RHI MAGNESITA INDIA LIMITED (RHIM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the RHI Magnusetta India Limited Q1 FY27 earnings conference call. 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 the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Before we get started, I would like to point out that some statements made or or discussed on today's call may be forward-looking in nature and must be viewed in conjunction with the risk and uncertainties that we face. The company does not undertake to update these forward-looking statements publicly. I now hand the conference over to Mr. Paramot Sagar, Chairman from RHI Magneteta, India Limited. Thank you and over to you, sir.

Thank you very much. Good morning, everyone, and thanks for joining us. It is a pleasure to welcome all of you for this early conference call for the first quarter of financial year 27. Safety remains our highest priority at R.H. Magnusita. We will continue to invest in our safety programs and make safety progress for zero harm and the well-being of our people. We've given a strong start to financial year 27 with revenue growth and significant improvement in profitability despite a volatile operating environment. This performance underscores the resilience of our business model, the effectiveness of our execution, and the strength of the strategic foundation we have built over the years. Our Q1 performance reinforces confidence in our ability to create long term value while maintaining discipline growth. Let me briefly share our perspective on the industry environment. The refractory industry continues to operate in a competitive environment, characterized by pricing pressure, rising input costs, and increasing competition from both domestic and multi-deserved players. With gear field and ground field expansion. Nevertheless, our differentiated business model, technical expertise, and customer-centric approach position us well to navigate these challenges. Encouragingly, demand across all our key and market remains healthy. In the steel sector, major steel producers reported steady growth in production and volumes. Aided by strong domestic demand and highly high-capacity utilization levels. From a retracting industry perspective, continued investment in glass furnaces, steel-making facilities, rolling mills, and capacity expansion projects are expected to sustain demand for retracting products. Our production levels and capacity utilization Across steel plants typically support both project related and maintenance refractory requirements. Requirements for advanced refractory solutions to improve campaign life, reduce downtime, and enhance thermal efficiency create opportunities. The cement industry maintains strong growth momentum in Q-127, supported by robust demand and capacity expansion programs. Industry players remain committed to significant brownfield and greenfield investments, reinforcing a positive long-term demand output. While the cement industry experienced margin pressures due to elevated fuel, energy, and raw material costs, manufacturers continue to focus on operational efficiency, productivity improvement, and cost optimization initiatives. While the operating environment remains dynamic, the structural growth drivers across our end market remains intact. And we remain focused on leveraging our technological leadership and strategic partnerships to consistently outperform the underlying market. Our sustainability agenda continues to translate into tangible business initiatives through formation of our joint venture with Khenkari Factories. Minpro to establish a greenfield mineral processing facility in Odisha, which will be a subsidiary of RHA Magnesita, India Limited. We see this as strategic investment that delivers both environmental and economic value over the long term. Overall, the progress across these five pillars reinforces our strategy of driving profitability, growth through market expansion, technology leadership. Cost excellence, sustainability, and long-term value creation for our customers. Before I conclude, I would like to take a moment to address an important leadership transition for the company. After having the privilege of leading RHA Magnesita India over the past several years and working alongside a highly committed team to build a strong platform for future growth, I am delighted to welcome Mr. Pankaj Malan as our new Managing Director and Chief Executive Officer while I continue to serve as GMR. Pankaj brings the industry experience, deep customer insights, and a strong commercial track record. His customer-centric leadership style and strategic vision make him ideally positioned to lead the company through its next phase of growth. I look forward to working closely with Pankaj as we do. Continue strengthening our market position and advancing our vision of building a high-quality, differentiated industrial solution business for our customers while generating value for our stakeholders and all stakeholders. With that, I would like to invite Konkar to share his thoughts and perspective on the opportunities ahead. Thank you very much.

