Electrosteel Castings Limited (500128) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '25 Earnings Conference Call of Electrosteel Castings Limited. [Operator Instructions]. I now hand the conference over to Mr. Vikash Verma from EY LLP. Thank you, and over to you, sir.

Thank you. Good evening, everyone. On behalf of Electrosteel Castings Limited, I welcome you all to the company's quarter 3 and 9-month FY '25 earnings call. To discuss the performance of the company and to answer the questions we have with us from the management team, 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 for 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. Madhav Kejriwal for his opening remarks. Thank you, and over to you, Mr. Madhav.

Thank you, Mr. Verma. A very good evening to all, and a warm welcome to Electrosteel Castings Q3 and 9 months FY '25 Earnings Call. Let me share a glimpse of our financials and industry demand scenario. The company's total income stood at INR 1,816 crores during the third quarter of FY '25. This was down 4% compared to Q3 of last financial year, which was mainly on account of a shutdown of the MBF at our South unit. The company's DI pipe sales volume stood at [ 177 lakh ] tonnes in Q3 FY '25 and 5.45 lakh tonnes for the 9 months. Export contributed to 14% of the aforesaid DI pipe volumes. On the ongoing brownfield expansion to reach capacities of 1 million tonnes of DI pipes out of our planned CapEx of INR 700 crores for Phase 2, we have already spent INR 480 crores till 31st of December. There is a minor delay of around 2 to 3 months on account of manpower shortage and delays in supply of equipment, and we are hopeful to reach the installed capacity of 9 lakh tonnes by the end of March 2025. We're also happy to inform you all that our long-term credit rating has been upgraded by CRISIL from AA- to AA. Coming to the industry demand scenario, the demand for DI pipes and fittings continues to be robust on account of initiatives like river linking, Viksit Bharat Vision, Jal Jeevan Mission and AMRUT 2.0. Although there is a pause for some time from the government on spending, which has been seen across all sectors, we are optimistic the government will continue to push towards infrastructure spending from the upcoming Union budget '25-'26. I would now like to hand over the floor to my colleague, Mr. Ashutosh Agarwal, Whole-Time Director and CFO, for taking you through the financial highlights.

Thank you Madhavji. Good evening, and a warm welcome to all the investors present in Electrosteel Castings Q3 and 9 months 2025 Earnings Call. First of all, I would like to brief you about the consolidated financial results of Q3 2025. Total income stood to INR 1,816 crores, partially impacted by [indiscernible] as informed by Madhavji shutdown of blast furnace [indiscernible] unit. EBITDA reported to INR 294 crores with EBITDA margin of 16.2%. Although margins were down year-on-year due to lower volume on account of shutdown, but saw an improvement from previous quarter. PAT reported to INR 160 crores with PAT margin of 8.8%. Highlights on consolidated 9 month results. Total income grew by 2.9% year-on-year to INR 5,701 crores. EBITDA increased by 2.7% year-on-year to INR 961 crores and EBITDA margin stood to 16.9%. PAT grew by 5.5% year-on-year basis to INR 541 crores in 9 months. PAT margin stood to 9.5%. Now I'm talking about stand-alone results of Q3. Total income stood at INR 1,673 crores, impacted while shutdown has implemented earlier. EBITDA stood to INR 280 crores with EBITDA margin of 16.7%. PAT stood to INR 157 crores with a PAT margin of 9.4%. Highlights of our stand-alone 9-month results. Total income was INR 5,236 crores. [ EBITDA ] [indiscernible] INR 903 crores and EBITDA margin, 17.2%. PAT was INR 521 crores, PAT margin stood to 10%. About the ongoing CapEx plan as implemented by Madhavji. So total plan was INR 900 crores -- INR 700 crores for Phase 2, and we have spent around INR 480 crores in December 2024. We target to enhance our DI pipe manufacturing capacity to 1 million tonnes by 2026, March. Now I will open the floor for the question and answers. Thank you.

[Operator Instructions]. The first question is from [ Gargi ] Singh from Value Investments.

[indiscernible].

Your voice is not clear, madam.

[Operator Instructions].

[indiscernible].

