than a separate entity?

So, the MOU was signed because the Indonesian government was interested in producing magnets also in the country, and the scope of our business is different from the scope of Midwest Energy. As I just indicated in the previous call, sorry, the earlier statement, we are forming first a JV. Between Midrace Limited and Perminas, Indonesian company, where the scope is taking from mine to oxide. That is the scope of Midrace Limited. The MOU also clearly says that. The later... Another JV will be formed by Midruss Energy and the Indonesian entity to take that oxide into magnets. So right now, all the activity, all the focus will be to first produce objects, and then they will do a JV for the magnets. So there is no JV-level partnership between these two companies. So there is no question of arms length coming there. And the capital raised will be between Midruss Limited and Parvinas, the Indonesian government.

Yeah, understood. So, in India, we also want to be part of this government initiative. So, where are we in terms of that, when we can see something outcome from that rarest magnet front in India?

Are you talking about the PLS scheme of government for India?

Yeah, the PLS came from the government, but we should want, we have thoughts to participate somewhere in that entire oral cycle, either from ore to oxide or oxide to magnet or something.

Yeah, so right now we are focused on. Production of oxides, that is our focus, and that will be our focus for the next two years. And once we do this in volume, then we look at further validation if required. But right now, I think we are very busy, and all these projects are taken up in order to produce from mine to oxide or ore to oxide. That will be our focus. And there, we are right now from government point of view, there is, in terms of opportunities or in terms of subsidies, nothing much. And also the projects can be easily capitalized and the margin profile is good. I don't think we are waiting for any subsidies from government for these projects.

Yeah, but I think earlier we discussed that there is some six entities, so it's a magnet production. So, do you think we will participate in that cycle, or another remote entity will take part of that one?

No, we are not looking at any magnet production as of now. All those schemes are for magnet production.

All right, I understand.

Thank you.

Thank you. The last question is from the line of Gursharan from GMA Advisors. Please go ahead.

Any update on the activity of our subsidiary in Sierra Loan?

No. So, we have to form a company to do some local works there and do some due diligence. And apply for some licenses. So this quarter, there's no update. And we have looked at a couple of concessions which had local issues. So we are still actively looking for there. There is no minimum or no expenditure right now on back front also. It is just the logistics of our team going there and looking at them. So I think if there is an update, we'll update you next quarter, but this quarter, we'll update.

Okay. Thank you.

Thank you. That was the last question for the day. I would now like to hand the conference over to the management for the closing comments.

Thank you, everyone, for joining the call and asking all the relevant questions. And, yeah, and look forward to the next call.

Thank you, everyone. On behalf of Go India Advices LLP, that concludes this conference. Thank you for joining us and you may now disconnect your lines.