Electrosteel Castings Limited ($500128)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Earnings Conference Call of Electrosteel Castings Limited. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Hiral Keniya from EY LLP for opening remarks. Thank you, and over to you.

Keniya Good evening, everyone. On behalf of Electrosteel Castings Limited, I welcome you all to the company's Q4 and FY '26 earnings con call. To discuss the performance of the company, 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 CFO; 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 some forward-looking statements that are subject to various risks, uncertainties and other factors, which would be beyond management's control. We kindly request to bear in mind that there might be uncertainties while interpreting such statements. We would 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 call to Mr. Madhav Kejriwal for his opening remarks. Thank you, and over to you, sir.

A very good afternoon, everyone, and thank you all for joining us today. I would like to thank all our shareholders, customers, lenders, employees and business partners for their continued trust and support throughout the year. FY '25-'26 has been a challenging year for the water infrastructure sector. The domestic ductile iron pipe industry operated in a relatively subdued environment. This is mainly on account of slower execution of water infrastructure projects by the states due to the delay in funds disbursement under the key government programs, mainly the [ Jal Jeevan ] mission. Our exports business performed well during this year, helping us diversify our revenue mix and partially offsetting the softness in the domestic market. We continue to deepen our presence in international markets and remain optimistic about future export opportunities. Our sales volumes towards exports during FY '25-'26 has increased by 7%, which was largely contributed by the Middle East. We were able to do good business in Q4. However, there will be an impact on the sales to the Middle East starting from March '26 onwards due to the U.S.-Iran conflict. I would also like to take this opportunity to touch on our acquisition of [ TIS ] Italy, which is our manufacturing wind. As per our expectations, the company has performed well with some challenges towards the end of the year. Revenue grew by 15% in the calendar year '25 to EUR 41 million versus 2024 and EBITDA margins also improved. Our vision is to double the revenue in the next 4 years. We have already started the development work for wire castings in India and look forward to production soon. Despite all the challenges, we continue to manage our operations with discipline, maintaining positive cash flows and building a strong balance sheet with nominal long-term debt. The approval of the [ Jal Jeevan ] Mission 2 marks a significant and long-term positive development for the Indian water infrastructure sector. budget outlay has been extended to INR 8.69 lakh crores up to December 2028. The central government has enhanced its contribution to INR 3.59 lakh crores from INR 2.08 lakh crores. With this enhanced outlay extending up to December 2028 and increased budgetary commitment from the central government, the program reaffirms the government's continued focus on providing safe drinking water connectivity across the country and strengthening water transmission and distribution infrastructure. With this positive development, we are hopeful and expect some demand to restore by early second quarter of this financial year. We believe that [ JJM ] 2, along with continued investments in urban infrastructure, sewage networks, irrigation and the much look forward to river linking project will create substantial medium- to long-term demand opportunities for the duct iron pipe industry. I would like to reinstate and reaffirm that our integrated manufacturing operations and strong distribution network continue to provide us with strategic advantages in serving both domestic and overseas markets. As we move into the new financial year, we remain cautiously optimistic. While some near-term challenges may continue in certain regions due to the project execution time lines, overall industry visibility, global geopolitical stresses, we feel the overall industry visibility has improved meaningfully compared to earlier quarters. We expect demand momentum to strengthen gradually and as execution under [ JJM ] 2 accelerates and government spending gains space. With this, I would like to now request Mr. Ashutosh Agarwal, Whole-time Director and CFO, to take you through the operational and financial performance for the year in greater detail. Thank you once again.