Thank you for more, and good morning, everyone. It's an honor to address today as Managing Director and CEO for H.I. Magnifica, India. I'm joining a company with a strong market position, deep tech in its expertise, and a proven track record of creating value to innovation, operational excellence, and long-standing customer relationships. As we look ahead, we remain focused on five strategic pillars. That are going to drive our next phase of growth. First, we would love to outpace the market by spending our present and high growth segments, such as our making DRI, pellets, flow control, and selected industrial applications. I'd be very confident this would be supported by new order wins and deeper customer attachments. Second, we continue to expand our GoPro model. Moving beyond traditional product supply to deliver tailored solutions and long-term strategic partnerships, with strong momentum coming in both the steel and seamen markets. Third, we are accelerating digitization and technology adoption to enhance customer value and operational excellence, including investments in advanced automation and energy optimization initiatives. Fourth, we remain focused on driving cost competitiveness to back-put integration, progress in porcelain mining, and increasing recycling rates, which would strengthen both our resilience and sustainability. Finally, sustainability remains at the core of the strategy. We continue with reductions in energy consumption and CO2 emissions. This reinforces our commitment to responsible and profitable growth. With a very resilient business model, trusted customer relationships, a talented team, and a very clear strategic priorities, I think we are very well positioned to deliver sustainable and profitable growth over long term. With that, let me hand over to our TFO, Mr. Azin, who will take us to the financials.

Over to you, Azin. Thank you, Fungfej and Pamoji, and good morning, everyone. Let me now take you to our financial performance for the first quarter of FY27. We began FY27 on a strong note, delivering healthy growth in both revenue and profitability, despite a challenging industry environment. Revenue from operations for Q1 FY27 stood at 1,014 crores, representing 9% quarter-on-quarter growth and 6% year-on-year growth. Growth was primarily driven in steel business, supported by favorable realizations and healthy demand across key applications. Cement segment also recorded a recovery during the quarter, benefiting from seasonal maintenance demand. EBITDA for the quarter is at Rs. 147 pros, reflecting a strong 42 percentage year-on-year freeze. EBITDA margin includes significantly to 14.5% compared to 10.8% in Q1 FY26. This improvement in profitability was driven by strong execution across our steel marketing, steel-making portfolio, favorable price realization, operating leverage, and ongoing productivity initiatives. Despite inflationary pressures in raw materials, logistics, and energy costs, disciplined cost management and operational efficiency measures are supported healthy margin expansion. In addition, initiatives around recycling, vertical integration, and supply chain optimization continue to contribute to cost competitiveness and long-term margin sustainability. As a result, profit after tax nearly doubled during the quarter, increasing from 35 crores in Q1 FY26 to 65 crores in Q1 FY27. Our balance sheet remains strong. Working capital remains well-controlled, even as we strategically increase inventory levels to strengthen supply continuity and support customer requirements in the upcoming quarters. We remain focused on maintaining supply chain resilience while preserving capital discipline and liquidity. We have cash and cash equivalents of Rs. 452 crores, and our balance sheet shows a strong improvement in working capital. Our balance sheet remains net cash positive with strong KPIs. Our confidence in the outlook is supported by the resilience of our business model, strong customer engagement, healthy order visibility, and the progress we continue to make across our strategic initiative as outlined by Pankaj. Looking ahead, while the industry continues to face competitive intensity, excess capital, and geopolitical uncertainty, we remain confident in our ability to outperform the underlying market. Our confidence is supported by customer engagement, order book, and continued progress across our priorities. We remain encouraged by the momentum in our business and expect to deliver profitable growth while maintaining a disciplined focus on margin, cash generation, and returns. Overall, the quarter reflects the strength of our business model and our ability to deliver profitable growth despite a challenging environment. With that, we conclude our prepared remarks and will now be happy to take your questions. Thank you. Back to the operator.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, to ask a question, you may press star and 1.

First question is from the line of Varun Jain from Dalek Capital. Please go ahead.

Hi, sir. Good morning. So, I have a couple of questions. So, starting with the realizations, I think realizations grew close to 12% year-on-year in this quarter. So, could you split this in what came from price increases versus product mix versus currency? And what is the sustainable realization for this year?

Normally, we don't do this, you know, split of, you know, what is coming from, price increase and other areas. I'm sorry, we don't have this split as of now.

But on a high level, what we can say is that most of the price increases were nothing but a worse charge. So, you can basically say that primary is driven by the product mix, if that helps.

Sure, sir. And, sir, on the CAPEX side, I think we did 8 CR of CAPEX only in Q1 versus 150 CR guidance. So, we are running kind of slower than the run rate. So, do we want to revise the CAPEX guidance or is it intact? And can you just give us a split of the CAPEX in 4 Pro, Dalmia modernization, etc.?

Actually, the long term of whatever we earlier said, 80 to 100 crore capex every year, we are maintaining still the same statement. It includes of modernization of dalmia plants, some 4-pro, machinery, robotic solution, and maintenance project.

