Earnings Call Transcript - XNSE:MIDWESTLTD 2026-11-11

Operator

Ladies and gentlemen, good day and welcome to the Midwest Limited Q21H1FR27 earnings conference call, hosted by GoIndia Advisors, LLP. As a reminder, our participant lines will be in the listen only most, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for an operator by pressing star 10-0 on touch-roll phone. I now hand the conference over to Ms. Tana Kapoor from GoIndia Advisors, LLP. Thank you, and over to you, Ma.

Sana Kapoor, Head of Investor Relations

Thank you, Shara. Good afternoon, everyone, and welcome to Midwest Limited's earnings call to discuss Q2 and H1SY's 27 performance. The financial results have been uploaded on the presentation. Exchanges 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. Oma Kolaredi, promoter and whole-time director, and Mr. Dilip Kumar, chief financial officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must therefore be viewed in conjunction with the risks that the company faces. May I now request Mr. Ram Kolaredi 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, sir.

Ram Kolaredi, CEO

Hi, everyone. Thanks for joining the earnings call. Hope you all had a great Diwali. I am pleased to share that Midwest. We delivered a strong half-year FI27 performance in revenue and tax, going at 24% and 18% year-on-year, respectively. Our natural stone business contributed 19% to the overall revenue during the half-year period. During the same period, we further spend in our business by receiving LOI. From APMBC, which is Andhra Pradesh Millers and Cooperation, to operate three new granite mines in Andhra state. We are also scaling up our quartz business through phase-to-expansion, which will double our processing capacity and integrate high-purity quartz scalabilities. I am also happy to share that our quartz business has become a bit positive. Our collaboration with Farminas in Indonesia and KMML, along with our progress on the Sri Lankan project, mark important steps towards establishing a presence in the Rayworth Valley chain. We continue to drive cost efficiencies through electrification, specifically electric mobility and renewable energy initiatives. We have deployed 10 electric trucks. And we should expect to generate annual savings of 2 to 2.5 crores, while a group captive renewable energy arrangement is delivering savings of approximately 2 rupees per unit on every 1 megawatt of installed power. We are also installing a 1 megawatt solar power plant, which is in progress and will be completing during this financial year. For the next 24 years, ours. Aim to achieve 2.5x revenue growth, 3x profitability, and 35% ROCE is firm and backed by a capex of 300 crores. With a strong resource base, expanding capabilities, improving cost efficiencies, and multiple emerging growth opportunities, we remain confident in our journey towards becoming a globally integrated materials processing company. For the, to have some strategic, to understand strategic updates for this quarter and the first half, as mentioned earlier, we have achieved EBIT profitability in Q2 for the quads business, which is an important milestone internally, and we will be ending up with that profitability for this financial year for the quads business. We deployed. 10 electric vehicles, and the journey is on to deploy more and convert the entire heat to electric trucks in the next 24 months. And we, so, we are regarding specifically the three LOS received from APM DC. One is a Black Knight. The other two are in Chittu District, and the other two mines are in Hittokalem District. And this is, we have not invested much. Upfront to acquire these mines. It is tender with raising some sale contract basis and we make profitability on extraction of blocks and sale of blocks. The energy initiatives are undertaken on an aggressive basis. We are planning to increase the capital consumption of solar power in the tune of several megawatts. for both the Quads business as well as the National Storm business, and our team has identified a low capex option, which we can elaborate on a group captive basis, initially starting at two rupees per unit saving, which can maybe increase in future, especially assuming that the power costs in India are going to be stressed over the next 24 months. I hand over to our CFO, Dilip, to take you through some numbers, and then we can do the Q&A.

Dilip Kumar Chalasne, CFO

Yeah, good afternoon, Kuala. We have a portrait this quarter result. Compared to the corresponding quarter of the last financial year, 15% growth in terms of revenue, approximately 9% less in terms of cash contribution. Half-year numbers put together, it will be 24% on the revenue line and about 70% less on the tax growth. In terms of, you know, cost savings, compared to fuel 1, fuel 2, energy costs, there is no cost really coming down. One is an account of the fuel lease and then solar initiatives, capital initiatives that we have taken, and EV down trust that we have already declared has started leading some result, and so those savings are getting contributed to the bottom line. And we are still maintaining our leverage ratio around 0.2 times for years, as we continue to maintain that. Yeah, that's only a quick update of, you know, rather snapshot of the financials for the current quarter.

Speaker 10

I think we can go to Q&A, Shana.

Operator

Okay. Thank you very much. We will now begin with 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. The first question is from the line of, I love Diora, from Odilal, Ushal, Financial Services Limited. Please go ahead.

Speaker 0

Hi, good afternoon. Just had a couple of questions. If you can just indicate what has been the quads volume for the quarter, and what is the current run rate now, which we are doing on a monthly basis?

