Hariom Pipe Industries Limited (HARIOMPIPE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Hariom Pipe's Q2 FY '25 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal. Thank you, and over to you, Mr. Kumar.

Yes. Thank you. Good evening, everyone, and a very warm welcome to Hariom Pipe Industry Limited 2Q FY '25 Post Result Earnings Call hosted by Motilal Oswal Financial Services Limited. On the call today, we have management team being represented by Mr. Rupesh Kumar Gupta, Managing Director; and Mr. Amitabha Bhattacharya, CFO. We will begin the call with key thoughts from the management team. Thereafter, we'll open the floor for Q&A session. I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you, sir.

Yes. This is Rupesh Kumar Gupta from Hariom Pipe Industries Limited, Managing Director of the company. Good evening to each one of you. [indiscernible] Thank you for joining us today. It's a pleasure to share the progress and achievements of our company during Q2, despite some challenging circumstances, including a noticeable slowdown in steel demand and a 5% drop in prices on both a quarter-on-quarter and year-on-year basis and weather-related disruptions in southern region. We have maintained a steadfast focus on growth and resilience. This year, the monsoon was particularly severe and prolonged in Southern India. While monsoon rains occur every year, this season saw a record fall -- rainfall and flooding, disrupting supply chains and delaying key construction projects. This significantly impacted steel demand in the region, affecting our overall sales. As the rains have begun to subside, we are seeing a recovery in demand, particularly in the infrastructure and construction sectors. This recovery is expected to drive steel consumption in the upcoming quarters, helping offset the slower demand experienced earlier in the year. However, our efforts to adapt and innovate have been fruitful. I'm pleased to report total revenue of INR 31,522.63 lakhs for Q2 FY '25, totaling INR 65,942.96 lakhs in H1 FY '25. This reflects a 21% year-on-year growth, a remarkable achievement in the current climate. Furthermore, our profitability metrics demonstrate strong operational efficiency. We achieved an EBITDA of INR 4,334.78 lakhs for Q2 and INR 8,891.65 lakhs for H1, marking the 35% growth in H1 year-on-year. Our EBITDA margin for H1 FY '25 stands at 13.48%, up from 12.41% in FY '24. This increase has resulted in an additional earnings of INR 571 per tonne compared to last year, with a blended EBITDA standing at INR 7,796 per tonne as opposed to INR 7,225 for FY '24. This improvement underscores our commitment of enhancing operational efficiency and driving sustainable growth. Operating profit stands at INR 3,108.14 lakhs for Q2 and INR 4,776.34 lakhs for H1, representing a 26% increase. And our profit after tax reached INR 1,575.06 lakhs for Q2, with H1 totaling INR 3,325.63 lakhs, reflecting a 10% growth year-on-year. Our commitment to financial health is also evident in our cash flow performance. We reached a targeted positive operating cash flow of INR 5,288.27 lakhs, a significant improvement over last fiscal year's INR 495.54 lakhs only. Net working capital days have improved from 61 to 58 days, demonstrating efficient capital management. Additionally, we successfully reduced total borrowings from INR 37,88.54 lakhs as of March '24 to INR 33,458.50 lakhs by the end of H1 FY '25, lowering our debt by almost INR 3,600 plus lakhs. Regarding our capital raising efforts, we have passed an enabling resolution for issuing equity shares through a QIP, allowing us to raise up to INR 700 crores over the coming year. This is a proactive step to strengthen our position and enable future growth as an approach -- as we approach our optimum level of 0.7 million tonnes by FY '26. Our team is actively evaluating opportunities in specialized steel products and geographical expansion, ensuring our growth strategy in both thoughtful and sustainable. In conclusion, we are on path of robust progress, achieving strong results even amid headwinds. Your trust and support are invaluable, and I assure you that our management remains committed to driving long-term value for all shareholders. We have already uploaded our financial results, as well as the investors' presentation on the stock exchange. I trust you have reviewed this report and presentation. Now for any questions on financials or compliance matters, I will hand it over to our CFO, Mr. Amitabha Bhattacharya; and Compliance Officer, Mrs. Rekha Singh, to address your queries one by one. And with the festive spirit in the air, I extend my heartfelt wishes for a joyous and prosperous Diwali to each of our valued investors and stakeholders. Thank you for your ongoing support and confidence in your company's journey forward. Thank you.

[Operator Instructions] The first question is from the line of [Gautam Rajesh] from [Leo Capital]. Due to no response, we move on to our next participant. Next question is from the line of Hemant Bajaj from Krijuna.

I have 2 questions. First, the company declares that the capacity utilization for the facility is around 70%. Right? So how do we interpret it in terms of the capacity utilization taking place? And the second question is that we have a bit stretched working capital cycle and especially the trade receivable numbers. So what's the commentary of the management on it?

