Electrosteel Castings Limited (500128) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Electrosteel Castings Limited. [Operator Instructions] I now hand the conference over to Mr. Vikash Verma from EY LLP. Hello, maam?

[Shreeja], there is a noise coming there.

Yes, hold on. [indiscernible] Can you hear me?

Yes.

Maam, your volume. Can you mute your line, please. Thank you. Ladies and gentlemen, I now hand the conference over to Mr. Vikash Verma from EY LLP. Mr. Vikash, please go ahead.

Thank you. Good afternoon, everyone. On behalf of Electrosteel Castings, I welcome you all to the company's quarter 1 FY '25 earnings conference call. To discuss the performance of the company and to answer the questions, we have with us from the management team Mr. Radha Kejriwal Agarwal, Whole Time Director; Mr. Madhav Kejriwal, Whole Time Director; Mr. Sunil Katial, Whole Time Director and CEO; Mr. Ashutosh Agarwal, Whole Time Director and Chief Financial Officer; and Mr. Gaurav Somani, General Manager, Finance. Before we proceed with this call, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties and other factors which will be beyond management control. We kindly request that you bear in mind, there may be uncertainties when interpreting such statements. Please note that this conference is being recorded. We will now start the session with opening remarks from the management team. Afterwards, we will open the floor for an interactive Q&A session. I will now hand over the conference over to Mr. Sunil Katial, Whole Director and CEO, for his opening remarks. Thank you, and over to you, sir.

Thank you, Mr. Vikash. A very good afternoon to all, and a warm welcome to Electrosteel Castings Q1 Financial Year '25 Earnings Con Call. The company has been able to sustain its growth trajectory in the first quarter of FY '25, achieving a notable 18.9% year-on-year increase in consolidated revenue to INR 2,036 crores, driven by strong demand of DI pipes and fittings in water infrastructure projects in the domestic markets. The EBITDA of the company has surged remarkably to nearly 102%, year-on-year basis to INR 378 crores in this quarter. This is on account of company's consistent focus on maintaining operational excellence and improving cost efficiency through economies of scale and other initiatives. We have repaid to this INR 30 crores of debt during Q1 FY '25, resulting into a net debt equity of 0.33x during the quarter, thereby signifying the strength of our balance sheet. The company's DI Pipes sales volume stood at 1.93 lakh tonnes in Q1 FY '25. Export contributed 12% of this volume. Electrosteel Casting remains the preferred supplier of choice for major water infrastructure projects, thanks to our deep domain know-how, both in domestic and export market and the resultant brand image. The ongoing CapEx initiatives are progressively moving as planned to cater the growth demand of DI pipes, thanks to the government's Jal Jeevan Mission and AMRUT 2.0 scheme. We plan to expand our production capacity to 1 million tonnes by the financial year '26 end. We are also in the process of acquiring land in Odisha for the upcoming greenfield DI pipe and fitting project. The project's scale is currently under final stages on the drawing board. We will update the same to all of you and our analyst friends through the exchange filings. Thus, through judiciously planned expansion and execution process, Electrosteel casting will continue to maintain its leadership stance in the domestic DI pipes and fittings industry and as well as hold, its flag high in the export market. I would now like to hand over the floor to my colleague, Mr. Ashutosh Agarwal, the Whole Time Director and CFO, for taking you through the financial highlights.

Thank you, Katial ji. Good afternoon, a warm welcome to all the investors present in Electrosteel Castings Q1 2025 earnings con calls. First of all, I'd like to brief you about the consolidated results of Q1 2025. The total income increased by 18.9% year-on-year to INR 2,036 crores due to robust domestic demand. EBITDA surged by 102% approximately year-on-year to INR 378 crores and the EBITDA margin expanded by 761 bps year-on-year to 18.5%, led by the economic of scale. PAT surged by 202% year-on-year to INR 226 crores, PAT margins expanded by 673 bps year-on-year to 11.1% during the quarter. Not evolve the stand-alone results for the Q1. The company sold 192,000 tonnes of DI pipes during this quarter. Total earned income grew by 21% year-on-year to INR 1,851 crores, EBITDA grew by 92% up approximately year-on-year to INR 354 crores. And EBITDA margin expanded by 705 bps yearly -- year-on-year to 19.1% led by economies of scale coupled with operational excellency. PAT surged by 161% year-on-year to INR 212 crores, and the PAT margin expanded by 615 bps year-on-year to 11.5% during this quarter. About the CapEx plan, highlights of updates on the -- our CapEx, the company ongoing CapEx is approximately INR 700 crores is in progress and as per the schedule. Company has spent nearly INR 410 crores till Q1 2025 financial year and target to enhance its overall Di Pipe manufacturing capacity to 1 million tonnes in the year 2026. Now I shall open the floor for the question-and-answer session. Thank you very much.