Got it, sir. And, sir, on this MINPRO JV, sir, what is the, you know, planned investment and how will we funding it, commissioning timeline? This can throw some more light on the entire economics of this.

Thank you. First two years, we and our JV partner, Klemka, as per the shareholding, 51% we will infuse, 49% we will infuse in capex as well as in working capital for first two years. And then the JV will have. Self-sustainable, you know, money, and from that, they will do further expansion or ramp-up of the facility.

So, my question was, how much investment is planned, and what are the, like, payback period, EBITDA margin, ROC, like, how are we thinking about it?

It is roughly 35 crore initial investment in next two years' time. And we believe Vita should be around 8 to 10% and payback period should be less than 3 years or so after production.

Got it. So just the last one, sir, on the volume front, I think we have a guidance of close to 9% for 27. So since this quarter, we didn't deliver that. So we need close to 14% for the balance nine months to meet that guidance. So is that much possible?

I don't think I have ever committed 9% volume growth. I normally say 7% to 9% and you are taking upper side of it. I can take lower side of it. So, my dear friend, you know, it all depends on the, you know, situation, dynamic situation, like cement season is almost going to be over by the end of September. I would say we will be having a healthy run-up. Equivalent to market growth. Okay, so I still believe we can deliver 7-8% volume growth, but not 9%. I think it's a bit of stretch, but definitely if we can get some, you know, good order with high volumes, why not? But as of now, I'm not in a position to say 9% is a sustainable volume growth for rest of the year. Okay, sir. Thank you and all the best. Thank you.

Thank you. Next question is from the line of Sahil Sangvi from Monarch Network Capital. Please go ahead.

Yeah, excellent set of numbers, team. Congratulations to the whole team. Secondly, just wanted to convey my best wishes to Paramod, sir. I mean, there was a time when the Irma team used to say that learn how to do profitable business from Paramod, sir. So, congratulations, sir, and best wishes.

Thank you so much, man.

Yeah, sir, my question is, how should we look at margins, sir, for the business? I mean, I'm more of understanding structurally and over a medium to longer term, what could be the levers for the improvement and this number that we've delivered this quarter. I understand that the price hikes are something which will be renegotiated and depends on how RM cost moves. But, I mean, if you can also split the margins between the Dagya business and the other businesses, because as we understand, the other businesses are. You know, flow control, heavy, and high margin. So, structurally, how should we look at the margins for this business?

Sahil, if I talk about Dhalmia and RASCVIL RIT in Magnetica India, it is mostly Dhalmia is flat. And the growth has come from IN. Why IN? Because in IN or RIT Magnetic India part, most of the products are flow control products, be it Bivadi plant or Gemshekul plant. And that was the focus area where we could manage to get price increases. So the growth has come from IN, whereas IR remains flat. What else? I was

asking for a medium to longer term structural view on the margins. Where do we see the numbers, maybe a range, and what initiatives we'll work on to reach that range?

If I was to take this question, first of all, the team has delivered a wonderful quarter one. We should appreciate this. I think going forward, there are a couple of things that Pramodhi also discussed about. One, of course, some structural changes coming up because of this Minco joint venture that we're looking at. Then, of course, we're looking at some of the mines starting for us. So, these are the structural changes that we are looking at in terms of making sure the margin is sustained, and we are very positive about the Indian context, specifically in terms of the continuing industry growth rates, the way the characteristics are planned. We are very hopeful going forward the price should also look sustainable over here. So, net net, we are hopeful in leading to long-term ways we should be able to sustain the prices.

Sure, sure. That's helpful. Thank you. Thank you. I'll come back in the queue. Thank you. Thank you, Sahir.

Thank you. Next question is from the line of Rajesh Machumdar from 361 Capital. Please go ahead.

Yeah, good morning, Panmush sir, Azeem ji, and Pankat sir, and congratulations on a good first quarter. I just wanted to know a couple of things. One is, what is the impact of project orders in the first quarter results, whether any project orders are reflecting in the first quarter numbers, and if so, what is the quantum of that?

Variation, we don't have any project in the first quarter, but there's no impact of any particular project delivered in the few months.

So this is entirely from steel operations mostly?