So thank you for your question. First question is about your operating capacity. So recently, we are having 0.7 million tonnes of capacity. Of 0.7 million tonnes. And out of that, as of September '24, we have achieved almost of 1 lakh 21,628 metric tonnes. So here, we have to notice that the out of 0.7 million tonnes, our actual operating capacity is 0.4 because we are [indiscernible] player. And in our earlier presentation also, we have clarified so many times. But as the integrator [indiscernible], our gross production capacity is 0.7 million tonnes. Or you can say as the way down, 7 lakh metric tonnes per annum, but our main output capacity is coming 4 lakh metric tonnes Per annum. So out of that, so far, Q2 FY '25, we have achieved 1 lakh, together 1 lakh 21,628 metric tonnes. And we are very much hopeful that by the end of FY '26, our optimal capacity will be [in play].

Okay.

Now your question about the holding levels of -- returns holding [rate]. So basically, as far as you have [indiscernible] as of September 30, 2024, our [indiscernible] rolling rate is 54. Earlier, it was year-on-year between March -- September '23, it was 43. So they are almost 8 days in. At the same time, our overall working capital days, 14 capital days is coming down by almost 5 days, if you calculate in that March '24 versus September '24.

Okay. I have 1 another question. Players like APL Apollo and other players in the industry are not offering the credit -- credit to the to their customers, but we at Hariom are offering the credit. So what's the reason behind that? Because when they -- yes, can you throw some light on it?

No. But actually, first of all, your question is, APL Apollo or in other steel segment in the peer industry. I should not comment on that, but the thing is everybody offering their credits. Without credit, it cannot be happen. Respective of number of days of holding days that is expected. Hariom is not offering any credit. Our concept is not distributer [indiscernible]. Our concept is to sell our product through dealer network. So we are having 800-plus dealers in South India. Almost up. And our selling point is almost all 1,500. So anyhow, we are offering some credit, and that credit is very much nominal in the present market. Justified.

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

And on a great set of numbers and improvement on operating cash flow side. My first question is on demand trend, right? I mean, as you highlighted, second quarter was kind of subdued. Are we seeing a better demand now in [indiscernible]? And should we expect the second half of this year to be far better than a [indiscernible] year?

Yes, to be honest, if you check the past historical track record of past 5 years of the any steel segment or any infrastructure company. This is basically Q2 is always become little bit slower due to that monsoon season because during the monsoon season, the construction had become slower. And if you [speak] with the statistics with the last 5 years or so, always third quarter and fourth quarter will be the peak year for any steel segment. So we are very much optimistic and very much hopeful that the first quarter and fourth quarter is much more better than the past Q2 and Q1. And we are very much confident to achieve our whatever the target, for the final [indiscernible] year.

Okay. And for next year, we have highlighted in the past, we had said we are targeting INR 2,000 crores of top line. And that will be peak utilization rate, do we maintain that guidance?

Yes, yes. Sure. Sir Actually, in just a few last question also, I have explained that. Our present installed capacity, whatever we have, 0.4 million output total capacity. With which we are very much hopeful and confident that with the optimum level of utilization will be happened by end of March '23. Once we have to achieve this optimum level of capacity of 0.4 million tonnes. Definitely, the top line will be reached to the expected, as we discussed in earlier so many investors meet and presentation also, we head to INR 2,500 crores.

Okay. Good to hear that. And my second question is the value-added products, like they are almost 90% plus price or volumes. So the second, why now our sales per tonne may not see much improvement given that most -- 90% of sales are now coming from value-added products. And going forward, your sales per tonne will be largely a function of how the steel [drives]?

Regarding this value-added product, presently, we are almost on 98% of our total volume of sales as of September Q2 FY '24 [indiscernible]. Value-added product is almost 98%. So that means our total sale quantity is INR 1 lakh 14,005. Out of that value-added product is company almost 1 lakh 10,046 metric tonnes. Okay. So we are talking value-added products -- in our value-added means we are talking about coil and MS tubes, [indiscernible] tubes, Galvanized pipe and coil, cold rolled pipe and coil, all those products are value-added products and other steel products, those products which are should used by the manufacturer like [indiscernible] that is -- that are all the products we have called other steel products. That [facilitate] is almost 22% in the H1 Q2 can say second quarter FY '25. So we have sticked on our plan, and we are [indiscernible] our focus on our value-added product reset. So as much as quantity volume will increase our value-add contribution compared to margin will be consistent.

Okay. Great, sir. And lastly on the operating cash flows and the debt [indiscernible]. You have done a good job in improvement in operating cash flows. So do we maintain this kind of a run rate in 20 years as we move forward -- and what would be the net number at the end of this year?

So [indiscernible] if you check with our financial, our improvement in operating cash flow is more than 100% Comparing to Q4 FY '24 Q2 Q1 FY -- Q2 FY '25. So yes, because we have concluded almost of INR 4.5 crores to INR 52 crores. Okay. So but we are in is regarding the second question in your debt. So as of September '23, our total debt was 411.35 and now we are standing with 333.53. So almost of we reduced in 12 months INR 78.05 crores debt. And if you check with our March last September, we have concluded almost all 50-plus. INR 36.06 crores we have reduced -- and continuously, our shares will be coming -- in the coming 5 years our shares will be continuously reduced. And the margin is consistent and the operating ratio will be growing -- consistent.

Okay. Sure, sir. This is helpful. And happy Diwali to you and your team, and best of luck in the coming quarters.