Ram Kolaredi, CEO

Yeah, so the quads for the quarter was around 16,000 tons. For the quarter, and this last month, we have done around 9,000, and I think current run rate is around there. Our goal is to patch across 10,000 over the next month, and we are in line to do between 12,000 to 15,000 for the next quarter. Monthly. Got it, got it.

Speaker 0

So, is it slightly slower than what we had expected because we were targeting I think close to 20,000 in 2Q. 2Q?

Ram Kolaredi, CEO

No, 2Q we indicated between 15 and 20, so we are at the 16,000 number, and Q3 we are estimating around 25 to 30,000, and Q4 between 35 to 40, those are the numbers.

Speaker 0

Got it. So that's for the full quarters you are seeing the numbers. Yes, yes, for the full quarter. Got it. And if I just look at the overall margins, the margins have been almost more like flattish QQ. So how do we see the trend here now moving? If you can just indicate because I think the course has also become.

Dilip Kumar Chalasne, CFO

The quads, if we operate on Q4, we will be getting into the capacity utilization to the defiled events. With that, we should be able to get the The EBITDA contribution comes from that vertical and that will contribute to the overall, I mean the EBITDA of the consolidation. I mean, as a granite, if we look at the performance of the part is increasing quarter and quarter, and H1 is granite as a standalone, it is around 18% part we have. So, there is some fixed cost which we, the quad segment couldn't develop. That's the reason why the contribution, there is a negative contribution from that vertical. That's, that's bringing down the number to 16.37. I think with quarter four, three and four, we should be able to make up the number in terms of, I mean, we should be able to deliver the production to the desired levels. I think overall, for the year, we should be able to make the profit as a standalone cost segment, and I think that will improve overall number.

Ram Kolaredi, CEO

See, another aspect I would like to add is on the cost front. So, if you look at the average fuel price of H1 of last year to H1 of this year, I think we have a 35% increase in the fuel cost. And if you look at the overall impact of that, that will translate to close to 6%. So, I think going forward, when you ask, apart from what we are doing, first fact is, usually Q3, Q4 is much stronger than Q1, Q2 as the business seasonality goes. So, that trend will continue, and this year, fortunately, we were not affected that much by the brands in cyclone this quarter. The second aspect of the fuel cost, assuming that the fuel cost goes back in between where we were last year and now also, it doesn't go all the way back, that will also give us a good bump on the bottom line. You got it. But as you see, in spite of this cost, as you see, in spite of this cost increase, we have increased the realization per unit realization, and the market has absorbed that additional number, but obviously there is a, and Quartz has eaten into the margins, and that I think we are in line to cover that. So once that is there, you will see a ripple effect.

Speaker 0

Got it.

Speaker 5

So, in essence, the entire hit that we had because of the fuel increase, the cost increase from 90 rupees all the way to 120 rupees, 130 also, the 40% increase in fuel is completely passed on to the customers. The good part is, I think there's a 6% impact, and the entire 6% increased in the pricing. So, it's been absorbed by our customers fully, and in fact, the dollar has added some extra part also, some additional 4% extra in the realization. That's why you see the realizations go up on the export side.

Sana Kapoor, Head of Investor Relations

So, in fact, because we've increased this pricing,

Speaker 5

and post settling down, post the U.S. elections, and post, if the civil prices come back to the ordinary range, we will not roll back on the pricing. So, that positive impact in pricing is there to stay.

Speaker 0

Sure. So, just wanted to understand this 182 crore of revenue of what we have done. So, how much would be from the, you know, the granite and how much would be from quartz, if any indicative number?

Dilip Kumar Chalasne, CFO

13 cross is quartz, 13.5.

Ram Kolaredi, CEO

And the balance is granite. 13.5 to be specific and balance is granite.

Speaker 0

Sure. And the QOQ, you know, little dip is majorly the monsoon factor or the, I mean, the seasonal factor.

Ram Kolaredi, CEO

No, I wouldn't say that. I think the overall, maybe there could be a small factor of yield, but it's not much. And also, the Q1 was literally full efficiency, no weather was there small parts in Q2. But I won't impact it to a big percentage. That's why it's a nominal percentage, it's not a big drop. Yeah, yeah. But the biggest factor, if you see last year, if you observe the last year numbers, Q3 was highly impacted. I think that mitigation is there this year. And the second is quads draining the whole balance sheet in terms of underutilization. I think that problem we are going over. And third is doing the fewer. If you focus on these three metrics, I think we'll get a bigger, better picture for this year.

Speaker 0

Sure, so Q3 actually on the last year's base, assuming there is no impact of...

Speaker 9

You know, the weather-related

Speaker 0

conditions, Q3 could see a big jump. I mean, I'm not asking for guidance here, but, I mean, it should ideally look...

Ram Kolaredi, CEO

Yeah, I would say it is a normal quarter where we don't have the downtrend. So, it will be in line to what we have been doing for H1, and Q4, during the Chinese New Year, And we'll have that historical cycle where we will get into that heavy-weighted quarter.

Speaker 0

Sure, sure. That's all from my friend. Thank you. All the best.