Yeah, it's operation. Mainly steel, and steel was a bit weak because, you know, whether it's non-ferrous or glass. There's hardly any project come up in the first half of the year, I would say, and there are some projects coming up in the second half of the year.

So, because we were expecting some project orders this year, but nothing seems to have materialized so far. So, we are still cutting in the second half of the year.

Yeah, we are still cutting in the second half of the year. The silicon glass model will come through in Q3 and Q4. We will normally do this as seasonal as we are very well aware of it. So it is still enough by clients. This is why we are emphasizing our order book visibility because these are lots of projects.

The impact of alumina, softer alumina in this quarter in terms of the margin because the gross margin standalone has gone up quite a bit. So I was wondering whether that impact is positive from the alumina price.

Alvina prices has stabilized from last six months, so last quarter, fourth quarter of last financial year and first quarter of this year, it was static, right? There's no movement, significant movement, I would say there's always movement a little bit here, there, but not a significant movement. So it's a stable as of now.

Right. And so what is the outlook for magnetite prices in terms of you already have some price increase in 1Q, but will we see cost increases again in 2Q, which will again be a problem and you need further price increases or you think the margins are going to be stable by and large given the impact of raw materials and everything. Yeah.

Magnetize price has already gone up by 6% to 8% from, say, We are trying to see how we can absorb this and how we can pass on to our end user. So both ways we are working on how we can further, you know, optimize our product processes, recipes, circular economy, and whatever is not possible, how we can go to our end user, customers, and ask for our price adjustment.

And so, my last question is, you mentioned in the presentation that the flow control market share has gone up. So, what is the contribution of flow control in this quarter?

It's difficult to say what is the contribution, but I can only say in one of the... The market share has gone up almost double in the last six months or so.

Just to give you a point, Rajesh, 35 percentage is coming from.

25%? Okay, yeah, that's useful, yeah. Thank you so much.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next question is from the line of Raja Kumar Vedyanathan from RK Invest. Please go ahead.

Yeah, good morning. Can you hear me?

Yes.

Yeah, thanks for the opportunity, and congrats for the good set of numbers. Sir, the first question is, this margin improvement that we have seen in this quarter, is that sustainable?

So, we have given, I will take this question. So, we have given us guidance of 13%. We still remain firm with that guidance earlier. Okay.

Okay. The reason is, I think your parent company, they have said that they are looking at a 44 million euro EBITDA improvement for 2026, coming from pricing efficiency and product mix combination. So I just want to know how much of that will be contributed by the India entities.

So, our guidance, our parent company is given for their entire group on the total pricing initiatives that it will contribute to 40 million. This includes all the region. A part of it is India. However, as we know that very clearly that we give guidance on these two aspects. One is on the volume growth, which we always have said that what our skills in and growth plus 1% to 2% is what we have always given a guidance. So this is on the volume side. On the profitability side, again, we get 13% page. So we continue to remain at 13% page year round.

I can only add out of this 45 million, what the global has said, we are going to contribute. Significantly, proportionately, I would say, they are the sixth visa, so we will be contributing proportionately, okay?

Yeah, and, in fact, sorry to labor on that point, so, so, of this 45, you said you are going to contribute significantly, so, is that already reflected in your Q1, or we will be expecting some more in the...

No, no, it's already reflected. Yes.

Okay, so that's going to kind of sustain in the next quarter, right?

Again, I'll go back to my earlier remark. We'll say at 13%. Of course, right, if there is any upside in the raw material poising and the war uncertainty gives us a little bit of a cost headroom, of course, this will be some kind of an upside, but we cannot comment or predict on this geopolitical uncertainty we have. So I think we will still, despite all these challenges, despite all these inflationary pressures and volatility in the market, we still come on what we have said in the last one year that we will still sit on the guidance of the 13%. Okay. Got it, sir.

So, the second question is, your competitor, SVS, has recently moved into the crucible market through the Foseco, Morganet, Erodi, to build out the non-ferrous industry exposure. So, the question is, does RHI sees crucible or a broader foundry consumable as a white space opportunity?

Actually, you know, if you talk about our good friend Bisuvia, they are from the very beginning with Fosigo. They acquired Fosigo maybe 30 years back, and this crucible business was there throughout. It is not a new diversification as per my knowledge. We as RHA Magnetica, India are open to anything and everything. If it fits into our scheme of things, we are really looking at various options.

Okay. Okay. Got it, sir. Thank you.

