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

Ladies and gentlemen, good day, and welcome to the Hariom Pipe's Q3 FY '25 Earnings Conference Call hosted by Motilal Oswal Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal Financial Services. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to Hariom Pipe Industries Limited Q3 '25 Post Earnings Call hosted by Motilal Oswal Financial Services. On the call today, we have the management team being represented by Mr. Rupesh Kumar Gupta, Managing Director; Mr. Amitabha Bhattacharya, Chief Financial Officer; and Mrs. Rekha Singh, Company Secretary. We will begin the call with key thoughts from the management team. Thereafter, we'll open the floor for Q&A. 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. Thank you. Good afternoon, everyone. This is Rupesh Kumar Gupta from Hariom Pipes. It is with great pride and gratitude that I address you today. As we reflect on our journey this quarter, I am sharing the progress of your company has made despite evolving market conditions. The Indian steel industry has experienced shifts this year, influenced by global market trends and temporary constraints in raw material pricing and supply chain. Despite these challenges, we have leveraged our resilience and strategic vision to maintain a strong foothold in the market. With the easing of these pressures, we are now witnessing a positive revival, especially in the thriving infrastructure and construction sectors. This momentum reaffirms our belief in the long-term potential of the industry. In this evolving scenario, your company has continued to deliver robust performance for Q3 FY '25. We achieved a total income of INR 30,036.58 lakhs, culminating in INR 95,979.54 lakhs for the first 9 months of FY '25, an impressive 16% year-on-year growth. These results underline our ability to adapt, innovate and sustain growth in the face of adversity. Our profitability metrics highlights our operational strength and efficiency. We recorded an EBITDA of INR 3,962.51 lakhs for Q3 and INR 12,657.50 lakhs for 9 months FY '25, reflecting a notable 31% year-on-year growth. Our EBITDA margins have improved to 13.21% in Q3 FY '25 compared to 11.64% in Q3 FY '24, showcasing our unwavering focus on value creation. Moreover, our operating profit for Q3 stands at INR 2,756.65 lakhs with a cumulative total of INR 9,232.93 lakhs for the 9 months, representing 21% year-on-year growth. Our profit after tax has grown by 11% year-on-year, reaching INR 1,122.96 lakhs for Q3 and INR 4,448.58 lakhs for the 9 months. These results serve a testament to our robust strategies, efficient cost management and commitment to sustainable growth. Looking ahead, we are optimistic about the opportunities in India's rapidly expanding steel market, driven by government initiatives and the growing demand from critical sectors. With a clear road map and strategic focus, we are well positioned to capitalize on these opportunities and continue delivering value to our shareholders. I would also like to draw your attention to our detailed financial results and investor presentation, which have been shared on the stock exchange for your review. For any specific financial and compliance-related queries, our CFO, Mr. Amitabha Bhattacharya; and Compliance Officer, Ms. C.S. Rekha Singh, are available to address your queries. Thank you for your unwavering confidence in us, and we continue to look forward. Thank you.

[Operator Instructions] The first question is from the line of [ Chirag Achani from Nagotia Investments ].

Sir, if we see last 2 quarters, there has been degrowth in quarter and quarter-wise. So any specific reason?

Okay. Any other questions in this parameter?

Yes. Sorry?

Apart from that, you have any other questions so that together I can start?

Okay, okay. And sir, if we see last 8 quarters, our Q3 is lowest amongst the 4 quarters. So rationale behind this? These are my 2 questions.

Okay. Thank you for your question and concern. The sequential revenue decline was preliminary due to weaker steel price and temporarily slowdown in the demand from key sectors such as construction and automotive, especially in Q3. Additionally, the pricing pressure in the domestic market and an industry-wide correction in selling price impacted overall realization. Despite these challenges, our volume increased by 17% year-on-year in Q3 FY '25. And we successfully offset some revenue pressure through higher value-added product sales. We remain confident in our long-term demand outlook with government-backed infrastructure project and solar structure continuing to drive steady growth. That is your first question, why it is lower comparatively to the Q2? And your second question is, why it is Q3 -- Q4 is better than Q3? So basically, in the Q4, it's a summer season and always the construction and all engineering activities have mostly happened in the -- during the course of January to April. So therefore, it is not for Hariom, in the segment-wise you can check from the past 4, 5 years data also, always the fourth quarter is the best quarter for the industry.