Operator

Thank you, Adok. Thank you. Anyone who wishes to ask a question may press star and one on the touchtone telephone. I repeat, anyone who wishes to ask a question may press star and one on the touchtone telephone. The next question is from the liner, Sanj Arya, from Desurgence, Pencap Advisor, Service Limited. Please go ahead. Hello. Yeah, I'm on your order. Yeah, so my question is that why was the CFO negative this quarter? What is the reason for it?

Dilip Kumar Chalasne, CFO

Please, there are two things I am going to know. In the last few quarters, post-GST rate, we have pushed the product, I mean the product which was otherwise going into the dump, into domestic market. There we have extended little additional credit period. Otherwise, our products used to go against LZ to the export market. Since the domestic market gave extended additional credit to it that led to additional refill bills, there it consumed the cash, so the cash is sitting in the form of reserves. Second is a little better inventory that we have built both on account of Quad as well as the Granite also. That also led to another 14 crore, 15 crore. So these are two major contributions, and that we have settled, if you look at the cash flow, trade payables are approximately 20 crores. Since now we have settled it, I mean, there's some immediate settlements were done. That's also contributed to the cash. So these three factors result into the cash negative.

Operator

And what are your bottlenecks and are there any updates on the bands that were placed on the mines?

Ram Kolaredi, CEO

No, it is a temporary thing where until we are rectification, it's not a ban. So we are starting the rectification work of the high wall issue that we had. So we are already three weeks into the rectification. I think in the next five to six weeks, that should be sorted. But the interim, what we have done is the machinery in this mine, since we operate multiple mines, we have moved to the neighboring mine, same galaxy mine, and we are taking out additional production there. So in terms of numbers, we don't foresee much impact due to this. But I think this specific problem will take around five to six weeks to resolve.

Operator

And could you please throw some light on what would be the timeline for Rare Earth and, like, all the ongoing agreements with the governments and other companies?

Ram Kolaredi, CEO

On the other side, we have two primary projects. One is the KML. KML, right now, we are waiting for some administrative teams to join. Right now, once the new Kerala government has formed, there is no team to take this. Not only our tender, all the work was for KML forward. We are waiting for that to happen. So, it's a government thing. We will not be able to give a time on that, but hopefully this quarter, that thing should be resolved from their side so we can move forward. On the Perlinas, Indonesia, we are on track to sign the definitive agreement this quarter. That was the plan to start with so that the work of the ground can start next quarter. And the third project is not directly related to Rearers, but Rearers is a bi-product of Sri Lanka, which is our earliest commercial project which is going to happen. We were in line to get all the permissions this quarter. The status is the same. We'll be getting all the permissions this quarter and start the work next quarter. So right now, apart from KML, we have visibility and everything else. KML is something that we'll have to keep a watch and look at when the new team is formed in KML and then take it forward, which is beyond our control.

Operator

And what is the process that we are using for the rare earth extraction?

Ram Kolaredi, CEO

So, there is extraction, see, basically, if you look at the overall process, you, in Sri Lanka, it is a monocyte. In Indonesia, it's ionic clay. They do different biological deposits. And in Sri Lanka, you are mining your heavy metal sands, and you are extracting your illuminate zoo tiles, a traditional beach sand mining operation, heavy metal sand mining operation, and the byproduct is monocyte. And there, what we do is, we extract rayless by a process from monoxide to rayless extraction. It's through solvent extraction. It is the main process in that. Solvent is used in a chemical process, and we extract your NDA oxide, TR oxide, and required materials. In case of IH, it's different. In case of IH ionic clay, there is no, it's not a sand, it is a clay form. And the entire clay is, you take the entire clay, then do acid leaching, then it's a chemical process, acid process, and there's no foreign extraction. And then you extract your radars. So both these are standard processes, and there are ionic clay mines being operated, there are monazite mines being operated. And in case of monazite, you have better know-how in India itself, because IRL is doing this for many decades. In case of IAC, there are companies outside India doing it, but it's an easier process. IAC, extracting heavy raiders from IAC is a much simpler process than extracting the raider process from Monotype. Specifically, the solvent extraction is a very large and multi-process plant. And in case of IAC, since you're taking clay and you're only extracting PPM, the volumes are larger, but the process is much simpler, which is the standard process. It is both the collant extraction and the acid leaching, ammonia sulfate leaching, the standard process.

Operator

Okay, sir. And one last question before I get in the queue again. Could you please give us some sort of visibility for the second half?

Ram Kolaredi, CEO

So, second half will not be different than most of the years that you observed, where in second half takes, in terms of volume growth and overall growth, second half takes more impact. Last year was the last, Q3 was an anomaly to the trend, which was the last maybe seven, eight years, given the fact that we had the cyclone effect. We have finished the cyclone season for this quarter, so we don't see much, any more cyclones, at least in the near future. And the other additional thing is, so on terms of top line, we will have the growth in the night on par with every year, And the Q3, Q4 will be stronger, much stronger than Q1, Q2. That's how we can give you right now. On pods, we will be achieving the reasonable revenue number. But more important than that, we will be coming out with a positive EBITDA and a net patch, a positive patch, which will improve the last year numbers much more because that was contributing to a considerable loss. So, these two are the impacts, and as it is, but if you see the fuel prices cool down, that will automatically translate into the bottom line also for the market.