[Operator Instructions] First question is from the line of Mr. Saket Kapoor from Kapoor & Company. [Operator Instructions].

Sir, firstly, about the CapEx part which Ashutosh-ji articulated about INR 411 crores. [Foreign Language] and how much more is left to be spent for this financial year.

Can I answer this question? Upto last quarter, we have spent INR 390 crores. And in this quarter, we have spent INR 20 crores.

Okay, [Foreign Language].

[Foreign Language] and further 1 lakh tonne will be [indiscernible] in 2026.

This is for the Kalahasti plant.

Kalahasti plant.

So for the exit of FY '25, we will be having [ 550 ] for the South unit. And what would be the capacity for our Eastern unit?

Approximately [350 ]?

[350 ]. 900,000 [ tonne ] [Foreign Language] that will be at the exit of FY '25?

Correct.

Okay. So we will get the benefit of the enhanced 1 lakh capacity in phased manner for H2? Or will that benefit -- will get percolated to the next year?

No. In fact, these facilities are expected to be commissioned by the end of third quarter. So part of the benefit definitely will start accruing from fourth quarter onwards.

Okay. And sir, when we look at the EBITDA number and also the raw material environment currently, so this EBITDA trajectory looks to be on a steady set of track and these numbers look sustainable now? Taking into account the major raw material price trends currently.

Yes. That's what looks like. Though there are some, I mean, fluctuations, actually, the coal prices have a bit softened. But at the same time, the iron ore has had the upward trend in both Karanataka region as well as Odisha. But possibly, I mean, these will get netted off more or less, and we should be able to hold on to the trajectory.

Next question is from the line of Pinaki Banerjee from AUM Capital Private Limited.

Sir, my first question is that [indiscernible] that coking coal prices have been under pressure for some time now. So is that adding in your margin growth for the current moment? And where do you see the trend going in the future?

Actually speaking, the coking coal prices are a bit softened in the last 2, 3 months. But it's very difficult as of now to really say how it is going to look like. In fact, there have been some fire in one of the major mines, in Australia and also a bit of the lull in the steel market. And China was also on the back foot. As a result of all this, in between, I mean, these coking coal prices have taken a downward impact. But now China has started getting back. So let's see, really. Yes.

Sir, your final -- terms and contracts with the final customers, are there fixed price contracts? Or do you have the option of renegotiating if the input price goes up?

Close to 90% to 95% of our contracts are fixed price.

Okay. So actually, if the prices go up, then you can have a relative disadvantage over there. Is my understanding correct, sir?

If the prices of the coal go up...

By price, raw material prices go up?

Yes. Along with a certain delay, obviously, because of stocks that we have for our existing order book. There will be an impact. But that similar trend is also playing in reverse because we will then book orders for elevated raw material prices. And if the prices fall, then we will see an upsurge in the margin. So on a midterm to long-term basis, you will see a streamlining of the margins.

Actually, just now Mr. Ashutosh said that you have repaid about INR 30 crores of debt. So actually, what is the current debt and cash position?

SO current debt, long-term debt is around INR 489 crores until 30 June 2024 and the short term is INR 1,357 crores. Total is INR 1,856 crores. Net debt after deducting the cash available in the system is approximately INR 1,500 crores.

Okay. Okay. Sir and just I'm squeezing last question in, sir, just hypothetical one. Sir. actually, now in the Union budget, the Finance Minister has allocated about INR 16,000 crores for Telangana. Are you seeing any opportunity over there?

I think you mean Andhra Pradesh, sir.

Yes, Andhra Pradesh, sorry.

Most definitely, we will benefit from that, especially considering that our South plant, which is the bigger capacitied one, is in Andhra Pradesh itself.

Our next question is from the line of Radha from B&K Securities.

Congratulations on good results. Sir, I wanted to understand that export mix has come down in this quarter to 12%. So with increased capacity in place by -- after 3Q, how do you see the export mix improving.