Next question is from the line of Muskan from B&K Group.

So my first question is the cold rolled coil that you're producing from the tandem mill of 0.4 millimeter thickness. Will that be used only in the induction motor part or is it used in both BLDC motor as well as induction motor -- and what is the value for content of the plan and withouho are our competitors? And what's our right to win in that, sir?

No, no. Actually might be termination actually water at 0.4 mm or 0.6 mm of thickness [indiscernible] Tandem maybe it's not using any more so. It is actually in [indiscernible] for mobile sectors, and industries, basically, they are using this kind of coils for manufacturing their product, and that is a very value-added product or can say that price realization prices more than that but whatever the [indiscernible] price, we will manufacture it. So these are in. And we are already supplying to so many companies corporate also, semi-corporate also. And in the coming future, also, we are very much optimistic that these portions of value-addition product will be growing in traffic which help us to consistent our margins and our profitability and as well as [indiscernible].

Okay. So these coils are not used in the fan -- is this?

Pardon? Sorry? Can you repeat?

These coils, the CR coil is not used in the fan blades.

No, no CF coils are used the 0.4 mm, that is used for standing for and manufacturing for power circuit. And at the same time, CF coils are using for fan blades also.

Okay.

And it's also PD also pre-engineered trading also.

Okay. Okay. So my next question...

Thickness are different. Every product is thickness -- thickness are different.

Okay, sir. Sir, my next question is that we see that the other expenses rose. So what is the reason for it? And also, can you please tell how much is the trade cost in the last year -- and where have you captured that in the other extent, sir?

Sorry? Can we repeat one?

Yes, sir. So we see that in this quarter, the other expenses rose -- so what is the reason for that?

Okay. Okay. Other expenses. -- see, basically what happened. Our company in the second quarter, Q2, we are participating trade shares as well as the business has invested in, so therefore [indiscernible] is play and other [indiscernible] and all those things, we are using some little bit of branding and promotion. At the same time, at our company is liable to pay have a huge amount for [indiscernible] as per the corporate government that is mandatory. So this quarter also, we are substantially -- for compliance, we have expenditure in credit CSO. That is why -- these items are coming under other expenditure bit on the [indiscernible]. So that's why peak little bit of high, almost on, you can say, INR 1 crore increase. Not much more to that figure, it is almost a INR 1.01 crores increase from the last quarter, Q1. [indiscernible] behind us.

So the -- how much of the freight cost in the last year, maybe where have we captured that in other expense?

Freight cost means you were talking about advertisement, brand promotion.

No, no, sorry, the logistics cost.

Logistics cost. So basically, logistics cost specific logistics costs are included in our cost of raw material this year -- included a cost of raw material, and we are very much ahead from the other players because our logistic cost is very nominal because we have -- our plant is geographically located nearby the raw material supplier -- and moreover, we are into the integrated [indiscernible] player therefore our in-house that we are using for end of Finish goods. Therefore, the logistic cost is very nominal. We have paid our obvious cost only for iron ore -- purchase of iron ore and imported coal. So that is really nominal.

The logistic cost for outwards like when you're supplying.

We are not spending any outward logistic cost. That is spent by our dealer. We are not having any straight outward.

Understood. -- 1 last question. the payment days has increased from 6 days to 30 days. So what is the reason for that? And will we be maintaining it for the next -- for the full year as well?

The payment days are increased because we are purchasing imported coil on instant basis. That is our credential or credibility. We are getting cheaper rate of promise here from the international market with a sudden credit facility, almost of 30 days. So that is the reason we are maintaining that healthy margin, and we are showing our operating profit and EBITDA is much more utility due to that 1 of the major reasons you have asked the correct question. So this is behind the main reason we are able to track the deal and that yes, it is correct, and we are very much hopeful to maintaining in the same report in the coming future.

Next question is from the line of [ Vinit ] from [ Chris BMS ].

Hello, sir, my name is [indiscernible]. My first question is with respect to the falling steel prices, like we are seeing that steel prices are falling, right? So do we maintain the guidance or like you have been confirming that you will be able to achieve this 2,500 guidance. But my concern is for the volumes growth like we will have to attain more volume growth to achieve the same level of revenue. So what is your commentary on that?

No, no. Whatever we have said in our management speech, our increase business. While we are talking about the price is dropping, if you take the price average realization -- so in Q1, in Q1 FY '24 -- '25, if you take that our total quantity of sales is INR 57,900 you can note it down, not an issue. Against the top line of INR 343.1. Therefore, the realization of -- average realization is coming INR 59,175, whereas in our current quarter, Q2 FY '24, our total volume sold is INR 56,065, to be precise. And our average realization is INR 56,057, where the top line is 314.28, our total revenue is 315.23, which is including the other income, but 314.28 is our impact top line. So therefore, the realization is coming average INR 56,050. So almost 3,000 down therefore the entire real addition to [indiscernible] despite that is realization is only impact the top line of the in terms of earnigns, not in terms of profit. Here, we have to understand that despite of the 3,000, our EBITDA goes up. So that is the [indiscernible] -- that is the industry which we have compared to others that we are [effective] in any circumstances, our profitable margin [indiscernible] which we have so many times, we have given the example that is increased by 500 plus -- so that is a -- so it is a [indiscernible] that through you and through this platform, that it will not impact the Hariom profitability, whether the price is coming down even though in our prospect accounts, we have clearly mentioned [indiscernible] are coming. Will we pass on this also pass on the price fluctuation to the -- in front of the consumers and we are very much capable to do that. So our profitability in fact and our commitment is fulfilled.