Good afternoon, everybody. I will take you through some financial details of the company for the fourth quarter as well as for the full financial year. Sales volume of DI pipe, fittings and CI pipe during the fourth quarter stood to 1.48 lakh tonnes, down by 21% year-on-year basis. In 2025-'26 full year, the sales volume was 5.84 lakh tonnes, 25% decline from the previous year, which impacted the overall financial performance of the company. The decline in the volume was primarily due to slowdown in the domestic market. However, export pipe volumes grew by 7% in 2024-'25 -- '25-'26, partially offsetting the weakness in domestic market and providing support to overall business performance. At a stand-alone basis, gross debt as on 31st March 2026 stood to INR 1,202 crores, which decreased by INR 598 crores from the previous year. The long-term debt stood to INR 352 crores and short-term debt stood to INR 464 crores. I will now take you to the consolidated results of Q4 '25-'26 and full year '25-'26. Total income stood to INR 1,530 crores in the fourth quarter and INR 6,133 crores for the full year. Sales were lower year-on-year, primarily due to reduced sales volume in domestic market. EBITDA, including other income for the fourth quarter stood to INR 99.3 crores with EBITDA margin of 6.5%. For the full year, EBITDA stood INR 573.6 crores with an EBITDA margin of 9.4%. PAT for the fourth quarter stood to INR 16 crores. And for the full year, [indiscernible]. Now moving to stand on the year -- for the fourth quarter as well as for the full year. Total income for the fourth quarter stood to INR 1,228 crores, lower year on year business [ 5.53% ]. For the full year it stood to INR 5,228 crores due to lower terms volume. EBITDA and [indiscernible] margin income for the fourth quarter stood to INR 2,253.57 crores, EBITDA margin of [indiscernible] and for full year approximately of INR 900 crores with EBITDA margin of 9.63%. [indiscernible] for the quarter was loss of INR 10.7 crores while the full year stood to INR 1,031.3 crores. In this position, Board has decided to reduce the dividend from 140% to 90% subject to shareholders' approval. While 2025-'26 remains challenging due to softer domestic demand, we believe that long-term outlook for the water infrastructure sector continues to remain strong. With this, now I'm opening the floor for the question-and-answer session. Thank you.

[Operator Instructions] We take the first question from the line of [ Ritesh Ram Gandhi ] from [ Discover ] Capital.

Just wanted to understand when a few years ago, we read a number of reports about how the opportunity in ductile pipe for many, many years is going to be extremely small -- export is going to be extremely strong and the opportunity is extremely high. And obviously, over the last year or so, we've seen the demand fall off quite materially and supply also increased materially. So is this a new normal? I just wanted to understand what has changed in this?

So the reports of certain issues around the way [ Jal Jeevan ] mission has been implemented so far. And owing to that, the scrutiny and the complete blocking off of central funds over the last 1, 1.5 years is the main cause for the sudden drop in the demand. [ JJM ] constituted 50% to 60% of the industry's total demand. And we never expected that due to some irregularities, we will be in a position where there will be such a strong and such a sudden handbake from the spending on that front. So this is the major reason. In my opinion, most definitely, this is not the new normal. This is the rock bottom. Of course, at the time of the last -- to last year and the year before that, we were quite certain that, that is also not a normal. That is the upper end. Here, we are at the lower end. So I'm fairly certain that we will go back to our older days of earning a 15%, 16% EBITDA level and maybe the volume growth will be a little more, I would say, less jumped and more slow. But definitely, we are not at all thinking that the industry running at 50% capacity is a new normal.

We take the next question from the line of Pinaki Banerjee from AUM Capital Private Limited.

Sir, you have mentioned that [ Jal Jeevan ] Mission 2, where you are expecting a sizable chunk of business. But actually, you have also mentioned that this [ Jal Jeevan ] Mission 1 actually where the government -- there was a slowdown in government awarding the projects and blocking of funds. So how optimistic are you in this segment?

Sir, all the scrutiny that had to be done has done. And after that, revitalized [ Jal Jeevan ] under the name of [ Jal Jeevan ] 2 has been taken out by the government. The cabinet has approved it. States are now being allocated funds, there is a very strict prerequisite regulatory prerequisite that is needed from the states for the disbursement of the funds to take place. So there is a very -- it's moving towards it being a more fool-proof funding mechanism. So the fact that the government is -- the central government is spending so much time and efforts towards this exercise, it's a clear indicator that it is still a part of the priority as they would have dropped it by now. And I'm very certain that in the project of honorable PM, this is going to be something that he's going to see to the very end.

Okay. Sir, my next question is like in this year, actually, though actually the exports were a cushion to you to report a steady number, but now due to this Middle East crisis, how are you popping up or what will be your strategy going forward?