Hello. I'm sorry, Ms. Singh. We can't really hear you. We request you to call us back maybe from a different number. The next question is from Rajesh Agarwal from Moneyore.

Sir, how much days provision was lost in this quarter? And can you quantify the revenue out of it? And second question is the outlook on the order because other companies -- pipe companies are saying the order is booked from central government to state government. And your outlook on the orders.

So we have lost approximately 8 days of production which is around 18,000 tonnes. In regards to the total revenue, Gaurav, why don't you?

Yes. So I think in terms of total revenue, it should be around INR 45 crores.

INR 45 crores. Okay.

So what happened was there was a shutdown of between December and January related in stock exchange. So around 6 to -- approximately 6 days in December and 7 to 8 days in January. Total loss.

Okay. Understood. So up to Jan 7, it is only for the quarter, December, 7 days?

So with the total loss that was given by Madhavji was for the total 12 to 13 days. In December, what we have lost is around INR 45 crores of revenue.

I apologize. I said 8 days, it's actually 6.

Okay. I understood, sir. And now that blast furnace has stabilized now.?

Yes, please. Of course, there is a time lag between firing and stability at the required production level. So, now after the restart, it's taken us around 20, 25 days to ramp up towards capacity, but now we are seeing stability at the blast furnace.

And has the efficiency improved, sir?

Yes, definitely.

And now on the order book, order book, outlook on the orders.

So we have around 8.5 months of order book at the moment. It's around 6 lakh tonnes of DI pipes.

And the outlook -- the order book is decreasing because we are expecting after the election, some orders will come -- so your outlook on that?

Well, there has been a momentary slowdown from the government side on the expenditure towards Jal Jeevan Mission, which is, that amounting to around 40%, 50% of our total order book and also the total demand in the market. For this particular quarter, post the budget of -- which is scheduled for tomorrow, we are very optimistic that spending will restart. And starting April, I think things will be back to the way they were earlier in regard to the demand pull. Parallelly, new initiatives by the government on the front of river link irrigation at a state level and AMRUT 2.0 are seeing good interest.

So the bidding -- our bidding pipeline is strong? Or we may expect some orders by April?

Absolutely. We usually keep an order book of around 8 to 10 months. We are at the lower end of that range, but it's still within our general...

And sir, the outlook on the export market?

Optimism is there towards growing upcoming economies like the Middle East, okay? Unfortunately, we have seen a bit of a hit on our business in the U.S. But Europe continues to be stable. U.K. is improving, but of course, it's a smaller part of the entire equation. We've also started exploring more markets in Southeast Asia and Africa. But at the moment, it's difficult to give you an exact number of the growth over there, but it seems like there's a lot of potential.

And sir, pricing and the margins will hold on or there will be improvement in the margins from here?

I think historically, if you see, we've always hit a margin of 15% to 18%. At the moment, we are at 16.7%. I think these are pretty stable numbers, which we should be able to carry on for the foreseeable future.

And any much fluctuation in the raw material? No.

I'm sorry, I couldn't quite get you there.

Any fluctuation in the raw material quarter-to-quarter?

Any fluctuations in the raw materials?

Actually, on the raw material front, on the coke front, and I mean, coking coals and all that, there has been a downward trend. And the price correction to the tune of some $35, $40 has come down. But at the same time, as far as iron ore is concerned, there has been an upward trend. So practically, on raw material front, they have neutralized each other, more or less.

[Operator Instructions]. Ms. [ Gary ] Singh from Value Investment.

Am I audible?

I'm really sorry, but your voice is breaking and -- it's very inaudible.

Yes, I'm trying again. So is it better?

It's much better.

Okay. So my first question was that, sir, in the last quarter con call, you had alluded that the coking coal benefit will be seen in this quarter, but the numbers suggest that it is not visible. The coking coal prices has fallen by 30% in the last 1 year. Yet in the last 1 year, the gross profit per metric ton is same at INR 52 per kg. So this has not even increased by INR 1. So what is limiting the expansion in gross profit? And why are we unable to see any gross margin expansion?