And sir, another question, which is in line with the question that previous person asked. Like just a confirmation -- our trade payables have increased from INR 12 crores to INR 108 crores, right? So this is because of the import that we have done, right?

Yes, absolutely right. you are absolutely correct. And not only for that, we are getting the cheaper rate compared to the domestic market.

Okay. So this rise is on account of the import only, [indiscernible].

Absolutely correct. And presently, we are getting the credit also from the domestic players.

S. O because we are seeing a good operating cash flow this time INR 50 crores positive operating cash flow we had and trade payables, like this type of trade war positively impacted. So will we be able to maintain this going forward?

Definitely, sir. We are -- our mechanism is only like that, if you remember [indiscernible] in our earlier investor call also and 1-to-1 call also, I have explained so many times we are watching closely working on additional facility and credit [indiscernible], we are closely working and hopefully, we'll be achieved when my operating cash flow was INR 100 crores negative. At that time, I was committed, and we have achieved this growth and showing that we are strict on our plan and in the coming future also, we'll be able to manage.

Okay, okay. And sir, can you please throw some light on the QIP that you have done recently like INR 700 crores fundraising, right? So what is the plan and what are the planning? Are we looking at an inorganic development going forward?

No. Actually, to be honest, our industry really signaled that QIP is just enabling resolution, at least for one year -- we are trading on our -- we have it so many of technical and qualified partners are on those, and they have abilities to do so many projects, including specialized deal geographically reached and the valuations and where the company is getting much more profit for any steel segment, product analysis, everything that is going on. And for the future -- so it's just an enabling resolution. And whenever we are going for QIP, definitely, what is the [indiscernible] and what is the object -- so far, we are not finalized, whenever in the right time will be up to the -- all the investors and then only we have to -- going forward with their permission fulfill the [indiscernible] and compliances and then only we have to have this [petition]. Nothing to worry, we will get prior notice and prior intimation and all the information prior to anyone.

Ok, sir, we will be waiting for our intimation with respect to that.

We are looking for the growth of the company.

Alright. Sir, last question from my side. Like this is more historical question between FY '22 and FY '24 the percentage of value-added products to our total sales has gone up, right? In 2022, it was between 20% to 40%. And now we are seeing a 90%, right? but I think we are in the range of 12% to 13%. So how come our margins aren't expanding, if our value-added products are going? Is this a case that where value-added products are the margin difference between the value-added products and the other steel goods is insignificant?

No, no, no. Here, we have to understand that in FY ''22, whatever we were talking about that. it is 68% to 92%. But in FY '22, our value-added product needs we are talking about only NSPs [indiscernible]. And in FY '24, when we are talking about value-added products, we have to improve that galvanized product, right? So here, the galvanized product source of raw material is not integrated. That source of raw material, we are purchasing from the [indiscernible] or international? That is nothing but [indiscernible] okay? So therefore, [indiscernible] the margin of the HR coild convert into the galvanized coil for [indiscernible], lower than the whatever we are producing from iron ore to [indiscernible].

Okay.

So therefore, as much as volume will be increased, the quantum will be increased. So automatically, whatever the blended EBITDA is coming, that is you are looking at it is almost of INR 100, INR 200. INR 500 it's more, but when the value-added product is so high, why it is not multiplied with that, but it is not the fact because almost in that 98%, we are standing our GP product is almost INR 65 crores.

Got it. [indiscernible]?

But the GP products lesser than the margin of EBITDA payable? You have to understand the basic mathematics in that.

So basically, you are saying that the EBITDA per ton for the galvanized steel is higher, but the margins like from the conversion margin between iron ore to MSPs are greater than those of coil to [indiscernible].

Yes. Very.

Next question is from the line of Hrishit Jhaveri from Pi Square Investments.

Congratulations for a stable set of numbers. Just wanted to confirm that what are your CapEx plan for FY '21 and FY '26. We've already spent a significant amount in the last 2 years. Do we see any major CapEx ahead or just maintenance CapEx going ahead?

Sir, major CapEx, so far, whatever we have said that is the major CapEx against our capacity -- and we have little bit on pipeline as about that already, we have discussed our [indiscernible], we are expanding [indiscernible] capacity by 46,000 [indiscernible], so whatever our [indiscernible]. And whatever -- in the past whatever the acquisition from this project as such acquisition that is [indsicernible]. So -- that is a major thing is capacity.

Okay. So how much do we plan to spend further this year as well as in FY '26 and in terms of how much outlay you plan on?