Okay. Okay sir. And sir, quarter 4 is the best. So, sir, any FY '24 target and FY '25 value and volume-wise?

So basically, we are targeting total volume growth is almost all 20% growth we are expecting and we expect steady growth in FY '25 almost 20%, which is reaching to some around 238,000 metric tons with increase in PAT volume terms also. And in FY '26, we anticipate continued double-digit revenue growth also.

Okay. So this 20% volume-wise, correct?

Yes.

And sir, when will be -- we were at 100% capital -- capacity utilization. If I remember last quarter you said in 2 years' time. So stay on that target.

In terms of CapEx, the CapEx investment, particularly in high-margin product categories like galvanized pipe and engineering structure require an initial ramp-up period. However, early signs of demand transactions are strong, and we expect to see improved revenue contribution over the next few quarters. One of the most significant contributors to our CapEx-driven growth is the galvanized product segment, which has witnessed almost a 38% year-on-year increase in sales, reaching almost 86,934 metric ton till 9 months FY '25 to comparatively to 62,876 metric ton in 9 months FY '24. This strong performance demonstrates growing market demand and effectiveness of our capacity expansion. With a balanced approach to CapEx deployment, cost optimization and high-margin product growth, we expect meaningful returns on investment to be fully realized in the coming financial periods, reinforcing our strong revenue and profitability trajectory.

Okay, okay. Okay, sir. And sir, one last question. I mean, net profit -- sorry, net margin target, if I see it is continuing declining, our margins. So any target for future?

So, basically, the -- if you see that cost efficiency-wise, we are doing extremely good. Our electricity cost price is cutting down from the last year to this year, almost on more than 30%. And our raw materials impacting raw material margin is also constrained despite the fluctuation in raw material rate and disturbing the volatility in the steel price continuously in the past 9 months, which we are facing in this segment from almost all after 3 years, even though you can say after COVID period, this is the first time in this segment, we are facing this kind of challenge. Despite that, our operating cost are constrained and we are continuously minimum our operating cost. And due to that, we are able to manage the margin, and we are very much confident the margin will be fruitfully growing in the coming future because this is the lowest price which we are seeing in the steel market. The steel prices rapidly gradually grow. And as and when the margin will be growing, the realization price, the margin will be much more showing good. Despite that, our per tonne EBITDA is highest comparatively to any market scenario.

The next question is from the line of [ Bhagat ] from Prosperity Wealth Management Private Limited.

Could you please provide an update on the INR 700 crores fundraising? Especially, I'm interested in the estimated time line and the process behind it. Are we expecting the fundraising to support debt reduction or any to facilitate inorganic growth opportunities?

Regarding this basically in the earlier con call also and so many times we have clarified that the present scenario, we are not -- the fundraising is deferred for the time being. And the company is whatever the growth, they are always focused on the -- for growth capital and company is planning to grow managed by their own, and it is segmental-wise and it is a process-wise. First, we have to focus on our, whatever the capacity, existing capacity we are having that we have to -- that resource we have to optimize level we have to use. At the same time, the company very much focused to add various other sectors, value-added products and our product basket is also we are expanding and we are also penetrating new geographical region. By that, we are already getting some government and private sector, corporate sector also very good volume of orders. And in the coming future also, we are expanding like that. As and when -- at the present moment, we are not going for any sort of fundraising. This is for the time being, it is deferred.

Okay. Understood. Sir, my second question would be, could you please comment on our guidance of achieving 4 lakh metric tons in volume and INR 2,500 crores revenues on which could you please comment?

So 4 lakh metric tons of volume and INR 2,500 crores of revenue, which we have disclosed, I think, in the mid of 2022. At that time, the steel demand and steel prices in the top notch and the market and the demand, domestic growth, GDP growth is also looking very positive, and we are still very much optimistic and our entire team focused and our channel are very much professionally handled, and we are very much keen to reach our goal first, as I said just a few minutes before. And it will be -- we ensure that, that figure definitely will be reached maybe by the end of -- instead of maybe by the end of '26, it can be somewhere around 3 to 4 months extra it will take. But definitely, Hariom reach this target definitely because whatever the present capacity we are having, that optimum level is this much, 4 lakh metric tons.

Okay. Like FY '27, we can expect this run rate?