Sorry, with regard to the export, at this point, due to the robust demand in the domestic market, it's a decision that we've taken keeping in mind margins to reduce export. It's by design that this has taken place. Also, there are fluctuations in the ocean freight owing to various global affairs. So it's not really an indicator of what will be happening on a long-term basis. We would like to increase our presence in the export market in tandem with the growth that we are seeing in our capacities.

Sir, I believe in the export market the realizations are slightly better.

It usually is, madam, but as I mentioned, there have been some major upheavals in the transportation costs, which are going to be temporary in nature and also there was good demand pull from the domestic market for this particular quarter being close to the election period. So that's the reason why we see this trend for that.

Okay, sir. [indiscernible] Because of the lower supply in the exports market like you mentioned because of the [ domestic ] demand was very good, so do you expect any loss in market share in the export due to this?

As I mentioned earlier, ma'am, this is not a trend to be -- it's not a trend for the long-term future. This is a momentary one. So what you're saying would probably apply for a period of 6 months or so, nothing longer.

And secondly, another 75,000 tonnes capacity is expected to come from the Srikalahasti plant for FY '25. Out of this, how much are we planning to sell from this additional capacity in this year?

We would be selling most of this, ma'am. I don't think there will be any unsold capacity from the additional...

so can we do north of 8 lakh tonnes on DI sales this year?

Yes, we will be hitting somewhere around the ballpark figure of 8.5 lakh tonnes this year.

The next question is from Kuber Chauhan from Anand Rathi.

Congratulations on a good set of numbers. There are two questions from my side. When you were saying about the demand, so from which region we are looking -- we are getting more demand? And my second question is on the land which we have acquired in Odisha, can you give some highlight on that?

So I think it's a little -- I'll start off by answering the second question first. It's a little early for me to throw any light on our plans in Odisha, right now. So I shall refrain from that. In regard to the demand pool today, there is a decent amount of work left almost all over the country. So there is no single state, which is really pulling a lot of demand. There are ups and downs with regard to -- due to seasonality or fund availability for that particular moment. So at times, you will see a state pulling in more, but there is no really one location. I think Andhra is going to pick up for the near future. So that's going to be one market which we are optimistic about. And of course, Odisha, Madhya Pradesh, Rajasthan, UP, these remain strong markets for us as well.

And what would be our volume on an annualized basis, if you can give some percentage or any ballpark number?

Volume -- Sales volume?

Yes, sales volume.

Our Sale volume will be around, as I mentioned earlier, it would be around in the ballpark of 8.5 lakh tonnes for this financial year.

Next question is from the line of Mr. Gunit Singh from Counter Cycle PMS. [Operator Instructions].

So sir, I would like to understand with our competitors and players across the board and DI pipes coming up with capacities in FY '26 and in the coming 2, 3 years. I mean do we see there to be any margin pressures in the future with respect to DI pipes. And do we expect the -- I mean, the supply to outpace demand? Or how does the overall industry scenario in DI pipes looks like for the coming 2, 3 years in terms of demand-supply dynamics.

Sir, in the near term, I look at it as a positive with the increasing capacity in the industry because at this moment, there's a major gap between demand and supply, which causes this thought and mindset of changing pipe material, but with the strong domestic industry, we would only see the demand being pulled up. So it's a kind of cycle where availability of material increases, so will the demand. That is one part of the equation. The other is that we are very far from installing even our first virgin infrastructure for water pipeline across the urban and the rural sectors. We've just about started with irrigation. So the next 5 years is quite an optimistic view.

Sir, what kind of discrepancy between demand and supply would -- I mean, can you quantify the industry wise number, if possible?

We would be looking at a demand scenario of approximately 5 million to 6 million tonnes over the next 5 years each year. And supplier would be meeting this , I think, around third or fourth year. So we have some time to go.

The next line is from Mr. Avinash Nahata from Parami Financial Services.

I have two questions. I've been following the company for quite a long period of time. When we have spoken in the past, let's say, last year, so we spoke about EBITDA per tonne, and the management team has indicated that INR 11,000, INR 12,000, INR 13,000 should be the right way to look at it. If I look at last four quarters, it's an upward of INR 15,000, INR 16,000, INR 17,000 and this quarter was more than INR 18,000 EBITDA per tonne. The product -- the sales were 193,000 tonnes, right?

Yes, please.