[indiscernible] You have all those in the balance sheet, it's there, in the balance sheet [indiscernible] if you chase that balance sheet. The total INR 31 crores, almost all is into the steel, okay? So in that INR 31 crores, we are already another INR 50 crores to INR 20 crores, we have to pay it to enterprise power acquisition and these figures are including for [indiscernible] got the permission from the position control board for its use to be converted as a property plan and [indiscernible] that's all. So nothing much more -- but there is no such figure where we have to [indiscernible]. So this is the ultimate figure but up to the [indiscernible].

Okay. So basically, with the current CapEx or spend, we are -- if we will be able to achieve the FY '26 target without any further CapEx?

Yes, yes. Absolutely, you are into the correct path.

Yes. Understood. Sir, I also had a question then.

One more thing. Hrishit Ji, you have to understand when we are talking about this particular segment. This segment is actually basically Cement segment, steel segment, our segment. It is CapEx-based CapEx-oriented segment. Okay. It's not a surface or [interest system] -- it is a CapEx-oriented segment. So therefore, like, for an example, rolls, rolls and manufacturing of pipe and coil -- so basically rolls also we have taken consider as a CapEx. And after the light is over, we are selling out. And again, we have [indiscernible] -- so such kind of financial metrics are reflecting in your balance sheet, but I'm just saying that if you check in the P&L also in the other income, we are showing that some assets trade on.

Right, sir. Understood. Sir, we had plans to expand our dealership network in zones like Western and other regions like we don't have presence in Gujarat, [Uttarpradesh] and Northern states. And how do we plan out to expand in these states with new dealer network to avoid that concentration risk of the Southern India?

Basically already we have engaged so many dealers in that particular segment. Here, we have to understand that the part kind of product we are selling to the dealer -- so basically, our target is to save in Gujarat and southern that part is not [indiscernible] it is coil. Okay. And next question is your -- how we have to increase the dealers and what is our thought process. So whatever the present capacity we have and whatever the market demand we have in our existing geographical [indiscernible] that is almost all optimum. So whatever capacity that can meet in South India and surrounding the South India. But at the same time, unless and until , we are geographically expanding, we cannot scatter fully in that particularly, but our team is already engaged and we are very much closely -- our team is working on it.

Understood, sir. And sir, I had a question that -- do we see any risk from Chinese import -- Chinese dumping of products at a lower rate, pushing down the prices as well as the -- because the volumes [indiscernible] those guys can produce with similar product line do we see any risk in the future?

No. See, Chinese dumping, we are not impacting directly because China will dumping. So basically, they will be dumping [indiscernible] which is our raw material as you see in the [indiscernible] candidate or [indiscernible] on getting a little bit of credit in imported coil and price or because of the imported coil because of [indiscernible] compared to domestic purchase. So basically, as far as Hariom balance sheet, Hariom finance, we are not so far chasing any Chinese company issue because we are not the producer of HR coil, hot rolled coil [indiscernible], right? So we are the producer where we are producing galvanized coil. Our galvanized coil, so whether it is coming from China domestically, our keen interest to better quality and lower -- [indiscernible] -- as far as Hariom is concerned. We are not thinking any challenges for China dumping. But if you are talking about broadly about the Indian economy or Indian growth [indiscernible] overall India country.

Also dumping pipe and fuel as well and oil I know.

Only coil, they are government of India directly cast iron -- import duty on China direct import. little bit of material are coming from [indiscernible]. Now profitability is strictly prohibited on flat products without BIS, nobody can export to India. So therefore, almost 90% problem is resolved, 8% percent are costly. So it should be, I think, in the coming quarter, it will be sorted out. It's not a big issue.

Understood, sir. Sir, last question from my end. The '25 crores guideline which you have given, what kind of margin trajectory do we see at EBITDA like are we -- can we get back to that 14%, 15% mark? Or will you stay at this 13%, 13.5% mark with the currency?

If you think that if you take into the consideration of the current scenario also, it is also a very operative figure? Isn't it?

Yes.

INR 2,500 crores top line [indiscernible] your current EBITDA percentage is 13.4%. So this is almost not INR 337 crores EBITDA. [indiscernible] Lucrative figure. So why are we supposed to comment on the future aspect [indiscernible] correcting. But as far as whatever you assume that we take into the consideration, the correct current scenario can also [indiscernible] figure.

Understood.

But our region is much more better, a much more bigger tender. But anyhow, this is also very satisfactory. INR 337 crores is [indiscernible]. It's a very good figure.

Next question is from the line of Darshil Pandya from Finterest Capital.

Sir, the other questions have been asked. Just 1 question was on the guidance part. Have you given any guidance for this financial year?

Pardon, sorry, can you repeat 1.

Have you given any guidance for this financial year?

In our earlier investor presentation, we have disclosed. I don't think okay, whether you have follow or not. So anyhow, our target is near to 2 lakh 62 to 2 lakh 52 intent 3 lakh metric tonnes of streel we want to sell, and we are very much keen about that. So anyhow, we have almost all achieved 114,000 something so far. So another 60% -- 60%, 70%, if we take into the consideration of 2 lakh 50.

Next question is from the line of Pankaj Motwani from Equirus Wealth.