Sir, the Middle East impact is definitely going to have somewhat downward pressure. Middle East contributed to approximately 50% of our exports. Saying that, I think with the improvement in the domestic market starting quarter 2 quarter and say, mid-quarter 2, there will be some improvement from that aspect. And for the remainder of it, I think a little bit of product diversification that we have done with [ Viales ] will help us create some cushioning.

Just one last question just squeze. Sir, in the balance sheet, you are showing investments INR 31 crores the current investments in what type of -- are they liquid in nature?

Almost liquid in nature.

Okay. So considering that cash and bank balance and investments add up to around INR 800 crores. So how do you plan to deploy these funds?

We have declared that we are also setting up plastic sorry, this plant. Some money will be invested there in India.

We take the next question from the line of Pujan Shah from Molecule Ventures.

Perfect. Sir, my first question would be -- so just want to understand in our equity, we have mentioned that there is a fund release from government of INR 150 crores. So sir, just want to understand if you can spell out how much money is still pending from government and to be released or need to be released? And how this situation will pan out like in Q2, what are we seeing is the release of funds gradually or we have been seeing a new tender opening up, which will create a new opportunity for the company as well as the industry?

So sir, the government budget for this particular financial year under [ JJM ] is INR 67,670 crores. Just a correction, sir, the disbursement that was done last year was not INR 15,000 crores. It was INR 1,500 crores because the cabinet approval came at the very end of the financial year. But nevertheless, this is a fund that has been released after many months. So it was a few drops of water on a very dry soil. Saying that, I think the government of West Bengal post the election announced some INR 2,700 crores. And as such, there has been MOUs being signed with various states for disbursement of money. So I think quarter 2 onwards, as I said, the jumps will not be very sudden, but it will be a steady increment of demand increasing over 3 to 6 months. And that will help us position ourselves back to strength. I am fairly certain that quarter 3, quarter 4 of this financial year, you will see us slowly getting back into the saddle.

Just want to continue with the same question. So obviously, I understand the situation as the fund flow has not been released. So there might not be -- the new activity might not be happening. But just want to understand, can we see the new tenders being flowing around right now? Or it is very early to say due to all the situation has already halted all the operations, which EPC need to make?

No, sir, inquiries from customers have started coming in now.

But it is on a meaningful way or it is just the beginning of -- it's a very nascent stage?

It's somewhere in the middle of both, sir. It's not nascent for sure. There is serious interest from our customers for supplies even within this quarter. So it is not that it is nascent. But at the same time, it is not close to its fullest potential. So it's somewhere in the middle of the 2.

Got it, sir. And sir, we -- as mission is might end in December '28. So I understand that there might be delay in terms of execution. But just want to understand on a broader aspect, then what are the demand drivers will be there for 2028 that will inch up our growth and growth trajectory towards what on a sustainable manner?

Sir, post 2028, the two largest drivers for demand for us will be irrigation and something linked to it, which, in my opinion, will give us a good impetus is the River linking project. Along with that, demand from the urban sectors and the rising pressure for increasing infrastructure in Tier 2, Tier 3 cities is also seeming to contribute overall, although it is not something as big as a [ Jal Jeevan ] mission, but it definitely has its own contribution. These are going to be the main drivers for DI pipes. And for us at Electrosteel, sir, our recent diversification into valves, which is a water-specific product, but it is not specific to ductile iron as a material, it is used regardless of what pipe material is being utilized. And our other investment diversification that we are looking at such as paints is going to help us cushion ourselves against any undulation that we have faced over the last 1, 1.5 years.

Got it. Got it. And sir, can you just give us a brief idea on how much money receivables it has been stuck in fund flow from and how much it has been released till date?

There's no significant funds stuck for us because we are supplying to EPC players. So our collections are mostly on time. Our debtors, what you see are regular debtors. So it's not any significant overdue one.

Got it, and my last question would be on the coal block. So just want to get an update on the coal block amount. Can you just give a specification of what is happening?

So soft cost for the one particular asset, which is a shaft and inclined is yet to be announced by the ministry. Hard costs have been announced and they are roughly similar to what our estimates were. So it's a long process, sir. It will take time, but I'm also again certain that our numbers are strong. So these things take time, but they happen eventually.