I'll answer your question in 3 parts. First, as mentioned by Mr. Kejriwal, we have seen an increase in the iron ore prices, which has an equal bearing on the costing. The second part of it is that due to our shutdowns, there are some increases in costs that are there. And as mentioned, we were having some stability in the blast furnace, which throws our efficiencies and productivity a little out of WACC. So these elements cause a minor disruption in the costing on the operations side. On the input material side, iron ore somewhat made up for it. Another -- the third point here is that we carry stock. So you will see that the impact of the reduction in costs don't take place immediately. It takes a little time for that impact to come into place. So although we are looking at a much lower cost on our stock as opposed to the beginning of the financial year, it's not come down as much as it seems to have on an index.

So sir, in response to that, actually, historically, if I see the raw material cost, then as compared to the iron ore, then the overall cost of production and the coking coal price will at least be 3x of the iron ore considering the requirement and the prices, how it fares out. So the benefit of coking coal should be significantly higher, and I've been waiting for this for quarter-on-quarter. But for the last 5 quarters, it is at [indiscernible] level. So hence, this doubt that why aren't we seeing the numbers? And when do we expect -- or do we expect to see this?

On the 3x part, it might seem so on the absolute term, but it's also important to understand that the consumption of iron ore and coke are different. And although you are right, the impact of coking coal is higher on the cost than iron ore, but it's not 3x.

No, the usage factors are totally different. Actually, the consumption of coke to iron ore is in the ratio of 1:3 roughly. 3x the iron ore. Iron ore, we consume around 1.7 tonnes for making 1 tonne of iron. And the coke we consume, I mean around say 500 kgs. So less than by 1/3 of that. So those are on the price index, what you said is absolutely correct that the impact of reduction in the coal pricing is much higher. But because the multiple of that as a usage sector, is less. So that is how it is getting neutralized.

Yes. And the difference in the delta of the cost of coking coal and iron ore is -- unfortunately, we've lost out on that due to minor changes in our KPIs, which is our key performance indexes because of the disturbance in the blast furnace.

Okay, sir. Sir, how long this is expected to continue? Because usually, the blast furnace shutdown, I thought it would -- because in your previous call, you had alluded that it will not get extended post November. But in the opening remarks, you mentioned that -- to the previous participant, you mentioned that...

The time line for the shutdown was only to start in December. So if I have said that, I might have miscommunicated or there's some sort of misunderstanding I feel.

No. Actually, when October we discussed, Madam, the point was that we are having problem in the blast furnace. We are in the process of procuring the material for that. And in all probability, in the last week of December or so, after '28, we should be able to take the shutdown. Actually, some small gap has taken place, and we will definitely, I mean, look into that. But that is what actually has been the plan. And we just want to clarify that we took the shutdown in end of December, 6 days into December and then 8 days into January. So after that, the blast furnace has come up. There were small teasing issues and now blast furnace has nearly stabilized. It's working fine now.

Okay, sir. Sir, second question was that going forward, if we see the coking coal prices sustaining at $200, $220 per tonne, then there will be a revision in DI prices according to this because of the lower coking coal prices. So a few of the competitors have indicated that there is a correction in DI prices according to the coking coal prices. So at the current level, we are doing INR 16 per kg EBITDA. And when we reach 1 million tonne volume and if we do -- considering the correction in prices, if we do around INR 14 per kg in EBITDA, then from a base of FY '25, the EBITDA growth CAGR is coming in single digits. So what is your take on this?

Well, ma'am, at the moment to really be able to quantify what will be the rupee value of EBITDA on our production is difficult because we are going to be reaching 1 million tonnes, say, in FY '27. At that moment to clearly know what the raw material price movement will be difficult. It's not never been so that for 2 to 3 years, there's been a stable pricing on raw material to have a INR 14 per tonne EBITDA margin. Thus, we'd like to fall back on percentages. So if we are -- I'm very optimistic, and I'm very sure that we will be able to maintain an EBITDA margin of 16% to 18%. And considering that, our growth will take place as our quantities increase.

Understood. Sir, third question was...

I'm really sorry to interrupt, but maybe request you to rejoin the queue as there are several participants waiting. We take the next question from Deepak Lalwani from Unifi Capital.