Operator

Okay, thank you, sir. Thank you. Anyone who wishes to ask a question, you've got star and one on the touch phone telephone. The next question is from the line of Chirag Gandhi from Astralid Investments. Please go ahead.

Speaker 9

Yeah, just a few basic questions from my end. What was the volume growth in granite business this quarter?

Dilip Kumar Chalasne, CFO

Yeah, one minute. Overall, half-year, it is 14%.

Speaker 2

This quarter?

Speaker 9

Yeah, yes.

Speaker 2

This quarter is approximately 7%.

Speaker 9

Understood. And what was our realization in the quarter business? I think last quarter we were around 10,000 rupees at the number.

Ram Kolaredi, CEO

No, the realization for this quarter, for 13.5 crores, 16,000 volume is close to 8,500 rupees.

Speaker 9

Okay, so are we doing a different QOQ realization?

Ram Kolaredi, CEO

No, Q1 was a very small volume. Q1 was almost only 3 crores. We have done 13.5 crores now. I think we also did more of the solar. So, I think overall, I think if you look at the overall year end or overall once it has the 10,000, 12,000 number, we should be in line with around 9,000 plus or minus.

Speaker 9

Understood.

Ram Kolaredi, CEO

Blend of solar and internet store.

Speaker 9

Understood, understood. And I'll be sticking to our quad guidance of 100 to 120 crores for FIWD 7 or do we expect a lesser number for this year now?

Ram Kolaredi, CEO

Pardon?

Speaker 9

I think last quarter we gave a guidance of around 100 to 120 crores of top time from the quad business for FIWD 7. So are we sticking to that guidance or any change to that number?

Ram Kolaredi, CEO

So, yeah, so we will be around, if you look at the volume, what we added up in the conversation, and the average price, around 9,500 and 9,600, then we will be touching around 90 crores for the year end. That is what we are anticipating to reach. And hopefully, if we touch the 15,000 ton mark early January, then we will go towards 100. So, I think we can factor in around 90 crores for this year on a comfort base.

Speaker 9

Sure, sure. And what is the status of the phase 2 of the Quartz facility? Are you on track for the ERN commissioning?

Ram Kolaredi, CEO

We already started the building, phase two. We already started placing the auto-commercial. So, we were, we wanted to, internally, we wanted to stabilize this plant to this 9,000, 10,000 volume, which we have done now. And now, we are aggressively pushing towards building this plant. So, the plant has two things. One is the regular product, your solar and engineering. Second is of HPQ. We first will be commissioning the regular plant expansion, and then HPK will take maybe a quarter more than that. So I think we are in line to commission this plant by next, first phase by next. Q2 next year, and maybe HBQ by Q3 slash Q4 next year, in between that.

Speaker 9

Understood. And the last question from my end is, can you talk a bit about the demand in the Quartz business? Like, what is our, like, go-to-market strategy? How are we getting new customers? Where is the demand coming from? Is it, like, the market is responding or we are taking some market share in that business? Like, if you can give some color on the demand, right?

Ram Kolaredi, CEO

So, the demand perspective, if you look at the engineered stone part, which is the bulk of the material and also the higher realization, here, the demand is the part can be sold global. But obviously, our preference is still locally to local companies. When we were ramping up the production, there was no issue. At these volumes also, there is no issue. But our concern, frankly, for this quarter was the oil tariff that the U.S. was going to impose on India and China. And keeping that in mind, we started positioning the product to other countries also. We were not waiting for that. Countries like Thailand, Vietnam and all, where this product can be sold and Europe. But I think looking back now, at this exact point of time, that risk most of our customers don't see, or our customers' customers don't see. The shipments are on. So I think this quarter will be continuing to deliver to domestic markets, to our regular customers, and ramping up to that 12,000, 13,000, 15,000. Once we cross, we will also be doing some exports, but may not be that aggressive, because we have local requirement demand itself good. Once we cross 15,000, I think we will aggressively push towards exports. Also, it will help phase 2 volumes.

Speaker 9

Sure. And in domestic market, the demand is coming from which end-users industry? If you can give some color on that also.

Ram Kolaredi, CEO

Ingenite's own manufacturers, like Pokernas, Maruzas, there are about 43 manufacturers in India who make slabs, right? So, they are our end-customers. Solar glass, so right now we are customers till any, and they are also doubling their capacity, and our next customer... We are writing our volume even at 60,000, 70,000 tons. For a year can be taken by the single customer. And usually they prefer to take from the higher quality quads from us so that they can run their products continuously instead of mixing. So I think our goal is we do the supply to them fully this year. Then phase two also they're doubling their capacity. But we have one more customer at that point of time. We're already in talks, and we're already, I think, starting supplying this quarter also to the second customer, which is Goldflex and Bellari. And there are other customers also, but I think they're high-volume optakers. I think once we get to those volumes, we start squirting other customers.