By the end of -- not exactly financial year, it is quite difficult for us to estimate or telling at this moment. But definitely, I am rest assured that as a growing demand of various value-added products, which we are already focused and we are getting some value-added product orders despite our major contribution by the pipes, we continue to enhance efficiency through automation, advanced manufacturing and cost optimization. As you said in -- saw in our presentation also, we have taken 9.5% market share in the 0.3 mm to 2.5 mm Indian steel pipe segment as reported by CARE. So there is a high-margin specialized product. Apart from that, we are doing regularly various other product portfolios, which allow us to reach our target within the span of somewhere around 18 to 20 months to reach that goal.

Okay. Just last question from my end. What would be the debt that you would be expecting for next year? Are we expecting to reduce debt going ahead?

The debt part is always -- see, the debt part -- our debt is always within the parameter. There is no debt equity ratio remain comfortable level, and we are continuing to focus on optimizing working capital to reduce debt over time with the cash conversion cycle expected to improve from -- almost all from FY '23, if you see that FY '23, we had 153 days, in FY '24 to 120 days, in FY '27, we process further reduction in reliance on external borrowings and the debt will be coming down by our internally financial stability.

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

My first question is on the demand scenario. I mean, you mentioned that fourth quarter is usually the best quarter for us. Are we seeing any improvement like because we are almost now mid of Feb, how has been the demand in Jan and mid of Feb as compared to, say, last year?

So basically, sir, if you see that from the last 9 months performance, if you see the last 9 months performance, our demand we have in quantity, we have almost all growth in the last 9 months, we had sold around 138,567 metric tons comparatively to these to 9 months, so we had almost 171,254 metric tons, which is a 24% growth in the similar line of activity quarter-on-quarter if you see, fourth quarter is the best quarter, and we are expecting almost near to 235,000 metric tons of the total volume we are expecting it will be we are able to sell.

Okay. 235,000?

Yes.

Okay, okay. Okay, sure. So that's good to hear. And in terms of pricing, right, I mean, the decline has continued in third quarter as well. Are we seeing any price stabilization? You did mention that we are probably closer to bottom of the pricing. Would it be fair to assume that we are -- like fourth quarter onwards, we might see improvement in the realization now?

So basically, the pricing factor, if you see that the pricing factor already it is corrected. And from now onwards, the steel already government has started spending in infrastructure sector also and the steel price is the bottom line. Now, we are expecting from gradually stabilized supported by the government infrastructure spending and recovery of global demand also. So from that -- from now onwards, the steel price is going a little bit above gradually. And the price corrections are beyond this -- whatever the price correction was happen beyond that, it is -- we are not thinking beyond that, it will happen.

Okay. But have we seen some improvement in month of Jan and Feb?

Yes, already it is recorded in our January also. We have got very positive approach from the market. And not only -- earlier, we are based on pipe. Now apart from pipe, we are having other product basket also, which is also doing extremely well. As in earlier conversation also, I mentioned that galvanized also, there is a 30% plus growth are there. So we are getting very positive response from the market on so many of value-added products, which we are not catered in earlier.

Sure, sir. Sure. Sir, in terms of industry sales, right, which are some of the top, say, 2 or 3 industries where saliency of our products is very high and which have been impacted, say, the last 2, 3 quarters, right, or there has been some weakness?

So basically, on industry scenario you will [ hear ] that this year, there is a low in demand and price corrections have happened and some imported coil also dumping in India. So this all happened and government spending is also not happened properly as they have allocated in the budget in FY -- for the FY '25. But now government has also started and the demand is also coming. So on that basis, we can expect that our CAGR will be increasing 8% to 10% as India is expecting to grow CAGR by 8% to 10%. So therefore, our growth of CAGR in the last 5 years is also witnessed a 34% growth trajectory. So in such scenario, we are also expecting some growth.

Just to be specific, right, my question is like whether our dependency on the government-led projects is high? Or is it more to do with the private investments, which can give us the impetus in terms of...

No, no. We are not directly -- earlier also Hariom is not directly contributed any government project dependency. The overall market economy are there. So on that basis, when the government is investing in the big project, surrounding area and surrounding private projects also coming actively, so therefore, automatically, it has happened, not created by government. It is created by government and private bodies also. So similar way, the demand is coming in both the way.