Sir, first question is that given the weakness in water infrastructure spend, is there any order execution risk that we will probably see in Q4 and going ahead?

No. All these projects that we have in our order book, a majority of them are projects which have already broken ground. So the risk of losing out on business is negligible. There might be a bit of a stretch in the delivery because of the slower expenditure by the government, which also I feel is momentary.

Fair enough. Understood. And sir, secondly, a related question. So you said that the outlook is strong, but given that Jal Jeevan is almost 80% over. The AMRUT scheme is fairly small compared to Jal Jeevan. So what gives you the confidence for the demand growth for DI pipes? And secondly, the demand-supply scenario, how should it pan out for the industry? And thirdly, if you've looked at -- have you witnessed any pricing moderation for our product?

On the pricing moderation front, it's minor, and it's related to the correction of the raw material front. Answering the question regarding AMRUT being a smaller CapEx than Jeevan. Jal Jeevan today is around 79% to 80% on the website. But if you see the actual impact on the ground, there are many places where the tap connections are there, but there is a dearth in drinking water available. That's because those taps are not really connected to a premium source. So there is a lot of work left. The initial outlay for Jal Jeevan was actually twice as what was decided to be spent by the government. So they will need to spend more money to make this project -- to make this mission successful. In regard to other demand sources, India is very strongly and aggressively moving towards pipes irrigation as against canal. There are many advantages that have been proven in that process. So there is increased spend on the front of the states on that. Another very ambitious project, which seems to have finally picked up pace is river linking. It was something that was probably started in the early 2000s, but now there's actual work on the ground that is happening. That's again going to be a good source for demand for us. Owing to these 3, 4 reasons, I find that the medium-term situation on the demand front is quite robust.

Okay. And the supply addition that you guys are doing and also the other industry peers, will it disturb the demand-supply gap? Should there be any risk of pricing relating to the supply being more than demand in your opinion?

I'm not really concerned about demand-supply mismatch where the supply is more at least for the next 3 years. There might be temporary blips like we've seen in the last quarter, but that's very momentary -- [indiscernible] orders in the market once the fund flow start, we'll go back to a situation where demand is surpassing supply.

Okay. That's good to hear. I wanted to clarify one number. So what was the order inflow in terms of tonnage in this quarter versus Q2?

Can I get back to you on that separately, please, because I don't have that number ready at this point.

The last question was on the margin outlook, sir, on tonnage basis per tonne basis, what should we be budgeting in for the next quarter, which is Q4 and the whole year of '26?

Sir, I think it will be difficult for me to give you an exact number in terms of rupees per tonne. But as a percentage, I think we'll be able to hold on to the performance we've had so far.

The next question is from [ Ankur ] who is an Individual Investor.

Sir, in the opening remarks, Sri Kejriwal said that the expanded capacity will start in the month of March '25. And on the other hand, GM Finance, if I'm not wrong, you said that the capacity will start in March '26, sir. So I would like to please correct the statement, sir, if I'm not wrong.

I'm sorry, I'll just bring clarity to that. Mr. Agarwal, who is the CFO, was mentioning the final capacity, which is around 1 million tonnes. I was highlighting the number of 9 lakh tonnes, which is our first step towards that.

When it will get start, sir, in '25...

FY '25, we will have an installed capacity of approximately 9 lakh tonnes, 8.5 to 9 lakh tonnes. And then during the course of the financial year, we will put in more capital to take our capacity up to between 950,000 to 1 million tonnes.

Okay. My second question is, sir, your forthcoming Odisha plant, sir, what is the position as of now, sir? When it will get started?

So sir, there is very good progress on the overall due diligence of this project. And I'm hoping that we will have cemented plans to present to the public soon enough.

Sir, can we expect that it will get started in financial year '27?

The project itself?

Yes, sir, 0.5 million tonnes, sir?

So I think somewhere between '27 to '28 is a bit more realistic.

[Operator Instructions]. Next question is from Saket Kapoor from Kapoor Company.

Just to -- you were answering to the earlier participant about the Odisha project. So sir, have we outlined the capacity he was mentioning about 0.5 lakh tonne?

Yes, please?