Speaker 9

Understood. Thank you so much and all the rest.

Operator

Thank you. Anyone who wishes to ask a question may press star and one or the touch on the phone. The next question is from the line of Roshab Shah from RBSC Investment Manager. Please go ahead.

Speaker 2

Hi, sir. So, this is a clarification on the quad business. If I look at the Q2 numbers this quarter, the margin, segment margins appear higher than the base business. Even at the low scale of operations, this is some anomaly here. How should one read into this?

Dilip Kumar Chalasne, CFO

Yeah, that's basically in Q1, there was some contaminated material which we have cracked, actually. We haven't counted our inventory value. So, in Q2, after carrying out certain issues in the operations, we have tried that material, we could get some price out of it. That's one which is contributing to that high EBITDA in the current quarter. But otherwise, overall, if you look at H1, we are at close to 12% EBITDA as of now.

Ram Kolaredi, CEO

On the quads, I think once we are towards the full capacity utilization region that fell to 15 to 18,000 mark, then our EBITDAs will be expected to be higher than the traditional grant business. So I think that is something we are, the current cost structure, current realization, everything supported towards that. Right now the goal is to ensure that we test that volume number.

Speaker 2

And also, we are trying to convert our trucks into electric in the next two years, and also we are increasing the share of renewables in the power costs. Is there any number that how much cost savings would happen for this maybe next over the next two years on annualized basis?

Ram Kolaredi, CEO

So, if you look at our commentary, for 10 trucks, we are saving around 2 to 2.5 floors per year. Then, apart from the captive power costing, the...

Dilip Kumar Chalasne, CFO

That will be another 2 crore for the current types that we have done. That's 6 MW we have already tied up with the captive producing company, solar producing company. Put together at this juncture close to about 4 to 5 crore is a saving that we can see on this front as a per annum basis.

Ram Kolaredi, CEO

So, this is for a 10 truck thing. So, obviously, we have a long way to go. I think we operate around 50 to 60 trucks in just the right miles. So, given that bandwidth, we have a long way to go. Let's say we are aggressively pushing towards getting there as early as possible.

Speaker 2

You mentioned that the quartz business margins at optimum level would be higher than the traditional business. So, that could be excluding this quartz sharing from electric trucks and renewables or including the sharing?

Ram Kolaredi, CEO

So, right now, excluding. Right now, the electric trucks are being used only in the granite. So, it's excluding. And, in fact, next year, once the quartz production is streamlined in Q4, Q4 of this year itself, We will start the process of electrification of the quartz transport system also. We have not factored any of those into our projections yet. Once we start doing that, we will get the baseline data and we will keep you updated.

Speaker 2

Okay. And on the rare side, what we understand is there has to be certain premium injured by non-China sources. So, what is the current scenario in terms of premium pricing there, and what is the trend expected for next couple of years?

Ram Kolaredi, CEO

So, premium pricing, as you see, the price is already premium over last year. In fact, if you look at the China index also, it has doubled. So, China price itself has gone high. On top of that, The rest of the world is willing to pay premium on top of that because that also the world believes is a more subdued or a mandated price because China is not supplying these materials. So when there is no material, how do you price it, right? So that has become the dynamic. And if you look at the U.S., they have not picked the index price, it's the floor price. So, I think premium pricing in this space will keep continuing for two primary reasons. One is all the magnet production lines which are being set up outside China will be wanting oxides, which China is not willing to give, which means oxides being produced outside China will always have a premium. The second dynamic is the overall number is still staggering. So, if China is producing 400,000 to 500,000 tons of magnet, and the rest of the world is producing 20,000, we are starting at 5%, and mostly in Japan. Now, the magnet market itself is growing at 12% to 13%, which is every year adding 50,000 to 60,000 tons to the existing demand. So, even if the world doubles their production, they'll be only able to meet that increase. They'll still not be able to touch the base plan. So, given that dynamic, I think the magnets produced outside China will go to higher-end applications globally, which is mostly different aerospace, which can afford higher pricing, and that will translate into the offsets. And once we produce more and more magnets, then I think they'll be economies of scale and then they'll start coming down over a period of time. But at least any dynamic that you see, even if China is going to reduce the prices of domestic oxide, then it's not going to affect so much because already the world has weaned out of that whole ecosystem because they're not selling the oxide at all.

Speaker 2

Okay. And just one last follow-up. On the octet production, I think, except for KML, we said we don't have visibility. We have visibility for everything else. So, what other measures do you see in terms of execution of plants in the para printer?