Okay. Got it, sir. And lastly, one bookkeeping question. I mean, I don't know if you have that number handy, but like we would be doing, sir, roughly INR 160 crores, INR 170 crores of EBITDA for this year. In terms of operating cash flow or conversion, say, from EBITDA to operating cash flow, where would we stand roughly ballpark?

So basically, sir, if you see our operating cash flow, already we have disclosed in our Q2 results along balance sheet and cash flow where you can see that the operating cash flow is coming positive INR 52.88 crores. Right? So we are happy to announce that we are able to manage this operating cash flow growth trajectory. And anyhow in December also, we have not officially disclosed because as per SEBI guidelines, we need not to disclose the balance sheet and cash flow in the Q3 and that's why we have not disclosed. But as investors, we would like to share with you our cash flows remain constant and strength similar Q2.

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

Sir, I had a couple of questions. First on the debt part, what would be your current debt level as of December?

As on December, our current debt is -- just a minute. Total debt is around INR 409 crores roughly.

And out of that, what would be the long-term debt?

Long-term debt is almost INR 123 crores.

So we have increased it from the September number. Any specific reason for that, sir?

For September? Sorry, from September INR 133 crores it was. December long-term debt was INR 133.57 crores to be precise. Okay. So it has come down from INR 133.57 crores to almost INR 124 crores.

Okay. And sir, in this quarter, we did around 57,200 metric ton of volume. What would be the average price realization which we achieved in this quarter?

The average price realization is INR 52,431.

Okay. And which you're guiding is a multiyear low pricing, which we are getting, correct?

Yes. If you check with the last quarter also, Q2 also versus Q2 versus Q3, there is a 6% downfall in the price.

Okay. Sir, as per you, what would be the optimal level above INR 55,000 would be an optimal level that we plan in Q4? What is the growth we expect in pricing scenario?

See, pricing scenario, if we had taken into the December figure also INR 52,000 what it was happening. This is the lowest price. From now onwards, we are expecting it will be -- the price will be grow gradually, not immediately, but gradually.

Understood, sir. But in the March quarter, how much do we expect? Do we expect INR 55,000 range in Q4?

54,000, 55,000, you can expect like that. But it is very difficult for me to say upfront this much can be happened because it's all are depend on market.

I would like to add that basically we are not concentrating only on pipe market. We are either concentrating on other value-added products, which are enhancing the profitability of the management and the company. So basically, our whole goal is to address on to the profitability area instead of working on the reliance of competition and results. So the focus and the gear has been changed of the management to understand and have the most grip on the area where the competition is very low.

Okay, sir. Understood. Sir, one more question on the China dumping part with the U.S. imposing additional tariffs globally, obviously, it will have adverse and indirect effect on India as well, which might further dampen the prices in the coming quarters. So what's your outlook on this scenario, sir?

So we don't think basically this would be a great thing which will happen and the Government of India will not focus on those. Government of India is also acting promptly on enhancing and respecting the infrastructure and the capacity enhancements, which other primary players are doing. So they have to focus on things, and this is not at par with only one particular company. It's with all the companies established in India for steel segment.

Okay. Understood. And sir, on the guidance part, earlier, we had INR 25,000 crore guidance for FY '26. I think that will be pushed to either near by 3 to 4 months, which you guided. So can we expect a INR 2,000 crore mark by FY '26?

So the volume part, we are rest assured because the price is not in our hand, as Amitabha has also addressed you before on this particular line, the pricing is not in our hand. We cannot assure you on the pricing and the top line of that, but assessment on this particular pricing as today, whatever is happening, we can estimate on volumes. So volumes, we are doing good. Now, if we see last year versus this year also, I think around 18% drop in the pricing is already there. So the volume is more important than the value of the product what we see. And our focus is onto the profitability instead of getting only the volume. That is the whole focus on.

Okay. But sir, in INR 55,000 to INR 56,000 price range by next year, do we expect a INR 2,000 crore mark with volumes in the range of...

[Foreign Language]

If you calculate at INR 56,000, it's coming around INR 1,700 crores.

Okay.

INR 1,700 crores to INR 1,750 crores.

We focus only on this particular volume level because focus of the [indiscernible] so the value-added products, so hence, the profitability and the numbers will obviously grow. We have been confident on that.