Thank you.

Participants, to ask a question, you may press star and 1. Next question is from the line of Chetan Toshi, an individual investor. Please go ahead.

Thank you for giving me the opportunity and welcome, Pankaj, to the board. Now, my first question is regarding in the coming quarters, this quarter you have performed very well as far as RHI is concerned. But in coming quarters, what kind of product mix you are going to concentrate, wherein you will see similar growth? And second is that in spite of the raw material costs and the other challenges, what active steps you are going to take to quantify them? And second question is regarding Lint Pro. So, actually, the production is going to start. The only company to recycle this or any other competitor is also capable in this segment.

Joshi ji, first of all, thank you very much for welcoming me. Your couple of questions, if I have understood well, first of all, thank you very much for including the team's performance in one of us. Of course, we have just touched on our guidance has remained strong. We have, my colleague, Azim has just opened up the profitability of where this 30% of the year will be standing. Of course, we are also looking forward to have some structural changes in the cost, which we have just touched upon, and we are very hopeful we will be able to deliver the numbers that we gave as a guidance. Number two, you spoke about Mint Pro model, and number two, you wanted some kind of product mix changes. Of course, our endeavors of the management is always there in terms of making sure the product mix is always on a richer side, which is what the control has on the speech technology side. So going forward, we will look forward how we can further enrich our product portfolio, and of course, that is the possibility. Third one, you wanted to understand which expected timelines of this project to start. We are very hopeful. We would be looking somewhere towards the quarterfold of this financial year.

Do you have any competition in that, or you are the only one to do this?

It's always welcome. We cannot comment on that, but competition is always there, and we believe in healthy competition as always.

Thank you.

Thank you. Next question is from the line of Praveen Jairaman from Aventus Park Institutional Equities. Please go ahead.

Good morning, sir. Am I audible? Yes, sir. Congratulations on the good set of number, and welcome, Pankaj sir. Pankaj sir, in the opening remarks, you mentioned something on quartzite mining. Can you give a more detailed one on what we are doing there, and what would be the idea here? I could not get that earlier.

Okay. The company is planning to have some backward integration, specifically for quadruped mining. There are two mining that we are working on. One is Chirai Pani, the other one is Bikampani. So we are very close to opening up this mine, and now we take it towards the end of this quarter, we should be able to open these mines. So this would definitely give us a solid construction benefit in terms of cost structure. The benefits, one, we expect could start coming up from next quarter.

If I may add a little bit, so this mine is something that we got as a part of a GAMIA deal. Now we have received all the licenses to operate this mine. So this will, as you said, this is most for supply resilience, making India initiative, which we have always offered upon with you, right? So this is where I think it's all coming to fruition now, and this will make us completely self-sustaining, and also most importantly, to serve our public sector in its field players, especially.

Thank you, sir. Thanks for this. My second question is on the lines of project orders. So, we were saying that we didn't have any impact on the revenues as of now. In the earlier consults, I came to know about the project orders which we were anticipating. So, what is the outlook on the same and whether it will be having impact in this year?

So, if we talk about, you know, we talked about the glass project, we talked about the Dhinika project, CoCoOne project. So, CoCoOne project is almost at a final stage of negotiation. There's a bit of, you know, pricing adjustment, which we are doing with our... So, it should be concluded any time, and we will start doing the production from next month. So, that project is a long-term project, maybe next 14-16 months, we will be fully booked for this. And the second is glass. Glass roof projects are at a very advanced stage of discussion. So, that should also happen in third and fourth quarter of this year.

Okay, so we could expect the project contributing from H2 with these two, I mean, on both the coconut side and on the...

Yeah, absolutely.

Okay, so thanks for this and all the bits for the management and Pankaj sir on the table.

So, thank you.

Thank you. Next question is from the line of Rajesh Joshi from Chris Capital. Please go ahead.

Yeah, thank you for the opportunity. I hope I'm audible. Congrats on a good set of numbers. My question would be around the growth drivers. So, given that we have a net cash balance sheet now, how should one think of incremental opportunities for us outside of the current industries or products that we, you know, manufacture and serve? Any other inorganic road drivers or any other new segments that we can probably enter into. Some color on that would be helpful, please.

We have just concluded with JV with Kheemka, so give us some breathing time also. As I said earlier, the management is, the global management is also very supportive to expand our business in India, and going forward, the management and leadership of Punks and the group into various options, or we can expand further our business in India.