We take the next question from the line of Rajesh Agarwal from Moneyore.

Sir, what is our current order book, whether it is 5 months, 6 months, 9 months? First question. And second, sir, what is the difference between [ Jal Jeevan ] 1 and 2? What difference it makes to us? And the third question is the amount of money which is getting released now, are they resulting in inquiring or new fresh orders because the pending order itself is huge? These are the three questions.

So our order book at the moment is between 4 to 5 months. Our -- when you say new orders, all the tenders that were to be released under [ Jal Jeevan ] mission have already been released. Of course, there are always some adjustments to those tenders, but those tenders are yet to be allocated to -- a lot of those tenders are yet to be allocated to EPC contractors and then in turn coming to us. While that is the case, there is also -- as we have 4, 5 months of order book or other manufacturers have 4, 5 months of order books. On top of that, contractors have tenders which they have won for which they have not yet placed the order. So these three are major drivers. I mean, if you put aside the orders that we have already booked orders with the contractors that are yet to be booked and tenders for which contractors are yet to be allocated. These two are the main driving forces under [ JJM ].

Any rough idea what is the quantum, sir, quantum of orders in terms of volumes metric tons tender the old one?

I would say around 3 million, 3.5 million tonnes.

So the chances of us backing -- what is our of backing the orders?

We have around 20% to 25% of the domestic market.

25%. Okay. And sir, whenever the order comes and the plant runs in capacity, the EBITDA margins will come back immediately, 15%, 16% EBITDA margins.

Sir, immediately, as I said, over -- it will be a steady growth rate. But I'm fairly certain that we will get to a 15% EBITDA margin.

And is there any pressure from the cost side?

We are facing some increments going to the war. I'll allow Mr. Katial to give a more elaborate answer on this, please. Cost pressure due to war.

On the cost front, principally, the freight has gone up. That is one major component. And we have major input in the form of coking coal, which comes from overseas. So that is one area where the cost is getting, I mean, substantially impacted. And now gradually, I mean, the energy cost in India also has already gone up by almost 70%, 80%. Added to that, now as a third phase now the government is also raising for general transport also, the diesel and petrol prices are going up. So that also will impact. Now these three factors, I mean, are actually causing a bit of a dislocation of the whole thing. Second is that see the movement of ships are also getting delayed, which is also creating a type of a problem because the whole cycle of movements is disturbed. So these are all having an adverse impact on the cost.

Sir, going forward, we'll be able to pass on the cost? Disruption is a different thing that is due to the war. The cost can be passed on?

It has a slightly delayed onset in the sense that the cost goes up today because we will have existing order book for the increased sales price to reflect in our performance, it takes around a quarter. Post that, you will see that there is changes in the -- there is an input of the cost into the selling price.

Sir, the last question, what was the component of exports in this quarter, current ending quarter?

Component in the sense, sir?

Total export on the volumes, what was the export in terms of value? Suppose we did INR 1,500 crore turnover this time. What was the export orders?

So exports contributed for this quarter around 23% of our revenue.

So going forward, it can be the same for exports?

With the expectation of the Indian market picking up and with Middle East being a little muted, we are seeing that this will come down to probably 17%, 18%.

[Operator Instructions] We take the next question from the line of Saket Kapoor from Kapoor & Company.

Sir, taking into account our deliverables for the current financial year, what is the likelihood for us for this current year, not factoring in what Madhav Kejriwal was mentioning in terms of Q3 and Q4 uptick there in normal course of business with the type of sentiment that currently is, what should be the deliverables for the year? And what should be our EBITDA margin trajectory?

Sir, can you elaborate a little bit on what you mean by deliverables?

Deli scheduled pipe delivery for this financial year.

So sir, we are expecting that we will have a dispatch of around 6 -- around 7 lakh tonnes approximately this financial year. This is including our export numbers. And in terms of our EBITDA margins, I think considering a slower Q1, Q2 and a slightly better Q3, Q4, approximately 13%, 14% is achievable.

On a consolidated basis for the year?