The next question is from the line of [ Vimok Shah from Goel Fintech Private Limited ].

Sir, I wanted to know like regarding the geographical expansion plan. What are the specific time line and milestones for expanding dealer network in the Western and Northern India?

So basically, sir, we are actively working on expanding our dealer network, particularly in Gujarat and Maharashtra. And our focus is on increasing penetration in Tier 2 and Tier 3 cities while also strengthening our B2B partnership with construction, automotive and solar power industries, [ fan ] industries, some government enterprise also where we have already started supply the material also, automobile sector also, recently introduced galvanized product segment will help us to cater in new industries and markets. As you rightly said, geographical-wise, we are slowly and gradually we are moving forward and it has happened reflecting in our results also in the coming future also, it is clear that our strategies also.

Got it. And sir, what are the current demand trends for the steel pipes and the tubes, particularly in the infra sector?

So basically, if you see our presentation also, in that presentation also, it is reviewed by CARE also, as per the CARE review, the total pipe segment almost all 96 lakhs pipes are demanding are there. In that pipe segment, almost 15% are below 0.5 mm to 2.5 mm requirement are there where Hariom contributed almost 9% plus. So this is the present demand scenario, which is audited figure as per FY '24 data, which I can say loudly and clearly as per CARE research report on the basis, which already we have disclosed in our presentation also. And in the coming future also, we are expecting as your Tier 2 and Tier 3 cities are growing and urban economy are strengthened. So therefore, this demand in the coming future also, it is coming very positive way.

The next question is from the line of Harshit Khadka from RoboCapital.

Sir, I wanted to ask, can you give some color on what would be your EBITDA margins for your value-added products like galvanized pipes?

For this particular quarter or you are talking about overall 9 months?

In general, sir, for 9 months and also for this quarter?

Okay. So in general, last year, it is much better. But this year also, we are getting around near to INR 6,700 to -- INR 6,500 to INR 6,700 in between, roughly you can say for the quarter of December '24. If you have taken into that 9 months, it is coming INR 7,000 for galvanized pipes.

The next question is from the line of [ Sara from UVR Investments ].

Sir, in your presentation, you mentioned that today company has 800-plus SKUs. What is your targeted number of SKUs by FY [ 2018 ]?

So day by day, our SKUs are increasing. And that might be by the end of FY '26, we can reach in the 4 digit also. So that means another minimum 200 SKUs also we are expecting to add. It's not only pipe, it's pipe, coil and other products also.

Sir, in Ultra Pipes out of total capacity of 84,000 metric tons, what is the percentage that can be manufactured via DFT?

So Ultra Pipe actually total machines are under that technology only. So whatever Ultra is producing that is under this technology -- by that technology only. Talking about technology, DFT is nothing but a technology.

Yes. Right. Okay, sir. Sir, what is the range of pipes in terms of diameter and thickness that can be produced in MS tubes?

So basically, we are having 1.2 mm thickness. In MS pipes, we are having thickness of 1.2 mm and CR/GP pipes and coils from 0.6 mm thickness, we are having. And in terms of diameter, we are having 29 mm -- 9 mm to 180 mm diameter.

All right, sir. Sir, one last question. What is the ROCE you make without backward integration in order to make MS tubes and ROCE in -- when you make via primary route in MS tubes?

Sorry, sorry. Can you repeat once?

Yes, sir. So what is the ROCE that we make without backward integration in order to make MS tubes and ROCE via primary route in order to make MS pipes?

So, madam, basically, we are not submitting any segmental reporting. It is quite difficult. And moreover, I would like to clarify that our MS pipe, route ROCE is always by the integrated part through. Without integration, we are not doing any ROCE. And if you are talking about company ROCE, overall ROCE as on December '24 is 18.1%. It is quite difficult for us to classify this way, unless and until segmental reporting.

The next question is from the line of Nitesh Dutt from Burman Capital.

Sir, in this quarter, we made an EBITDA of INR 7,000 per tonne. Can you give EBITDA per tonne for MS pipes, tubes, GI pipes and the galvanized coil as well?

So you want to segregate asking me the individual product-wise EBITDA?

Yes, EBITDA per tonne. Just a broad range would also be okay. I just wanted to get an idea of...