Ram Kolaredi, CEO

So, first project will be Sri Lanka. That is where we will get our first revenue from. The Indonesian project, if you start from the next queue, maybe it will be two, three quarters later. And both the projects are large, decent sized projects. And so, these two will be our focus. Yes, KML is also our focus, but I think we will fast-track or we will put all our efforts on it once the team in KML is in place. So I think still in the next 30-18 months, at least we are our radar first, which we will be developing. In order that's in Lanka, Indonesia, and if KML happens quickly in the next, this quarter, then that will also be on top. So we are not prioritizing any, we are treating all three in parallel, and then we will be executing in parallel.

Speaker 2

Thank you. Thank you. All the best. Thank you.

Operator

Thank you. Just a reminder to all the participants to press star in 1 for more questions. The next question is from the line of Bala Murali Krishna from Oman Investment Advaiters. Please go ahead.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Hi, good evening. So, what's the next trend? So, this quarter, I think, is there a little bit higher utilization or higher, you know, is there a lag in the expression of the actual trend?

Ram Kolaredi, CEO

Can I please repeat your question?

Speaker 5

The line is not clear.

Ram Kolaredi, CEO

The line is not clear. Yes, yes, no good.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Yeah, the question is regarding the quad business. I think we're expecting in Q1 and a little bit higher utilization due to, I think, do you think that it's in line with your expectation or is there any lag which you can cover in the Q3, Q4? And by the end of year, what kind of utilization level you're expecting from this case?

Ram Kolaredi, CEO

No, so base, we are starting at a very low base, right? So Q1 was hardly 3-4,000 tons. We have done four times this quarter. Next quarter, we anticipate to double that. The quarter, that's going to be increasing about 20%. So, it's the plan, that is what we projected, that is what we are achieving also. The range for this quarter was 15 to 20, and we are in line, I mean Q2. Q3, 25 to 30,000, and Q4, 35 to 40. That is what we are planning. And as indicated earlier, once we touched the 12,000 threshold, then I think we can ramp up to 15 and 18 over next year. 15 will touch by March, and over next year, we'll try to ramp up to 18,000 consistently, so that next year will be, at least we want to get close to double of current year. That is the target.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Okay, thank you. So, on the railer front, we have KLM and also the Indonesia project is also there, and Sri Lanka is there. So, other than this, are there any projects which are under discussion? You would have initiated something like you created some subsection that is in Singapore. Can you share some other interactions with you are going on regarding the railer? Maybe it's been very large in the, maybe three, four years down the line. And also, please update on the Sri Lanka project when we can expect something from the government. Go ahead.

Ram Kolaredi, CEO

So, Singapore subsidiary was specifically formed to have the Indonesian project under it. It's a 100% subsidiary. So, it's like an intermediary holding company for tax reasons and structuring point of view. In terms of other projects, right now, very early stage, nothing specific. I think these are our focus projects. And regarding Sri Lanka, as mentioned, this quarter, internally, we are still confident that we'll be getting the permissions required to start building the project on the ground for next quarter onwards.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Okay.

Ram Kolaredi, CEO

Since they've asked on initial discussions, yes, I think state governments in India have started calling industries and getting their thoughts on floating tenders to develop the Indian HMS projects. So, we have been engaged with them, and especially Southern States, I think, we have right now nothing on paper, so I think over the next 10 months, something, some of those sellers might come and we'll be participating in those in the account.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Yeah, thanks for that. My question is, actually, I suppose to ask that question, domestic, what is the visibility? So, how do you think that TAM would be in the domestic front? I think we have some mines also in the village also, where we are already based. So, what would be the TAM in the domestic front, in the radar structure? So, how much we can grant that one?

Ram Kolaredi, CEO

So, forrettes in southern India, specifically Andhra, are similar to Sri Lanka. Beach France, you mine the beach, you extract the minerals, and Monazade becomes the first forrettes. And the APMTC has formed a subsidiary on Andhra Pradesh Weirast Mineral Corporation, and I think that corporation is handling the Monazade part, like how we see the KMML tender. Otherwise, in terms of TAM, you produce Illuminate, Rutile, it's a global market, it comes in millions of tons, a huge traded product, and Monazite, I think we are in a position to take whatever we can produce. In fact, it may not be enough domestically. So I think the minerals from beach, the other minerals apart from monothelite, illuminate, rutile will have strong market in India. Some will be exported. Jarnet is an export material. Rutile also right now is predominantly an export mineral. Azircon is again a mixed market, India and export. But monothelite, I think everything will be taken domestically, whatever India produces. And Andhra has one third of India's resources, almost 100 million tons. So it's a large deposit, large scale. And once the products come into fruition, there will be large numbers of audience members coming in. And next, there is also Orissa, which has decent size, and Sharla. I think these three states will be doing something in the next 12 months. They've already started their internal reports as well.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Okay, and the magnets manufacturing plant, so if somebody is, the PLA is there, so somebody wants to manufacture it, that's fine. So, as of now, I think there is no raw material available in India. They should export, import that material. So, after this development, so maybe they could be able to cause this domestically, right? Or any other thoughts on this one?