Yes, please.

Okay. Sir, when we mentioned 7 lakh, it is only about the pipe or pipe fittings and everything altogether?

This is just the pipes.

Okay. So our number was 5 lakh 84,000 for pipes fittings. So if you could give the pipe...

It will be around 7.4 piece.

Including everything will be 7.4. Sir, then about the acquisition, what is the current order book? And what steps are we taking exactly, sir? What kind of revenue profile will open up in times to come? I think so with product development, what are we eyeing to achieve from this investment?

So sir, this financial year will be a bit more stable than a growth-based trajectory because of the issues around the supply chain. Valves is also a business which has a lot of components coming in from many different parts of the world. So this pressure on freight cost is going to have a bit of impact on our overall business. But our projections is that we will double up our revenue in the next 4 years. That is approximately a 20% growth rate. That's what we are right. And this will be contributed through India, the Middle East and Europe.

Okay. Sir, on the -- just two small points. On the revenue profile, how should TI work current when it should be at an optimum level. If you could just give in rupee terms, how should this entity perform?

So last year, they had a revenue -- if you consider the calendar year was approximately INR 400 crores. We are seeing that this financial year, instead of a 20% growth rate, we should probably hit a 14%, 15% growth rate. So I think around INR 450 crores. The entire year -- last entire year's revenue is not reflected in our books because the company was acquired in August. So what you see in the books of accounts is a half year situation. And they are currently -- they were running on a calendar year basis. So if you consider this calendar year, I think they should be at around INR 440 crores, INR 450 crores.

And margin profile?

14%, 15%.

Just to end the discussion here, sir, when you mentioned 7 lakh pipes, you are factoring it that the [ Jal Jeevan ] and the all scheme will be gaining traction from Q3 onwards. That is what the hypothesis is currently.

Steady traction, sir, not pedal to the metal traction. There is a -- we are considering, as we said, we are being cautiously optimistic, not overly optimistic.

Right, sir. And sir, on the last part is on the promoters buying sir. I think so the promoters have endorsed their faith by upping the stake from the open market acquisition. So for your minority shareholders, sir, what should they anticipate? Are we done with our exercise or we can look forward for the activity or you find still find value to invest more?

Sir, at this moment, we invested what we were capable of investing from the promoter side. Of course, we also have to look at our personal financial capabilities more than just the confidence on the company. I think going forward, definitely, if we could, we would invest further.

Okay. And it was the lower tonnages on that led to the stand-alone losses for this quarter or the better absorption of fixed cost? Or what could be the main reason for us posting not being able to cover our finance costs and other aspects and reporting losses of INR 7 crores on a [ PBT ] level?

Sir, loss of tonnage, there is an exceptional cost of around INR 38 crores, INR 40 crores on account of the new labor rules. That and definitely, the margins being squeezed due to a [ dearth ] of demand. These are the three major factors due to which we booked a loss.

Then the realizations for pipes are also down, sir, order booking. There are the pipes realization also lower because of overcapacity in the system and less demand from the lesser amount of pickup of stock from the [ EPC ] player?

Yes, sir, I think as similar to what is reflected by a lower EBITDA margin, our cost to realization delta has reduced. That has also caused a downward pressure on the profitability.

So one could conclude that even for Q1, sir, this is the trend because the things have not changed as of now. We are already half of 45 days into the quarter. So there are no further any change in the profile for the company's operating and financial performance?

Nothing substantial, sir.

[Operator Instructions] We take the next question from the line of Rajesh Bandari from [ Nakoda ] Engineers.

[Foreign Language] we expect orders from the contractor. Do the contractors have orders?

Yes, the contractors have substantial orders, plus there are tenders for which the contractors have not yet been selected. So both of these factors are there.

[Foreign Language]

No, no, sir. I am optimistic in [Foreign Language]. Things will get better, not worse.

[Foreign Language]

Just the [indiscernible] sir.