Yes. So what has -- so my question is -- two questions in the same thing. I mean what has transpired in the last four quarters, which has seen what we used to do INR 10,000, INR 11,000, INR 12,000 and we are not doing INR 16,000, INR 17,000, INr 18,000 per tonne in terms of EBITDA. And I mean, what are the key reasons from -- both from a demand-supply perspective, if you can tell us? And second is, what is the sustainable number? I had asked this question last year also when you guys said INR 11,000, INR 12,000 is a good enough number to carry?

I think last year, the reason for those numbers were because we didn't want to overcommit. I do agree on the fact that it was probably not envisage that we will see such a jump in the overall margins, although now that we study, the reason it seems like those reasons are going to be valid for the foreseeable future. So saying that, I think being around these margin numbers is pretty much valid. The reasons are largely demand and supply related, the numbers, as I've mentioned just a while ago was that there's a gap of around 1 million tonne to 1.5 million tonne at this moment between the demand and supply, which will take some time to narrow down. It's largely related to that. There have been some unlocking of efficiencies that we've seen as we've expanded, of course. There's also the matter of economies of scale that adds to the equation.

So I mean, two questions again from my side is, one is we were running our plants at full capacity earlier also. And second, from the demand side, when you're saying 1 million tonnes, there is a gap of 1 million tonne. So that gap existed 1 year back also 2 years back also.

I would not say that the same gap remained 1 year back and 2 years back as well. The demand scenario has been picking up, the avenues for the demand pool have also increased by way of irrigation, starting to pick up and AMRUT expenditure starting as well. The other aspect in regard to our full utilization of plant, we have obviously made some improvements in the overall equipment and that really helps you hit better efficiencies. You see it is not a pro rata jump in your efficiency when you go from a certain size of equipment to a much bigger size. So that comes into play. 0.5 million tonne steel plant and 1 million tonne both running at full capacities will not have the same performance indexes.

Okay. So are you saying that INR 15,000 per tonne is maintainable. Maybe INR 18,000, INR 19,000 is on the higher side, but INR 15,000 is maintainable according to you over the next -- I mean, whatever foreseeable future you can look at?

Yes, please.

And what was the export number we did in terms of tonnage?

We sold around 24,000 tonnes.

[Operator Instructions] Next question is from the line of Mr. Jojo Shaju from Alpha Invesco Research Services.

Sir, most of my question is already answered. So just two questions from my side. One is on the exports. So exports volume, as you mentioned, came down to 12 percentage. And if I look back, it was around 20 percentage in the Q1 of last year, last financial year. So I just want to check what is the outlook on the export market? And if you can specifically talk about Europe and Middle East market?

Well, the demand in Europe and Middle East are very much stable. In fact, in the Middle East, there is an upswing in demand. Europe has seen a very temporary downswing, that's more seasonal. And also, there were a lot of elections going on this year. So a bit of a slowdown owing to that account. In regard to our percentage of share for export, because of the fluctuations in the ocean freight, there was a bit of a downturn in this quarter. I don't think that this trend will maintain for too long. We are seeing trends for us to maintain the 20% export contribution.

Okay, sir. And how about the U.S. market doing for us? What is the outlook over the there.

The U.S. market is very protectionist in nature, and it has its own difference in material type, which is one of the reasons why it cannot be completely capitalized by an outsider, and it also has a very strong indigenous manufacturing ecosystem. So owing to that, we don't see the U.S. being a market where we can exponentially grow, but we will maintain our existing hold.

Next question is from the line of Mr. Bharat Sheth from Quest Investments.

Sir my question is we wanted to work on to improve the contribution from joint business, so which can help us, which is a higher EBITDA margin. So can you give how the trend is and currently, what is the contribution? And whatever [ in past ] and where do we see in a couple of years?

I'm sorry, sir, you'll have to elaborate a bit on that question, please?

See, we have two products, Joints and the Pipes, correct?

Okay, Joints. Sorry, I didn't quite get that. At this moment, we have been continuously expanding our capacity for fittings. I think that is what you are referring to.

Correct. Yes, fittings.

We are looking at having an installed capacity of 24,000 tonnes, even for the greenfield project of Odisha, there are plans at this moment to see if we can expand it. Of course, nothing is concrete. We are hopeful that we maintain the contribution of fittings at around 5% to 10%. And going forward, I think that will be a good value add for us, you can say, a cherry on cake scenario.

Okay. So currently, it is in what range? And where do we see in '25 and '26?