So my question is on the product side. So like I want to know like how that depends on the side high-tech and GTN because our EBITDA pattern is much higher than that of other peers that our EBITDA is around INR 7,500, peers is around in the range of 3,000 to 4,000. So like what is our -- what is the differentiating sector from our -- in our products?

I'm sorry, but your sound is very disturbing. Can you repeat because it's echo. So can you repeat once and this slowly if you repeat then I can be able to [indiscernible] an answer.

So like I just want to know on the product side, how are our products of Hariom is different from other listed players like high-tech and retail because our EBITDA pattern is much higher than that of peers because our EITDA is around INR 7500 and other peers is in the range of INR 3,000, 4,000. So like how -- what are we doing different in terms of product that -- our EBITDA is higher backward?

So basically, whoever whatever you are taking name, I should not comment on that. It is [indiscernible]. But as far as Hariom is concerned, I don't know about that -- as far as Hariom is concerned, we are having 2 [indiscernible]. One is integrated -- totally integrated from Iron ore to any product of MS tubes and another is from galvanized units where we are purchasing HS coils and doing [indiscernible] in various -- for various industries, various statements not only the Commercial segment. we are doing very other various segment. So therefore, our margin is much more better. Much more better means, I'm not talking about better or lower because I am not comparing with anyone -- it is -- it is satisfactory [indiscernible] okay? Now you at whatever name you have taken, I don't think so maybe I'm wrong or right. I don't know if you were a bit there. I don't think so they have certain raw material sources by their own -- their total [indiscernible] main storage or GP, whatever the product they are manufacturing for that, they are totally depend to purchase the HS coil. So that is no 1 only major reason I see. Even though I don't know about that.

Yes. So my follow-up question on this. So like even our new additional capacities, which is in Perundurai and this only 20,000 metric tonnes of new capacity in Mahabubnagar. So these are also the nonintegrated facilities. So like what is the outlook on the margins because these are not integrated capacities. So the margin will not be of -- will not be that of indicated plants. So can we -- so like what is our margin outlook on this?

That is the reason in your previous participant also asking the same question. In the FY '22 year, our margin is trending when our value-added product, we are selling 60%. Now we are selling 98% while the margin is not increasing, the EBITDA is not increasing as we have increased our value-added product. So in this regard, I had explained that our margin related to galvanized pipes or galvanized coil is lesser than the MS pipe as it is from indicated sources and business, that source is from HR coil, so which we are purchasing domestically and internationally. Therefore, the margin is lesser than the MS pipe because it is [run] through integrated source.

Yes. So like because these are the new capacity. So I think this will ramp up in this year also. So like the impact of the new capabilities. So like can we expect the margin to decline further from this part because this capacities have been started in from started given revenue from this year only. So like how as we ramp up forward. So because of the increased portion from this integrated capacity. So like margin will be -- I think margin would also decline, like I just want to know your view on this, like how things will be.

The question is -- your point is I understand what I understand, please correct me if I'm wrong. My point is what you wanted to know from me, we have addition the new product [indiscernible] that is galvanized steel [indiscernible] together almost a 3 lakh metric tonnes [indiscernible] the margin is lower, what will be the impact in that even -- so my point is here, we are different from other key players that is -- we have so many presentations. We have clearly mentioned that we are working through the time line may -- we are the spot steel manufacturing where the entire pipe consumption is coming from solar. Our operating cost is cheaper than our power cost after the raw material power 1 of the major costs for manufacturers, et cetera, in the steel segment, so power cost is cheaper because of the main power and other facilities and retail technology. All those together and moreover, we are having such integrated system. So therefore, we are able to reduce the logistic costs. We are having that cost charging facility where our plan is to reduce the carbon and as well as coal transaction. [indiscernible] manage your profitability and your cost of production in our finance stocks. So all together, it will be helpful to reduce or compete with the other in terms of cost of production. The second thing, more important thing right now the question is how will we be able to increase our EBITDA margin in the value-added product like galvanize that is the question [indiscernible] we are talking about that when we are position other specialities where we are talking about 0.6 mm thickness, which would be used cost specialized plan industry, automobile industry there are realization much more where the lower operational cost, your cost of production is the [indiscernible] -- so therefore, you are getting -- we are getting better margin than [indiscernible]. That is the ulitmate in future which will be achievable. It can be achieved.

Okay. Got it. And just 1 more question. I just want to know the status of the CapEx on [indiscernible]. I think it was about to complete by FY '24. So what is the status as of now?

See [indiscernible] we are showing as you go through with our financial results in the capital [indiscernible] property, plant and equipment after the [indiscernible] capital working progress. These amounts are reflecting only the usually, the recent cost [indiscernible] has changed and the new component has come. And [indiscernible] when the component has changed the new gen as Pollution Control department for entire Committee has changed as the new committee investors have appointed. Now they have to -- we have submitted our proposal to the government of Andra Pradesh Pollution control department for consideration almost for 9 months before -- 9 monts to 1 month, 1 year before. But so far, not only us in that particular segment, particular India, all the manufacturer or not, they have not taken for this very [indiscernible] and then we conduct a meeting and will be getting and approval [indiscernible].