[Foreign Language]

Sir, it's not that it will go away. Today, rural demand, which is under [ Jeevan ] is giving us 50% to 60% of the total demand. I am fairly certain that even after these investments, it will go down to probably half of what it is today. So it will still contribute to 25% of the demand. It cannot be that it will completely go away because even when we started x number of households which are having water, but those pipelines are old, they need replacement. There's always some repair work going on. The INR 19 crore number that was there was based on an earlier population consensus. I'm sure they will find that they will need to keep investing, albeit in a smaller scale and more state level than central. But some investments will keep coming up. Haryana has...

December 28 also, we will have [ Jal Jeevan ] Mission to some extent.

Sir, I'll give you an example. Haryana as a state has achieved 100% connectivity, but they still have tenders coming up in rural. So it's not that it will go away. It might not be called [ Jal Jeevan ] Mission, but rural India's demand for pipes will continue.

[Foreign Language]

Approximately 7 sir.

[Foreign Language]

[Foreign Language] But I think [indiscernible] bandwidth as opposed to 1 that we were hitting the optimistic level, because even before JJM and pre-COVID Indian pipe average EBITDA level of 15%. So that is pretty much global.

[Foreign Language]

[Foreign Language] It is difficult to predict. I can give more of a stable size where we can go. I was quite sure that is [indiscernible] situation .It is not that it will not, but I can't -- it's difficult to pinpoint.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] this is a process. There is a hard cost, soft cost element to all the assets that are there. So we will go through that process. is also facing some delays in the approvals for the mining. So there also how things move, sir, in this regard.

Second half of '26, '27 and further, we can expect that same Electrosteel Casting as in the past.

I'm very hopeful, sir, for that. We are also investing and diversifying in different products. So that should help give us some [indiscernible].

[Foreign Language].

[Foreign Language]

[Foreign Language]

Not entirely sir.

[Foreign Language]

No, I wouldn't say we have a monopoly. There are other companies also international companies that are there in India. But of course, they don't have the team strength and the reach that we do with our customer base.

[Foreign Language]

Hardly sir.

So that will help us in getting our turnover?

Hardly, hardly.

Because will have a much better profitability margins.

[Operator Instructions] we take the next question from the line of [indiscernible], an individual investor.

I've got two questions. One is given the significant exposure to government infrastructure and water projects, does the recent change in state governments have any bearing on the project execution, order inflows, payment cycles, approvals or policy continuity? Have you observed any slowdown or reprioritization in decision-making at the state level?

The two major states where there has been a -- I would say, three states in terms of their contribution to our business, Kerala, Tamil Nadu and Bengal, these states of course, there is a small slowdown during the election period and due to the change, there will be maybe a month or so of slowdown. But at the policy level, I don't see the new governments not wanting to pay attention to [ JJM ]. Bengal was very quick to announce disbursement, in fact, of -- from the center, they were disbursed money or allocated money rather, sorry, my apologies, allocated money, not disbursed. So I find that whatever slowdown is there is only administrative in nature, not policy or mindset in nature.

All right. The second question I'd like to request your views on. We are expecting a severe drought conditions this year as predicted by many, including IMD. Do you foresee any reallocation of state or central government spending away from existing infrastructure programs towards emergency relief measures? Or could that affect project execution time line or order inflows as well?

So the bigger threat at the moment is the energy security of the nation. Drought, of course, has a major impact as well considering that India is still very largely dependent on its agriculture industry. But it seems the top of the town is the energy sector and there is less being thought of in regard to the super El Nino effect that we are expecting. Saying that at one end, it might cause certain delays, although very temporary in nature, maybe a quarter or 2, but it will also give us impetus to get the government to focus on understanding that the time of the old ways of irrigation are over and more infrastructure towards pipe irrigation needs to be put in place. Pipe irrigation is to a very large extent, armored against these major issues of climate uncertainty.

All right. And if the Iran conflict escalates into a prolonged energy disruption, do you expect the impact to be primarily on the input cost, supply chain continuity exports or demand disruption as well?

In my opinion, there will be an impact on both demand and on supply chain and input, but the contribution of the disruption from demand side will be lesser. There will be a higher impact of cost and supply chain. But definitely, all three will be impacted. There's no doubt about that.

All right. And lastly, you had earlier indicated plans to expand into industrial paints and protective coatings. Could you elaborate on the business road map, including target...