Sir, the earlier participant was mentioning about 5 lakh tonnes. So have we outlined the capacity will be coming up for the Odisha project?

So that is a somewhat approximate figure. There is no -- like I mentioned that you have to kind of get into the optimization of capital expenditure to capacity installed. And with the kind of sizes that we have to reach a good level of production and efficiency, somewhere between 4 lakh to 5 lakh tonnes should be the minimum that the company should be looking at. So basis that, that's the genesis of this number.

Okay. Sir, if you could just provide me firstly with the tonnages for Q3 and last year comparable and also for 9 months and 9 months comparable?

Yes, sure. So for Q3, our production this year has been 177,000 tonnes, Q3 '24 was 184,000 tonnes. Our 9 months has been 5.5 lakh tonnes for '25. And for '24, it was approximately the same, give or take 2,000, 3,000. It was 547,000 tonnes.

Now sales.

Sales this year, we've had a sales of 177,000 tonnes, it's matching our production. Last quarter, we had more sales than production. It was at 195,000 tonnes. 9-month sales is 545,000 tonnes for '25 and for '24 was 550,000. So we're somewhat matching our production to sales.

So for 9 months, it is 525,000 vis-a-vis 550,000.

545,000, please.

Sir, taking into account still the shutdown, which was in the month of January and now the revamping of the MBF, what should be an ideal number to end the year?

Sir, we are hoping that we will end at somewhere north of 7.5 lakh tonnes, both on production and on sales.

7.5?

Yes, a little north of that.

Okay. And last year, what was our sales?

Just short of that, it was 7.47.

Okay. A small request if the volume data can also be provided in your presentation or in the press release, which was earlier a norm. So that would suffice and we save a lot of time also.

We will look into that.

Sir, now coming to the impact of this shutdown, I think so if in absolute number, you could give us some idea how much have we lost. We lost about revenue of INR 45 crores for the [Foreign Language]. And for the balance 7, 8 days, it should be closer to INR 60 crores, I think so in that proportion. But in terms of the expenses that we have incurred, which does not commensurate with the revenue. [Foreign Language].

So the total expense for the shutdown is around INR 7.5 crores.

Okay. This is for all the 15 days total?

14 days, yes, please.

Okay. Sir, then what explains this other expense line item growing disproportionately if we take the year-on-year comparison also and also for the quarter-on-quarter at the consol level?

Saketji, one factor is ocean freight, which has gone up compared to last year. So that led to increase in other expenses. Also, since the production was low, so the fixed cost absorption took a hit. So that was the second reason which led to a fall in the margins and higher other expenses.

Okay. And sir, for other income, there is also a significant increase if you take the consol number at INR 39 crores, what says INR 21 crores or INR 22 crores for previous 2 quarters. So what has attributed -- and what should be a sustainable number for the other income?

So sir, this is on account of a anti-subsidy refund that we have got from the European Commission. There is an anti-subsidy duty that they avail on us, but we keep applying for refunds, and we managed to get a refund of INR 23 crores in this quarter. Going forward, I think in the next quarter -- in this quarter as well, we will be expecting a similar, we will be expecting some sort of refund. This is an exercise that is ongoing, sir. We do it every year. Some years, we are able to get a substantial refund on some yes, it's lesser. It's difficult to give you an exact stable number for this.

2 more points, Sir Madhavji, you mentioned about U.S. business getting hit. Can you explain the reasons what has led to this? And what steps are we taking? Exactly what has happened for the U.S. business?

So there is an overall slowdown in the U.S. market for our product as a whole. And secondly, because of the impending possibilities of tariffs that to come and Made in America programs that are there. Customers are a little apprehensive in buying non-American products right now. They're afraid that those products won't sell into the market. Unfortunately, sir, this is an issue which -- the solution to which is to go local manufacturing there. For that, we have no immediate solution. We are looking at increasing our market shares in other geographies so that we don't lose out on our overall export percentages.

And sir, for USA, what percentage attributes to our total export. How much do we -- [Foreign Language]?

It's very small amount, maybe 1% of the total export that we do now.

Yes, now it's come down to 1%. It was probably a sub-5% level earlier.