Ram Kolaredi, CEO

Yes, it is so domestically. So, if you look at the timeline, the PLAs, I think they're just coming now, they'll be commissioned in the next two to three years. And these plants in India also will be commissioned during that two to three years. So, it will be matched. And hopefully, in that time, we don't have to import any. India can be self-sufficient.

Speaker 10

Thanks for the help. All the rest.

Operator

Thank you. The next question is from the line of Kave Mehta, an individual investor. Please go ahead.

Speaker 10

Yeah.

Ram Kolaredi, CEO

Hi, sir. Am I audible?

Operator

Yes, sir.

Speaker 9

Yeah. So, just wanted to ask that as you mentioned that we have better realizations in the engineered stone segment for pods. So, just wanted to get an understanding from you. There is a big player out of Telangana who is undergoing a capex. So, is he our potential customer going ahead? And just wanted to understand another thing that the realization range is between 10,000 to 12,000 rupees, right, for engineer stone.

Ram Kolaredi, CEO

Ah, yes. See, in general, there are several categories. It starts off at $9,500, the next year, $11,000. It goes all the way up to $14,500 also.

Dilip Kumar Chalasne, CFO

Now, the rate depends on the end market the customer is going to deal.

Ram Kolaredi, CEO

And if you're asking about specifically the Tanangana company being Pokarna, they cater mostly to U.S. market. They take a higher end spectrum of the market. We were talking about a player like Classic Marble, which is the largest domestic producer. They cater to local markets, so they take more of the 9,000, 10,000 materials. If we talk about a customer like Marisa, they go blind. So it depends. We cater all the categories. It's up to customers based on what market they're selling and what is feasible for them to pick up the material from us. So, we will majorly cater to the customer, our

Speaker 9

customers will be the one who will cater to the domestic market, as you mentioned.

Ram Kolaredi, CEO

No, no, no. Right now, most of our customers are export-oriented only. Most of them, and those customers also sell domestically, but they could have, let's say, 60-70% export share ban and 30% to the market, and so it is a blend. We are looking at, right now, we are looking at serving the local market in Andhra itself, geographically, because the volumes are still at 9-10,000. I think we are also planning to murder in Karnataka, which is the largest, India's largest laptop dealer. I think as we go and increase the wallet, we spread our wings and go a little further and start suffering to everyone. So, the larger players like Pocan and Mahdudar have their own captive mines or ports? They don't have? They don't have. They buy the phone.

Bala Murali Krishna, Analyst — Oman Investment Advisors

So, they all can be our potential customers who are interested.

Ram Kolaredi, CEO

Yeah, they are all potential and they are already we are supplying to some of them.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Fair enough.

Speaker 10

Thank you.

Operator

Thank you. The next question is from the line of Rishabh Bura from AB Advisor. Please go ahead.

Speaker 10

Hello, sir. Can you hear me?

Speaker 2

Yeah.

Ram Kolaredi, CEO

So, my first question was on realization of granite. So, how has the realization per cubic meter for

Speaker 2

black galaxy and absolute black granite moved during the portal?

Dilip Kumar Chalasne, CFO

The realizations are close to 88,000 in terms of export per galaxy. It's about close to 39,000, 40,000 for black. And black export is a little high price, but that is approximately a lakh rupee. Okay, okay. Got it, got it. So, yeah.

Ram Kolaredi, CEO

So, moving on to my next question, what volume growth, type of volume growth are you expecting in the Granite business for the remainder of FY27?

Dilip Kumar Chalasne, CFO

So, we have seen volume growth in the current half-year about 14%, but always there were little higher numbers and there were numbers close to 10% also. So, on a balanced way, if we try and understand this number, it's approximately 10% to 12% is what we can look at in terms of volume of the growth. Then about 3-4% in terms of currency. I think overall maybe around 14-15% is the growth that we can expect in terms of revenue on the next platform segment. Okay, got it, got it.

Speaker 9

So, moving on to another question of mine.

Ram Kolaredi, CEO

So, may I ask what is the current progress on the phase 2 expansion, which will increase processing capacity to 606,000 metric MTPA?

Dilip Kumar Chalasne, CFO

Yeah, this has been explained in the previous calls, but I'll just brief you again. We have started placing orders fully, phase 2, and our first frame was to stabilize the phase 1 operations that we almost did, and quarter 3 and quarter 4, the volume numbers will ramp up, and By Q2, a partial process with the complete time in phase 2, expansion will be completed next year. And Q3 will be HPQ added to the KT. So, by end of next year, or third of early fourth quarter, we'll have completely established phase 2 facility availability.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Got it. Yeah.

Ram Kolaredi, CEO

So, last question of mine is on the cash flow. So, cash flow from operations was negative during each one, FY27. Can you show some light on that? Why that was the case?