Katial to elaborate for you on that front, please.

On the paint front, in fact, we are getting into industrial paint segment. And the plan is that we have principally driven a 5-year road map. by which we will go to a business revenue top line of around INR 600 crores by that time.

All right, sir. And any -- I mean, initial what is the outlay, INR 80 crores to INR 100 crores is spent over -- expected to be spent over how much?

This is expected to be spent over a span of within 2 years, maybe 1.5 years roughly.

And when do we see the positive effects being reflected in the bottom line?

Bottom line from financial year '28, '29, we will see a positive impact of that.

[Operator Instructions] We take the next question from the line of [indiscernible], an individual investor.

Yes. Regarding this [indiscernible] project, sir, how much share would be the pipeline work of that INR 40,000 crores, sir?

Sorry, sir, could you repeat that?

[ KenBetwa ] project out of this INR 40,000 crores, how much that share could be pipeline work, sir?

Around 10% to 15%, please.

5 Okay. Okay, sir. And this feasibility reports like DPRs which have been completed for River projects, like when can you expect them to be executable stage, sir?

So sir, every project is in a different stage. As you mentioned, Kenbetwa is in the further most advanced stage. Then there is the river link between Rajasthan and MP. And there are some works going on within Tamil Nadu and within Maharashtra as well. So each project will have its own time lines. It's difficult to say that -- it's not one project really. It's all under the guard of River Link, but there are many multiple and each project very mega sized being executed at different time lines. So I feel that River Link as an overall subject will take our country around probably 5 to 7 years to execute.

5 Okay. Is it also taken that they would be through pipes and not open canal, sir?

So up to a certain mass, it has to be done through open canal, sir, because you cannot use pipes to move that level of water. It's -- the main vein that will be used to connect the rivers has to be open canal. But all the subsidiary pipelines that will come out, all the routes that will come out from that main vein, those will all be in pipes. And they will contribute to irrigation to rural water supply and in some cases, even urban water supply.

We take the next question from the line of Rajesh Agarwal from Moneyore.

Sir, my question is on the [ Jal Jeevan ] Mission 2, which has been a condition the last mile water connectivity has to come on the tank only then the payments will release. So then the EPC contractors will get less cycle of money and that in turn will result in our payment also getting delayed?

I wouldn't say that will result in the payment getting delayed. But as I mentioned, the growth for demand, which was more like a floodgate release during the previous years, that will become a bit more steady. So there will be stability in the demand, which has a positive aspect to it also where there is no ups and downs. It's not that there will be a major delay on the payment because even the EPC contractors through the last few years of experience of a massive upswing and a massive downswing have started operating in a more stable way rather than being extremely opportunistic.

So working capital cycle may get that advantage, no?

I don't foresee that happening, sir, because we are hedged across multiple states, and it's not just [ Jal Jeevan ] Mission. So even with [ Jal Jeevan ] Mission, it is still 35% to 40% or even lesser in fact, around -- yes, no, actually 35% to 40% of our contribution to demand today for Electrosteel specifically. So within that, even if it goes up by 10%, it's not so much of a difference really.

And last question, what will be the CapEx and maintenance CapEx in '26, '27, CapEx and maintenance?

Around INR 25 crores to INR 30 crores.

That will be maintenance CapEx.

Maintenance CapEx.

Okay. No -- no new CapEx.

Well, so for the paint plant and for our valve plant in India, which are both in design and development stage. These two will have a CapEx. But of course, we have not determined exactly how much will be required this financial year, how much will flow into the next financial year because the plants are still in design stage. So this will -- it will take some time.

So in 2 years, it can be how much -- if you can quantify that, INR 300 crores?

Between INR 200 crores to INR 250 crores.

Ladies and gentlemen, due to time constraints, we take that as the last question, and we conclude the question-and-answer session. I now hand the conference over to the management from Electrosteel Castings Limited for closing comments.

Thank you, everyone, for joining us today, and thank you for your continued trust in our company. We remain committed to driving sustainable growth, strengthening our balance sheet and creating long-term value add for all our shareholders. We appreciate your support, and we look forward to updating you on our progress in the coming quarters.

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