Next question is from the line of [ Vari ], an individual investor.

Sir, you mentioned that we have 800 dealers. So I just wanted to understand if my understanding is correct that we don't cater to distributors and we directly deal with dealers. Is that correct?

Yes, 100%.

Okay, sir. And then secondly, how many fabricators are we in connect with as of now? And how often do we interact with them? Because peers are also dealing with fabricators and constantly engaging with them.

So -- your question, your point [indiscernible] and you have already gone through that mark.

Sir, sorry, there's a bit of disturbance. [ Vari ], can you please talk to the handset? Got it, sir.

Hello?

Sir, go ahead.

Yes. No, the other ma'am, am I audible? Hello?

Yes, yes, sir.

[indiscernible]Fabricator in various places in the Southern part of India and we are engaging that fabricator with over respective [indiscernible]. That is our own reality. We are not supplying anything directly to the fabricator, we are cross [indiscernible], we are motivating the fabricator, we are incentivizing the fabricators. And therefore, the fabricators we are making with our respective area of dealer.

Next question is from the line of [ Pawan ], and individual investor. Pawan, can you hear us? Due to no response, we move to the next participant. Next question is from the line of [ Shada ], individual investor.

Yes. So due to recent clarity, we would be seeing increase in the number of shares, hence, affecting our EPS. With INR 2,500 crores FY '26 in top line, how do you see that growth translating into EPS also?

In terms of EPS in INR 2,000 crores, INR 2,500 crores top line.

Yes. In FY '26, is a targeting that. How do we see that translating into ETS? Because we would be diluting also our equity [indiscernible].

Yes. So see, basically, in FY '24, we said our ETF is 20.3 crores -- so after that, we are expecting now no nearby activity for FY '24, okay? And almost INR 40 we are looking for in terms of FY '25.

Okay, sir. 40, 43, you are saying?

Yes. Which is a very good return.

Yes. Okay, sir. Yes, all my other questions are answered.

The next question is from the line of [ Kashish Gandotra ], individual investor.

All of my questions have been addressed. Thank you.

The next question is from the line of [ Pani Tredi ], individual investor.

Sir?

Yes.

Yes. Congratulations on a set of good numbers. Government has sanctioned the industrial corridors in [indiscernible], which are in very close proximity from our clients -- from our manufacturing plans. Are we seeing any -- can we expect any huge orders from these industries in industry and corridor?

[indiscernible]

Government has sanctioned industrial crane and carat which are in very close proximity from our plants. from manufacturing clients.

Okay.

Are we seeing any -- can we expect any huge orders from these industries?

There you went to pay we are going to expand?

No, does.

Orders?

Yes.

And exiting order and infant in the ore, we are selling our products. We are radically getting one. Not only for these colleges, we are regularly having Piano many dealers we are adding substantial orders from the particular the even the most of the area anum is from the hedging. We have a competition.

Next question is from the line of [ Himan ], individual investor.

As you mentioned previously that...

[ Himan ], your audio is not clear. Can you speak to the handset, please?

Yes. As you mentioned previously sir that will be having a revenue of INR 2,500 crores by FY '26 Okay. But if I take a look at the H1 FY '25 numbers, we are roughly around INR 650 crores. So is it H2 heavy -- and if it's H2 heavy, then what sort of revenue are we targeting for FY '25?

Your question is very correct, we have targeted for INR 2,500 crores by FY '26, and if you take into the consideration of H1 FY '25, it is 669, 659 -- so whether it is almost 1/4 of the targeted gas call in March '26. So whether we will be able to achieve. So now the quality [indiscernible], it can because sometimes it happens in our life [indiscernible] switches beyond our control, beyond our strategy okay. And this 1 happened in the last 6 months in India, not only with Hariom, it has happened with other [indiscernible], we do [indiscernible] with [indiscernible], which is drastically from now. for this Hariom, keeping all negativity Hariom extremely -- now we have quality further we can achieve by the end of FY '26 in such figures INR 2,500 crores we plan because we -- our target is, which we are able to say 4 lakh metric tonnes of steel. By the end of FY '26, they will be reached to the end of INR 2,500 crores plus. So if you take into the company division in FY '24, we have already completed 2 lakh metric tonnes of steel. And this year, our target is near above 3 lakh metric tonnes. However, due to that slowdown, we expected around somewhere around 70,000 metric tonnes. So once we reach the 270,000 coming around to of 270,000 to next year to like 2026, it is very weak for us to achieve this because we have already started so many of Specialized case, which can help to reach our volume very first and reach our target first rather than [indiscernible].

So just to sum it up, we'll be targeting INR 1,600 crores of revenue in FY '25 with 2.7 lakh metric tonnes and 4 lakh metrics tonnes of volume in FY '26 with INR 2,500 crores of volume?

Yes.

So should you be much better than H1?

We in that next year?

This year actually, should we H2 FY '20?

Yes. You can check with the past data also this H2 orders better than the H1.

And INR 1,600 crores of revenue by -- I mean this year, FY '23?

FY' 25.

Okay. Okay.