Dilip Kumar Chalasne, CFO

This was clarified in the previous call also. The major contradiction is, in the last financial year, if you observe, there was a GST rate cut on the stone segment. From 12% to 5% the rate has been reduced. Okay. During that period, we have seen some potential in the domestic market, and now we started giving, you know, product to the domestic buyers, where, you know, especially the factories, cutter factories, they, I mean, you know, they in turn cut the slabs and then push it to the retail market. So, they have extended credit periods, and now to accommodate that and to make the product used to them, we have, at one time, we have taken a call to extend the additional credit periods of them. That contributed to the cash, I mean, receivable sitting to the tune of 25 crore in the current corporations. And about the inventory edition, that's about both on account of additional vertical quads and then granite also we have added a little more. That's about 14 crores. And trade payers, there were peak settlements in order to get some discounts and all. There were settlements that is about 20 crores. All these put together contributed to the negative cash flow. But no, what are the LD in terms of cash flow or gain ratios have retained income, same as what we were in the past year.

Ram Kolaredi, CEO

So, that's it for me. Best of luck for the next quarter as well, and the rest of the year. Thank you.

Speaker 10

Thank you so much. Thank you.

Operator

Thank you. Just a reminder to all the participants to press bar in one for more questions. The next question is from the line of Shreya, an individual investor. Please go ahead.

Shreya, Analyst — Individual Investor

Hello. Hello, my order please. Hi, thank you for the opportunity. I have two questions. First one is the working capital cycle. It has increased to 127 days in H1 and FY27 from 104 days in FY26. Could you enumerate the reason for that? And what are the steps that, you know, we are taking in order to kind of improve on the capital, working capital efficiency? That's one. I'll come back to the next question after this.

Dilip Kumar Chalasne, CFO

We have formed a new JV with APMBC. They gave additional land for leaves for extraction of minerals. So, normally we used to have a discounting facility with the bank without recourse as and when the bill of exchange is confirmed by the customer. We just discount them and there is no recourse and the receivable used to be knocked off. So, for this new entity, there was no limit, which was not available, and that has contributed to a few days. And, you know, if you have heard my previous questions answered, there was some receivable which contributed from the domestic push. So these two factors led to this spike. And then we have clear vision in terms of credit policy going forward. So we are not extending any additional credit to the domestic market. So I think this number should come down in the coming of quarters.

Shreya, Analyst — Individual Investor

Oh, okay. Sorry. My second and last question would be, like, you know, could you please provide an update on the, you know, the KPIs that have been minkered so far out of that 300 crores planned, you know, that was year marked?

Dilip Kumar Chalasne, CFO

This is 300 crores broadly if you look at the majority amount would be spent on the rarest vertical. That's for middle separation and the concentration plans. Initially, I mean, we had planned this particular CAPEX for Sri Lanka projects. And phase 2 also, we planned around 120 crore. These two put together broadly comes up to this 300 crore. Phase 2, as I just explained, by when I did this, and then added to the capex. And so we are just waiting for an update from the Sri Lankan administrative team and soon the things are progressing as we will get onto the ground and then start putting in money.

Ram Kolaredi, CEO

And as it depends to quads, I think in the next four quarters we will be spending the entire 120 course to commission the phase 2.

Shreya, Analyst — Individual Investor

Okay, thank you so much. Got it. Thanks a lot. And all the best. Thanks a lot. Thank you.

Operator

Thank you. Anyone who wishes to ask a question may press star in 1 on the touch phone telephone. The next question is from the line of Balam Murali Krishna from Oman Investment Advisor. Please go ahead.

Speaker 9

Thanks for the follow-up. What do we are producing?

Ram Kolaredi, CEO

Is it suitable for sodium gas per nest as a raw material for production of aluminum? Okay, just to repeat, it's not clear, the line is not clear.

Speaker 9

Yeah, the quads which we are producing, is it super-on-edge raw material for sub-minerals for

Bala Murali Krishna, Analyst — Oman Investment Advisors

production of silico-manganese?

Ram Kolaredi, CEO

So, the quads they're producing is higher grade than that. So, the quads were, ferromagnet is price conscious. I think it's around 4,000 to 5,000 rupees kind of a ton of maximum 6,000. And so, right now, we are focusing on higher product. Even in phase two, we'll be focusing on higher value product. Yes, it can be used for your question, but it's not apt to use. If you want to make that product, you can make it different raw material. It's a cheaper process.

Bala Murali Krishna, Analyst — Oman Investment Advisors

Thank you.

Operator

Thank you. We take that as the last question for the day. I now hand the contents over to the management for closing comments.

Ram Kolaredi, CEO

Thank you for joining the call, and I think the next two quarters will be quite exciting, especially from the quartz point of view for us. And one of the projects hitting the ground is that it's hopefully Sri Lanka and Indonesia, and most likely both. And looking forward to monitoring the Kerala. We'll keep you posted, and hope to see you on the next call. Thank you.

Operator

Thank you. On behalf of Goinda Advisors LLC, that concludes this conference. Thank you for joining us and you will now disconnect your lines.