So it contributes around 4% to 5% at this moment.

And you want to take it to 10% by -- in 2 years time?

I'm sorry, sir?

In 2 years time, you want to take it to 10%?

Somewhere between 5% to 10%.

Next question is from the line of Deepesh Sancheti from Mania Finance.

Sir. I just wanted to know the capacity utilization is 100%, right?

Yes, please.

Yes. And so what is the raw material mix? How much of the raw material, like how much iron ore and how much is the coal? Does that affect our raw material prices in terms of percentage?

As a percentage, the coal prices are around 52% and iron ore is around 26%, 27%.

26% to 27%. Okay. And what is the order book right now?

We have approximately 11 months of order book.

11 months. And with the increased capacity, are we looking -- I mean, how much is the order book is from exports and from domestic?

I'm sorry. How much of the order book is from export -- approximately 15% would be from export and the remainder from domestic.

Okay. And I know you gave this question, but any update on the money from JSW?

So being an election quarter, there was a lot of lull on that front to be very frank.

Okay. I mean, okay, there was a bit lull. But now with the government coming, the same government coming again, do we expect that this will expedite.

I've been wrong in my assessment of this in the past. I'm still optimistic because it's moving in the right direction, but it's a little slower than what we expected. So I think it's best if I don't give any time lines at this point.

Right. But there has been no advancement or anything, nothing in this quarter at least.

From the last con call, no, sir. There have not really been any advancements. At the same time, it's not going back either. So there's nothing negative.

Okay. So we are hopeful. Now I just wanted to understand with our Odisha expansion and other state expansion, how does the change of government affect our expansion plans? Or do we get the orders from state government or directly from central government? How is it?

The orders are coming in from the state government, but I think both the past and the current government are quite efficient and focused towards the infrastructure development. So I don't see any change in stance over there.

Okay. So with the Maharashtra elections or any other elections coming in for the future also, you don't see any change of -- I mean a big change?

Not at all. I'm of the view that now every government has realized that infrastructure development is a core part of what is required to be done. And I find that focus is there. Water is also a very essential, probably the top 1 or 2 points for what's in focus. So I don't see any real impact coming in due to the government change. There might be a slowdown due to fund allocation for a temporary period, but nothing more.

Okay. And just wanted to understand this JSW matter, is it stuck with -- it is stuck with the central government, right? Which ministry is generally involved in this?

It's the Ministry of Coal, please.

Ministry of Coal, okay. And we are hopeful that you'll get the money soon.

[Operator Instructions] Next question is from the line of Radha from B&K Securities.

Sir, your guidance of 8.5 lakh tonnes of volumes, does it include fittings and cast iron pipe or this is purely DI pipe?

These are just ductile irone pipe as of now.

Okay. How much are we expecting to do in fittings and cast iron?

Approximately 36,000 tonnes in cast iron and 22,000 to 24,000 tonnes in fittings.

24,000 in FY '25?

Yes, please.

Okay. Secondly, sir, in this quarter, could you give us a number for fittings and the cast iron pipes and the similar number for last year first quarter?

I'm sorry, could you repeat that question, Because it's a little soft on this part -- on this side?

Sir, wanting to know the sales volumes of DI fittings and cast iron for this quarter as well as for last year first quarter.

In fittings, we sold 4,100 tonnes in this quarter. Last year, year-on-year, last year, same quarter, it was 3,900 tonnes. DI pipes, second quarter was 9,300 tonnes. And in the previous year quarter, it was 5,000 tonnes.

Next question is from the line of Sidhanth [indiscernible].

So my question -- yes, okay. So part of my question was answered already, I was asking regarding the margin -- EBITDA margin. We have discussed previously that INR 18,000 per tonne is the most good -- as in, the best scenario. So can you expect this for the entire financial year or we -- there were some specifications like only [indiscernible] specifically quarter 1 performance.

We are optimistic to have these tailwinds stay for the entire year, in fact, for the remaining 3 to 5 years. So to answer your question, yes, of course, I can't give you a specific number on the percentage, sir.

But can you do 18,000 per tonne like a scenario for this financial year role. Because realistically, I'm thinking about that on a year-on-year basis, we sell around 8 lakh tonnes. So based on that number, can I come up with that expectation?

So as I mentioned, it's a little difficult to give you a specific number, but we will be in the ballpark of this, yes.