Okay, sir. And lastly, sir, on the coal block part, sir, already, we have seen in precedent that whenever the party who has acquired the block and starts mining operations and all the -- there are payments in packages that are released. So I think JSW name, which was mentioned in your notes to accounts, speaks about the mines being handed over to them. So exactly, sir, where are we in terms of whether the right figure has not been determined? Or if you could just give some more color to the same?

Sir, classification of the assets into the right categories and then its valuation is an exercise that has been ongoing for a little longer than we had expected it to go on for as well. Of course, it's a very voluminous procedure. At the moment, JSW has -- yes, you're right, they have been handed over the mine. But within the mine, if you look at the orders, it says that under mine infrastructure, it says nil, which is the reason why they cannot start operating it at a commercial level. So at this junction, we are still awaiting for proper categorization and valuations of all the assets. They've managed to do some of it. There is some still left.

Any timeline we are working -- so yes, I'm joining only [indiscernible] just communicated. I will just answer. Any time line we can look forward, sir? Or is the [indiscernible].

[Foreign Language]. I would rather just say that things are -- we are optimistic because we know that it's in the right stages.

Next question is from [ Deepesh ] Agarwal from ICICI Asset Management.

So a couple of questions. The first question was we are looking at increasing our capacity to almost 1 million tonnes by FY '26. And you just mentioned that we are currently matching like -- the current demand scenarios are matching our capacity. So do we have any tangible proof or any tangible material that proves that by FY '26, we will actually meet that 1 million tonnes of capacity. We really have that demand prospect for the next couple of years?

Yes. Well, you see the capital expenditure at the governments and both state and central that was being done up till, say, mid of this year or even maybe a little beginning of this year, owing to that expenditure, there was a demand-supply gap of almost 25%, where the demand was higher. So -- or being optimistic on the fact that we will at least go back to that level of expenditure, it seems obvious that there is good space for growth. Beyond that, there is also new projects that are coming up. As I mentioned earlier, River-linking is a very big robust project, which is seeing light of day now. I think there are around 8 or 9 projects, of which 3 of them have really picked up pace, and there's good outlay against them. It will take 5 to 7 years for them to be completed, but every year, there will be a good allocation towards those projects. So keeping that in mind and when you kind of understand the growth trajectory of a developing economy to a developed economy, you try to replicate the growth story of demand for the product in China, in the States and in other similar economies, you will realize that at this particular junction when you're in the transitionary space, demand just keeps growing, and we need to maintain our market share, if not grow it.

Right. Understood. So can you give me a geographic breakdown of our revenue?

You mean in terms of country by country or...

Yes. Country by country, yes.

Sir, this is something that fluctuates every quarter, every 6 months because, as you know, it's a project-based business. Today, we are seeing Middle East take up a big chunk of our exports, whereas a year back, it was not much. And say, the year previous to that, America was a little bigger than what it is today. Europe also fluctuates. I think for me to give you a particular trend because within 6 months, that would change. I can give you a breakup of export and domestic, it's approximately -- for this quarter, it was 14%, but our general average is around 18% to 20%.

I think the reason I asked that question was not just India, the whole world is actually looking to build a clean water infrastructure. So not just India, there is a lot of opportunity that lies in this particular asset. So I just wanted to understand if the company currently has a good presence to capitalize on that? Or are we making any such expansion plans to capitalize on this?

No. Of course, while we expand our capacities here in India, we will also be looking at increasing our market shares in different continents. We tend to keep a minimum baseline quantity in each major country that is there. And then based on where the projects come, we expand. We've been selling in the Middle East for many, many years, and there was a peak during the Qatar World Cup, and now there's a peak again due to Saudi. Similarly, in Europe, just post-COVID, there was a big peak because the government spent a lot of money to get the economy starting again. So this is something that, as you rightfully said, every continent, every country is looking at expanding, but they don't spend money at the same time, fortunately. So we are able to capitalize on different places based on what they're doing at that moment.

Right. So last question. Are there any R&D expenditures that we are making that may help us maybe work better on our capacity utilization or help us in executing projects faster? And secondly, are there any new business verticals that we are looking to tap into like the management of the Board believes there are much more better opportunities maybe in other verticals that the company can explore?