Understood, sir. And secondly, I think we, I mean, on the call, we've just spoken about how we can enter PSU clients better after having our own captive mind. Just wanted to get a better understanding there of why we were not able to cater to them before so well, and lead to that would be SAIL has announced a new plant recently. So, would we be participating in the same plant, both from a one-time, you know, upfront capex that they do, and then also from a recurring revenue perspective on the same plant that they're setting up?

I think Mr. Dr. Singh was saying about PSU, linking with the mine. We are already doing this project, for example, with the PSU plant. Only thing is with our own mining, we will have a supply resilience and a cost advantage. That will improve our, you know, margin in a way. And we are not relying on third party to supply, you know, our raw material for the company. So that's what he was trying to say. That's fine.

Okay, okay. And sir, I mean, so then, should one look at this, some perspective that given our own captive mines, we can price our products better, and that should lead to higher volume growth, while margins remain largely stable, or should one look at it as volume growth should be where it is, and margin should improve because we have a captive base? Second option, margin will improve. Okay, okay, okay. Understood. And on the stale villi plant, if you could just clarify whether we are there in the plant or for the new capex that they've announced?

You know, they are coming up with SMS 4, so it will take still a time when they will start talking to refractory producers for, you know, first fill or capex orders. I happened to be there a few weeks back. We discussed. In general, when it will come, but it is still, I don't know, away. Maybe another six months or eight months when they will start talking to refracting parts. But yes, SMS 4 is coming up. They have a plan of adding about, I think, 6 or 6.5 million tons.

Okay, okay, okay. And from a product portfolio perspective, if you look at our parents' product portfolio and basket of operating, are there some products per se which our parent has which have not been introduced in India yet and we could possibly introduce them at some point in time depending on how the market evolves in India here?

Yes, from last three years, we were continuously trying to transfer some technology, some products which we were not producing in India. So, some are already transferred, some are in the pipeline, we are working on that, and in maybe one year's time, we will have four or five more products being produced in India.

So we have shared this portfolio of what we are transferring. If you go to the investment deck on stage number 21 and 22, you can see this, what is our current new product transfer and what we are developing. So it will give you a flavor of what we are introducing already or in the process of it.

So, thank you. This is helpful. Thank you, and we'll see you all the way first. Thank you.

Thank you. Next question is from the line of Sahil Sangvi from Monarch Network Capital. Please go ahead.

Thank you for the opportunity again. Just if you can give some more details on the quartzite mine, I mean, would this scale up to make us self-sufficient on our requirements with particular, I mean, with respect to that particular mineral? And if there is any approximate understanding on how much cost savings can be done or any translation into margins, any kind of details on this front, any direction.

Sahil, it is still work in progress. Our F&A team is working on how much will be, you know, mining cost, transportation cost, royalty, etc., etc., landed cost, at what price we are buying from, you know, outside sources. So, it's still work in progress. We are working on this, and we will reach out to you when we are ready with the costing.

I think this question is big offline in terms of varying specifics of the advantages, but yes, there are such advantages which we are expecting.

Got it, got it. And with respect to Khenka, I mean, I understand whatever you have explained in this call till now, but again, is there any kind of quantification possible on how much, you know, we can, you know, say with respect to our cost structure?

Not exactly we can develop those numbers as of now, but of course, it's more of supply chain resilience, more of what is just now said. I think we are trying to create that kind of resilience in the supply chain. So we have seen in this year there were a lot of disruptions because of the geopolitical tensions. So we don't want this to happen in the future. So we are preparing organizations from a future perspective.

Got it, got it. Secondly, we are also constantly trying to work on the export story. Any kind of developments or any kind of visibility improving on that front with respect to 6 to 12 months?

You know, Sahil, it is really unfortunate from last two, three years, we were trying very hard to increase our export, you know, percentage of business, but sometimes, you know, Ukraine, Russia war, now Middle East war, something or the other is happening. We keep on thriving, and we did some trials, very successful trials, and we expect at least some flow control, particularly isostatic products export will go up in coming months.

But the current performance, it's actually reduced from last quarter to this quarter. So it's actually reducing at the moment for us.