Okay. Okay. Another question is regarding the payment side of structure because most of our orders are from the government directly. So how does the payment structure? How is it better, like how is that like, is this structured, well in advance or was it like a difference in the...

No, so for, domestic part, majority of our orders come in from EPC contractors, it's private companies. They in turn have their linkage with the government. At times when as -- it was asked previously in this con call when there's a government change, sometimes there's a bit of a slowdown from the government to the EPC contractor [ doesn't -- turn it ] comes down to us as well. But for around 85% of our order book, which is through EPC contractors, it's all backed up by LCs, bank guarantees or advanced payments.

[Operator Instructions] The next question is from the line of Mr. Surendra Khemka, Individual Investor.

[Foreign Language].

[Foreign Language] Although the numbers are somewhat similar, our margins have gone slightly higher.

[Foreign Language].

[Foreign Language] largely because of improvement of...

[Foreign Language].

sir, when you are coming out of the expansion, it takes some time to ramp up the production. So that is the reason why the total tonnage is where it is, plus owing to the seasonality factor of largely heat, there is some minor inefficiencies that have come in the first quarter.

[Foreign Language].

[Foreign Language].

[Foreign Language] due to higher price, due to premium price [Foreign Language].

Sir, [Foreign Language].

Next question is from the line of Mr. Rajesh Bandari from Nakoda Engineers.

Congratulations for the good numbers. Sir, I wanted to know this Electrosteel, that mining thing was there, have we received the payment money?

So it was in the Electrosteel Castings company that the coal mine was present. And this has been recently allocated -- not recently, but it's been some time since JSW has been allocated, the mine. Unfortunately, the processes that lead up to the finalization of the value are still going on. So although things are -- have been moving on the right track, there is no real firm date as to when we can see this materialize.

What is the expected amount, sir?

[Foreign Language] as per book -- as per value on our books, [Foreign Language].

Value on books [Foreign Language].

INR 1,258 crores.

INR 1,258 crores. [Foreign Language].

[Foreign Language].

[Foreign Language] BlackRock is your shareholder?

[Foreign Language].

Which is INR 8 trillion [Foreign Language].

Thank you for your suggestion, sir. We shall take that into consideration.

Next question is from the line of Radha from B&K Securities.

Sir, I wanted to understand what is the average cost of coking coal in the -- for this quarter. And with respect to that, what is the inventory that they are holding in coking coal cost for the inventory that they are holding?

Ma'am, I think that's too detailed an answer to provide.

Okay. Could you tell me what is the -- how many months of inventory are you holding for as of now?

Around 4.5 months.

Sir, secondly, this acquisition that we are about to do for the Singardo. There, we have planned to expand in the overseas [indiscernible] market. Could you explain what is the opportunity size that we are looking at?

So ma'am, the thought behind Singardo is that with our growing capacity markets which we have earlier avoided due to China's influence to the Southeast Asian market of Vietnam, Thailand, we would like to start exploring that. We've become more competitive on the pricing front with the Chinese. So we thought that Singapore is the best place to be for these markets as a hub. This opportunity came in front of us, so it was best to capitalize it.

Next question is from the line of Mr. Saket Kapoor, Kapoor & company.

Sir, firstly, if you could explain me what led to this increase in our consolidated profit this time. When we look at our turnover that has risen from 1,832 crores for stand-alone to INR 2,012 crores approx for console, whereas the raw material consumption is similar, the same amount. If we keep the consol and the standalone numbers, the material consumption is same. So, if you could just explain, and I think this is the first quarter wherein we are seeing these higher amounts of profit at consol level. Earlier, consol levels used to report lower profit. So if you could just -- any expectation part for this quarter?

So sir, as per the accounting norms, because of the lower export from India, the stock buildup at the subsidiaries are lower. Thus, there's an amplifying effect of the sales, both here and in the subsidiaries, which was erstwhile replenished by new stock from India. And we would have to reduce that from the stand-alone numbers as per the accounting norm earlier [Foreign Language].

Thank you, sir, I now hand the conference over to the management of Electrosteel Castings Limited for their closing comments.

I would like to thank everybody for taking out their valuable time and listening to us patiently at the end of this very interactive call. I would like to reinstate that the company continues to grow along with maintaining its balance -- balance sheet strength and further is well positioned to benefit from the growing water infra spending. In case of any query, please feel free to connect with EY IR consultants. Thank you.

Thank you. On behalf of Electrosteel Castings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you so much.