No. In fact, in the -- I mean, recent past only, we have added some capacities with new products or new type of coatings and all that. Our major focus on R&D is on the fittings area, whereby we are continuously trying to develop new type of fittings, I mean, to suit different terrains and applications.

Also in regard to different verticals, you see we look -- we see ourselves as a water solutions provider. So we are continuously exploring, increasing our product portfolio to satisfy the customers' needs and move more towards a one-stop solution for our customers, both in India and overseas. So that is a continuous exercise. We are improving. In fact, let me highlight the fittings numbers. We've already seen an increase of approximately 3,000 tonnes this financial year, 9 months average as opposed to last year. And this is all owing to addition of new product lines. So as such, we are looking at going up to 25,000-odd tonnes over there. So that is all a result of R&D. On the pipe front, we continuously look at finding ways of giving the customer a solution depending on his requirements on soil, pressure, quality of water. So electric steel today offers one of the widest range of linings and coatings on a pipe that any ductile iron producer gives in the world, not just in India. In India, we are definitely the largest supplier of various combinations. But even in the world, Electrosteel is probably in the top 1 or 2.

[Operator Instructions]. Next question is from Dheeraj Ram from Ashika Institutional Equities.

First question is, what can we expect as a volume sales in FY '26? And how can we see the margins going ahead in [indiscernible]?

Sir, on the margin front, as I mentioned that depending on the overall scenario, it will be between 16% to 18%. On the volume front, we are hoping to hit a figure of somewhere between 8.5 lakh tonnes to 9 lakh tonnes.

Got it. Okay. And my second question is, sir, are we seeing a slowdown since the order, the tender outflow in Jal Jeevan Mission is facing some headwinds and AMRUT 2.0 is taking some headwinds in terms of tender outflow. So do you see any slowdown at least for the short term in this particular segment?

Definitely, there was a bit of a slowdown in quarter 3. And even in quarter 4, as of now, there's -- it's not at the same pace that it was at, say, last quarter 3 and quarter 4. But as with all other infrastructure spending such as railway and highways, we are pretty sure that come the new financial year and even the last 1 or 2 months of this quarter with the budget coming out tomorrow, there will be a good allocation towards water infrastructure because the stage we are at right now, it's kind of not here, not there. So they have to spend to make all that infrastructure complete and successful.

Next question is from Rajesh Bandari from Nakoda Engineers.

Sir, I wanted to know what is our total present capacity of DI pipes, 7.5 lakh tonnes?

Sir, 7.5 lakh tonnes is what we will achieve. Our installed capacity is close to 8 lakh tonnes.

Okay. And sir, you said 9 lakh by March '25 or March '26?

Our installed capacity will be close to 9 lakh tonnes around March '25.

Production?

Production for the year, sir, because this is going to get installed, and then it takes a little bit of time to start ramping up to that level. As I mentioned, our capacity -- our production will be somewhere between 8.5 to 9 lakh tonnes.

Right. By March '26, we will have after 9 lakh tonnes.

Yes, please. And we would have put up an installed capacity of approximately 1 million tonnes by March '26 or March '27, our production will be somewhere in the range of 950,000 to 1 million.

In March '27, we will have that 950,000 to 1 million.

Yes, please.

Yes, please. Normally, sir, 1 lakh tonnes means around approximately INR 800 crores?

Sir, 1 lakh tonnes [Foreign Language] that always seems like it's too small of a number. You can't really hit economies at scale.

No, no. Why I'm interested in knowing by March '27, what will be our approximately turnover? Because [Foreign Language].

[indiscernible] considering that our raw material price trends remain the same, it will be around INR 9,000 crores.

Around 9,000 crores.

Yes, because the business was a lot on margin percentages rather than absolute numbers. Raw material prices become half.

Naturally, the turnover will come down, naturally, naturally.

Yes.

[Foreign Language].

So fittings production, we are looking at expanding substantially. We're also exploring, as I was mentioning just to the previous gentlemen that we are exploring, adding to our kitty further product lines, towards the water infrastructure space.

[Foreign Language].

Sir, around INR 300 crores to INR 500 crores.