So the larger focus, which we really want to be, we are an Indian company, and we would love to focus on the domestic markets. So, we would be definitely introducing new products like we've just spoken up a while back. But the larger focus is continuing to be in the Indian market. Local by local.

I understand. I understand. Thank you. Thank you. All the best. Thank you.

Thank you. Next question is from the line of Raja Kumar Vithyanathan from RK Invest. Please go ahead. Mr. Verdianathan, your line is unmuted. Please go ahead with your question.

Yeah, thanks for the opportunity again. Sir, there was also a commentary online about India which said that there is some India steel market share loss as a deliberate exit from low-margin business in favor of 4th row. So I just want to know how much of top line we lost due to this.

I think that's not the right statement, Ram, if I understand. So basically, we are not saying that we will prioritize 4-pro. I think these are two different statements. So what we said in our earlier calls was that we want to be absolutely disciplined on our profitability or the opportunities that will generate. Value for our shareholders. What does it mean? Basically, is that we will sometimes exit low margin business. And if it is not adding any value or any strategic advantage, it will not grow for the sake of growth. So that's what we said. Now, 4Pro, as we said that, this is a different business model what we are adopting. It's a completely different approach altogether in the way we are selling. Earlier, we used to do this CRM or SLS kind of contracts. Now we are saying that we will provide solutions for our customers that would, Wherein, we are not just a supplier of bricks or mixes. But here, our focus is that we understand the problem statement of the customers, establish long-term relationships, and ensure that we provide the solution that works for them, which could be not just providing refractories or installation, but it also could be automation. Digitization or robotics or supply chain, managing the supply chain of the infractories for them. So this is what we said on the 4-pro perspective. Again, on the margin, on the numbers that you're asking, we don't usually give that split because it is unfair and it is a competitive, sensitive information. So we don't give this stuff outright.

Okay, so this shift to 4 Pro, will it also lead to elongated safe icon, given that you're looking at providing long-term solutions to the customer?

Exactly right. That is the intention of this long-term partnership because sometimes if you are putting up robotics or automation or digitization kind of initiatives, it has its own technology, life scales from adoptations, and also maturing this to get the full value of the customer. Second, it also has an investment from our side as well. So the customers very well understand it, and that is our entry point to ensure that we do the secure long-term relationship with the customers.

Okay. Okay. Got it, sir.

And, sir, just one housekeeping question. So, I saw this notification on this auditor's resignation. So, any reason there is a mid-year resignation with the auditors, if you can give some color to it?

So, I know that you follow our group results also very closely, and I'm sure you have observed a notification that we had a change in auditors in our group. So, we are basically aligning with that process, and most importantly, our auditors were also getting rotated already next year. So we are aligning with our group strategy to ensure that we have same auditors to ensure that we have this mandatory rotation. The group also changed the auditor. It made sense for us to have a productive discussion.

Sir, if you permit me, can I ask one more question?

You are already asking, sir. Go ahead, one more.

Yeah, sorry about that. Sir, the question is, last quarter you made a goodwill impairment. So, do you think that the things have now kind of improved? Will there be a situation of reversal of that impairment? Is it something that we can expect?

So basically, goodwill was one time, and all we can confirm is that all the goodwill of Dalmi has already off our balance sheet now. And by the way, just to kind of remind everybody to the investor, these are all non-cash goodwill, non-cash impairment, no impact on our profitability. It's below EBITDA line. And yeah, so we don't think we don't need anything further because we have it on RHIM, IN, some goodwill, but we have enough headroom also if even the situation worsens as well. And by the way, this also has a positive impact because it also has contributed positively to our growth.

Okay. Got it, sir. Thank you so much. Thank you.

Next question is from the line of Chetan Doshi, an individual investor. Please go ahead.

Thank you for giving me the opportunity again. Thank you. Robotic solution and caster operation. So we have two robots already installed. All of these are in operation and we have written that we are flexible on 5-year lease. So we are ready to offer them 5-year warranty kind of a thing that we are associated with the company and we take care of the maintenance card if at all something goes wrong as far as this is concerned.

Yes, Pankaj, the contract with the JSW is for five years, and in Chetan, sorry. Chetan is a five-year contract. It includes everything, supply of refractory, maintaining of robotic part. It's the maintenance, everything is taken care of when we offer this.

Chetan, if I was to just add, I think you know the world is opening up to data-centricity, which is, you know, I would say a layer of automation, robotics, and then, of course, artificial intelligence. Your company, RHIM, is strongly looking into this side of valuation to the customers also going forward.