Thank you. Next follow-up question is from the line of [ Vinit ] from [ Chris PMS ].

Sir, my question is with respect to the operating [indiscernible] 1 of our related company, right? -- ultra pipes was the name i guess. So can you tell me like I saw your presentation there, it was mentioned the 32,000 metric tonnes capacity in the MST has been added from this? What type of synergies are we able to create out of it, like it is just the MSG capacity or something else also?

No, no, you were talking about from 130 to 2 we started to 216,000. Therefore, the recurring is coming in almost 82,000 a terms coming from top 84,000 coming from [indiscernible].

Okay. So this was the whole reason behind that?

Sorry?

Or so there was the sole reason for the buying of the operating assets?

Yes.

Okay.

That is the reason.

Okay. Thank you.

The next question is from the line of [ Pawan ], individual investor.

Okay. Most of my questions are already answered. I just want to know -- if you can throw some light of your revenue targets for the next 3 years? I know FY '26, we have INR 2,500 crores. If you can elaborate for the next 2, 3 years?

Right now that as per state regulation, I should not speak beyond these whatever official investments in the investors presented already, I have uploaded into the stock exchange and [indiscernible] more than that because I have -- once I have to give guidelines before that, I have to implement to the stock exchange for -- due to that only Otherwise, I have the guideline. But I'm sorry, this platform, I cannot [indiscernible].

No problem. If the growth trajectory will remain same. What we have been seeing last 4 years?

Definitely, we have increased in that sense.

Okay. So that's me. I'll do the math.

Next follow-up question is from the line of [ Ragi ], individual investor.

Sir, I could not hear your point on the fabricators. How many fabricators do we have and how often do we engage with them?

That is actually very difficult because we have not directly sale to our fabricator. So therefore, whatever figure I will be giving, that is not correct and not authentic because we do not have that much of back up. See, what happened is that we like, we have to understand, we are engaging the fabricator. We are fabricator meet will be adding every month on month in India on area business and we are now incentivized fabricators in that particular area. And then if fabricators whatever the dealers are available in that particular area for Hariom, we are engaging them or we are in [indiscernible] to purchase the material from that dealer of Hariom. Therefore, you are getting certain benefits. So in such, we have engaged as a fabricator to our dealer, right? So it is not directly with Hariom. So therefore, I don't have any backup. -- unless and until backup, I cannot comment on the particular any numerical figure. It is not right.

Sir, what is the difference between 1,500 selling points and 800 dealers? I cannot understand the [indiscernible].

INR 1,600 crores, INR 1,500 selling point we are selling certain dealers, dealers having so many [indiscernible] means suppose you are my dealer, you were tipping in Tandem area. So in Tandem having [indiscernible] almost 150-kilometer radius so many small villages are there are so many fabricators or so many small pipe traders are there who are not able to purchase directly from Hariom because they are on their contract is very late to [indiscernible] so they are basically purchase from the dealers. They are not able to purchase only directly from manager. So that means if I sale any to my dealer in Bangalore [indiscernible] surrounding the 15 to 30 relative having gained a 12 dealer to sharp of -- there also in that particular shop also be Hariom [indiscernible]. So if you count to it 1 dealer versus 10 Sure. Likewise, you have to wear assumption this figure.

Okay, sir. Sir, second question is on this. You've mentioned that effective capacity operating capacity today is for 4 lakh tonnes. So the breakup of it, I just wanted to understand if my understanding is correct that the breakup of this 4 lakh tonnes is in MS tubes, it would be around 92,000 to 93,000 tonnes. 5,000 [indiscernible] holding and GP and GI pipes effective would be 3 lakh tonnes?

No, 4 lakhs exactly figure is 4 lakhs 37,000 tonnes. So in that 132,000 tonnes is MS tubes 5,000 [indiscernible]. So all together 4 lakh 32 thousand.

Okay. And the Ultra Pipes that we are adding, that would be -- that would take this effective of MS tubes from 1 lakh 32 to how much?

Almost 80% [indiscernible] installed cap from 1 lakh 32 to 2 lakh 60.

Sir, we'll also have the billets [indiscernible] in this?

No, no.

So The billets [indiscernible] capacity is 95,000.

And that is currently this capacity is 104,000 metric tonnes. We have reached capacity, 224,000 metric tonnes and MS tubes is 103,200 now after [indiscernible]. So now your point we are purchasing or we are going to produce previously to the extent of 100,000 metric tonnes and we saw our pipe capacity going to 216,000.

Yes, sir.

And so therefore, we are purchasing less for the market for the candy and producing [indiscernible], which would have [indiscernible]. Instead of green and other cable which [indiscernible] to in the asset light model, which help us to maintain the margin at topline.

Okay. So currently, the -- and this 4 lakh will go to how much effective when you're talking about effective capacity in FY '25?

[indiscernible] be almost INR 47 plus. So you can say 5 lakh?

Understood. Okay.

Thank you. As there are no further questions, I will now hand the conference over to the management for closing comments.

Thank you. Thanks a lot for the meeting has been arranged. It was a wonderful [indiscernible]. Thanks for this conference.

Thank you very much.

Thank you.

On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.