[Foreign Language] by March '27, say approximately INR 9,000 crores to INR 10,000 crores.

Somewhere between that. A little more towards, I would say, between INR 9,000 crores to INR 9,500 crores.

INR 9,000 to INR 9,500 crores. Okay, [Foreign Language].

Yes, please.

[Foreign Language].

[Foreign Language].

It will come all to Electrosteel only?

[Operator Instructions].

Sir, only I have to complete my question.

Yes, yes. Yes, please. The answer to your question is yes, please.

Next question is from [ Kaushal Bengani ] from Jindal.

I've gone through your results and presentation. It's a good presentation. Only a couple of points. I think management may consider it favorably because a couple of other participants have also requested.

These are always open to the interest of our shareholders.

But I've noticed that on quarter-on-quarter basis, the EBITDA margin has increased and PAT has also increased. Now the operational impact is not clear in absence of tonnages because what has happened is despite production being lower by 10% on a quarter-on-quarter basis, EBITDA margins have still improved. Now that can only be visible if you provide the tonnage data because that impact is not evident to someone who doesn't participate in the call or doesn't go through the transcript and only goes through the presentation. So if in the next presentation, maybe management can consider including tonnage data.

I can commit to you from now itself that this will be done.

Because if we are good at something, I think other people should also know that we are good at it. Most definitely, sir.

Most definitely, sir. Generally remain a slightly shy organization on that front, but I do completely agree with you. And this will be done. We don't need to -- we will not need to rediscuss this.

Okay. In one of the earlier discussions, you have mentioned that you're getting good orders from the Middle East. Do you believe that more orders specifically from Saudi Arabia are expected in current quarter and in next quarter?

Sir, for the current quarter, the dispatches against the orders that will happen are for orders that are already booked. But yes, we are seeing a growth in our order book from the Middle East, especially from South East, mostly Saudi Arabia right now when I say Middle East.

Okay. Finally, I've noticed that the promoter holding has remained at 44% to 46% levels for quite some time. Is there a view within the promoter group or with the promoter of increasing this stake going forward?

Sir, that I would say there is no real discussion on this front at this moment here.

Okay. So maybe there's an update on this, we would appreciate if that can be communicated going forward, whenever there is an update.

Absolutely, sir.

A follow-up question from Mr. Rajesh Bandari from Nakoda Engineers.

Sir, I just wanted to know what is the holding of BlackRock?

Just a minute, please.

BlackRock holding, sir, in Electrosteel.

0.5%. 0.5%.

0.5% is the holding. [Foreign Language], it is all expected to come to Electrosteel Castings only?

Yes, please.

And that will be added in our kind of reserves or whatever [indiscernible] will be money for Electrosteel Castings?

Yes. The money will be received by Electrosteel Castings only. And it will not be to the reserve because there is the receivables.

I didn't get you, sir.

There is a receivable outstanding in our balance sheet. It will be adjusted against that, but the cash flow will be available for Electrosteel Castings.

No, it is not going to go to Electrosteel if we.....

No, it is not going to go to Electrosteel. No, it does not belong to Electrosteel.

Next question is from Vikas Jain from Urban Steel.

Hello. Can you hear me?

Yes, Mr. Vikas. Please go ahead.

I would just like to have a thought from you all. Your shares have been one of the worst performers in the last like 3, 4 months and mutual funds have also more or less exited from your company. So what sort of a thing can we do to win their confidence back?

Sir, I think consistent performance. We would like the consistent performance, sir. I think work and actions speak much louder than words. So to be able to perform consistently to the commitments that we make and adequate transparency in time communication to our shareholders, -- that's the best way.

Somehow, this doesn't seem to be working with them. They seem to be exiting like whatever the holdings, whatever the miniscule holdings they were having, they're still exiting that also, it seems.

That is a question that you will have to ask them. It'd be difficult for me to answer. But with due course of time, I will not be surprised if there's a reentry of the same people.

Okay. Let's hope so.

Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

Yes. Thank you all for dedicating your valuable time and engaging with us during the con call. Should you have any questions, please feel free to reach out to E&Y and our Investor Relations consultants. Have a very good evening. Thank you.

Thank you, everybody.

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