For MS tubes, you can take roughly around INR 8,600 to INR 8,650. Scaffolding that all the figures I'm telling you, exact figures, I cannot say because it is not audited. It's a limited report, but the figure is almost all similar range, INR 8,600 you can take from MS tubes, scaffolding, you can take INR 11,500. And GP pipe is again INR 6,500 to INR 6,800 for this quarter.

Okay. Sir, in GP pipes, my understanding is you are not as backward integrated as you are in MS tubes because you have to buy HR coils and then make coil from galvanized -- GP coil. So how are you making such high EBITDA per tonne there as well? Because I think I believe converters in the industry typically make INR 3,000 in MS tubes, if I'm not wrong.

Yes. In MS tubes, converter is generating INR 3,000 as we are -- in MS tubes as we have the backward integration. So in furnace also, we are having certain EBITDA. In rolling mill also, we are having certain EBITDA. And in iron ore to sponge iron manufacturing also, we are having certain EBITDA. So altogether, we are getting INR 8,500-plus EBITDA in MS pipe despite this market scenario. And as far as GP pipe and GP coil question, if you check that the figure is INR 6,500 to INR 8,500, means almost INR 2,000 lower than the MS tubes. That is why as we are -- our raw material source, we are purchasing from the outside. Therefore, our INR 2,000 is lesser than the MS tubes. And from the market, why we are getting better margin because of we are producing 0.4 mm thickness coil also from our tandem mill. And as I said earlier also, our product, coil product and other product also apart from GP pipe, that is used for specialized steel engineering sector, where we are getting better margin in terms of realization. So that is allow us to blended EBITDA is coming this much.

Got it. Just one more question, sir. In the industry, primary players, right, people who purchase HR coils directly from steel producers and then make MS pipes. Do you price your products slightly lower than those people? Or is your pricing independent of their pricing?

So basically, in the price segment, that is always depend by the market scenario. We are basically in our product, we are not compared with any primary or secondary steel producer. As far as Hariom is concerned, Hariom brand, the management and the Hariom is one that best market realizable value, we are selling our product and that is independent. We are not calculating or depending back calculation anything.

So adding on to your question, Mr. Nitesh, basically, our performance is based on to dealer networking and all. It's not the distributors. So the pricing part, we get a better realization. That's the whole thing what we do.

The next question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital.

First of all, congratulations for maintaining the volume growth even in such difficult times. I wanted to understand your progress on...

Sorry to interrupt, Mr. Sahil, I would request you to please use your handset.

Congratulations for maintaining a strong volume growth in difficult times. My first question is, can you help us understand the progress on some of your B2B side contracts? I mean, you were working on signing a few new customers and contracts. Any progress on that front, especially on the few other government side also? Anything -- any progress on that front?

So basically, for B2B, GP coils and others during the quarter, last 9 months, our total volume 10%, you can say, directly GP coils. In terms of volume, almost all 17,260 metric tons we directly sold to B2B.

Okay. And on the total volumes, we are still at 15% of sales to B2B?

Yes.

Okay. Okay. Okay. And secondly, would you be able to help us understand how the working capital cycle will be reduced, especially on the inventory days and on the payable days, please?

So basically, sir, in terms of raw material, if you check with the raw material, so last year versus this year, almost all September '24 to -- or you can say last 9 months versus automatically, it is coming down, raw material -- overall raw material cycle days. So it is coming down, that consumable days is coming down to almost all 4 to 5 days. And similarly, finished goods is also coming down. And raw material segment also assuming 1 to 2 days difference. Overall, net working capital days to sales, if you are taking, it is coming down to -- from the last financial year to this financial year, last 9 months, it's coming down to almost all 12 to 14 days. We are managing this cycle continuously. In terms of receivables, we are approaching dealer finance through very much PSC banks or private banks to onboard our dealer where we are getting our debtor holding days is coming down and against our volume of sales. And at the same time, we are taking credit from the manufacturer or direct suppliers, primary steel producer so that our working capital holding -- operating cash flow becomes healthy.

The next question is from the line of Richa Chowdhary from Electrum PMS.

Sir, in the last call, we had given a guidance of roughly 270,000 tonnes of volume. So do we see that happening considering the run rate is roughly around 55,000 to 60,000 per quarter? So do we see quarter 4 to be very strong?