Oh, that is great. That is great news. Thank you. Thank you.

Thank you. Next question is from the line of P. Yogesh, an individual investor. Please go ahead.

Good morning, everyone. My simple question is, let's take a look at three to five years. Apart from our core business, recently, we have a new contract with four PROs, and we are doing so many things again and again. So it's good for shareholders. I'm just simply thinking, as per our understanding, apart from the refractory business, what we can do a few more to jump up the top nine, and what could be the basically services business and product business going forward. Roughly, based on your understanding, because you know the client better, and because the scope of automation and improvement everywhere in India and in the world as well. So based on your understanding, what will be the possibilities? I am not asking you to target anything, because this market is new to me and everyone, to be frank, because I have not seen all these kinds of plants, probably where we can add value, where we can actually give consultancy or maybe ANC income or maybe other any product like Recently, Fosigo India acquired Fosigo Crucible, and they are basically the non-fairest kind of thing. I don't know whether we can do that part also or not. Just a hypothetical comment, I'm not asking you very straightforward.

So, it's a very forward-looking question, Yokesh, and it's a brilliant question also. Look, the company is always being trying to add value to the customers, and we would be going all the way in terms of making sure we engage with the customer. So, when we say engage, it is going beyond the selling of the products. We really want to fit ourselves into the shoes of the customers and see what exactly we can add value to them. Now, this can actually spun out of some kind of automation. So, NetNet, if I was to say, the company would be striving to move from a product selling to a solution selling, definitely in the next three to five years basis. Second, of course, opportunities I can't predict as of now what would be there in future. But yeah, company remains open to exploring whatever comes on their way in terms of attractiveness of the business.

And anything for a non-ferrous side?

Sorry?

Anything for a non-ferrous side?

Non-ferrous, we are already there. We have into cement, so we are into a medium. And we will continue to look, we are into copper. So we will continue to strengthen our position in terms of non-ferrous going to copper. Okay.

Just a last question on my side. Sir, I agree in a volatile kind of situation, it's very difficult to predict anything, but I'm asking, well, let's say this year, how do you see for steel industry as per your understanding and because you are in touch with customer also, and obviously you have some basic idea how things are turned and there is a lead time to supply goods and services. I'm not asking exact number, but outlook wise, how do you see that this year would be better than last year based on because most of the production, auto production and everything is going up. So just asking simple because last year was X scenario, whether this will be 1.2X kind of scenario for this year.

We very clearly outplayed our strategy elements with you that we are looking to outpace the market growth. That's where the management is working out with. Of course, there would be customer engagement coming through ProPro model. Definitely, we would love to adopt more of technology and digitization that I just touched upon. Fourth, of course, we are looking into structural changes in the cost structure itself. So, all these initiatives are there. There is a lot of strategic notion to this, which will be, which as a team, we will continue to work on and take it off.

No, no, no, sir. I'm asking the environment, because the strategies we can decide in terms of...

The environment, if I was to say... Sorry. We all know heat is growing very great in the country right now. If we look into the numbers, the way Indian seed sector has grown in H1, it was 78% growth. So, that actually puts us into a very good sweet spot with the growth of our end-consuming industry. CBEC, of course, continues to grow at a good pace, and we are hoping the India story would be intact going forward. The way we are looking at the CapExes announced by a lot of steel companies and their commitment to the CapExes, I think, if I just do a very broad-cut number, Not to be exact, but I think steel sector itself would be seeing a KPEX nothing less than 50,000 to 60,000 crores coming up this financial year. So that also gives us a lot of headroom. Going forward, the growth rate of steel sector is going to be great, at least for the next five to eight years that we look at. And refractory industry should be tagging in line with the growth rate of steel sector.

Sure. Thank you very much and all the best.

Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Paramahad Sagar for the closing comments.

Thank you very much. Dear valued share holders and analysts, thank you for your support as you people are doing for many years. Thanks for your trust in the management and we assure you we will do everything possible to exceed your expectation. Under this volatile situation, we can't comment, confirm everything, but, you know, intention is to grow more than the market, and we will continue this. We look forward to your continuous support. Thank you very much, and all the very best. Thank you.

Thank you, sir.

Thank you.

On behalf of RHI Magnesita India Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.