Quarter 4 is strong, and we are expecting, as I earlier also clarified that 20% growth in volume there. And from last financial year to this financial year, our total volume growth will be 20%. And it is along with the proportionate increase per value also in terms and moreover in terms of absolute figure in volume. So 270,000 whatever you say, it is a little bit difficult, but somewhere around 238,000 to 240,000 will be reached.

Okay. And also, sir, could you just mention how much is the debt levels and cash on the balance sheet as of like the last quarter?

Debt level already clarified that the total debt long term and short term is INR 409 crores and total outside liability is INR 516 crores and [indiscernible] is almost another 0.92, below 1.

Okay. And one last clarification. Do we see any capacity expansion happening on the GP side for the next like 4 years?

In GP side, no, first of all, we are using our existing capacity to exhaust our existing capacity and then execute it in phase basis. We align capacity increase with the market demand and scale and availability. We have long-term plans for utilizing this land on scalable capacity expansion.

So right now, the GP capacity is 3 lakh tonnes, right?

Yes.

The next question is from the line of [ Rahil Shah from Crown Capital ].

Sir, just one question. I believe it's the same on the volume front. So you said you expect to close the year with 2.38 lakh tonnes, correct, metric tons?

Yes.

Can we cover the gap which we are missing out this year in the next year -- financial year FY '26 and reach 3 lakh tonnes? Is that our target or aspiration?

For the next financial year, you are talking about 3 lakh metric tons, right?

Yes, which we were kind of targeting for FY '25, but we have fallen short.

For FY '26, we can take this target 3 lakh metric ton. So here and there 10% plus or minus will be there because we can -- in the last financial year, we can only see the volume only, we can work on that, and we are -- definitely, we'll be targeting and we'll achieve it.

And the average selling price, which is now gradually moving upwards and expected to continue ahead as well, what sort of bracket one can assume for the whole year? I mean, of course, you can't predict the prices, but like where do you expect them to be?

At least if it is coming to the line of FY '22 performance, then the price was almost all INR 62,000 overall all the value-added products together, then you can say it is nothing like it. We are always expecting in that kind of value again, we'll be getting, but let's see what market will give.

The next question is from the line of Pankaj Motwani from Equirus Wealth.

Sir, my question was on the inventory part. So I feel like there is a significant amount of inventory in your books and like with the decline in the steel prices, so like what is the quantum of inventory losses you have booked in this quarter? And also despite these losses, like the gross margins of your company appears to be stable like if I see gross margin, it is in the range of 24%. And sequentially, like in the September quarter, it was also in the same range, like 24%. So I also want to understand like despite this decline in steel prices, how are we able to maintain the gross margins?

So basically, raw material price fluctuation are a common challenge in the industry. However, we have effectively mitigated their impact through strategic procurement, bulk purchasing efficiencies and continuous process optimization. Our diversified product mix and agile pricing strategy have enabled us to maintain stable margins while staying competitive in a volatile market because of this strategy, we have successfully maintained our EBITDA margin, which is almost 13.21% in Q3 FY '25 comparatively to 11.64% in the Q3 FY '24. So our EBITDA for Q3 '25 INR 39.63 crores, reflecting a 22% year-on-year growth. For 9 months FY '25, it reached INR 126.58 crores, making a 31% year-on-year increase. This demonstrates our ability to sustain profitability despite external cost pressure reinforcing the strength of our operational efficiencies and strategic cost management. Apart from that, I'd like to add that power cost. The power cost after the raw material is a major factor for any steel industries where we are able to manage the power cost in terms of almost all 32% reducing power cost, which all together allow us to maintain our margin.

So a follow-up question on this. Like I just want to understand like do you have booked inventory losses in this quarter because of the decline in steel prices?

No, nothing is coming because as we have purchased, we are into that steel business from past more than 2 decades, the inventory loss, we are not holding any stock purchasing. Therefore, the steel price, whether it is coming down or coming up, raw materials, especially raw material, it's not impacted to our balance sheet. We have always maintained the cycle and always our finished goods is always prebooked, which we are -- lying in our factory premises. So therefore, we are not -- so far we have not booked any sort of inventory losses.

Like as per the accounting policy, we have to value inventory on cost or which is lower. So I just want to understand like even with the decline in steel prices, so we have to revalue inventory at lower cost because of the accounting policies. So just want your view on this, like why we are not booking inventory losses?

No. Actually, if you see our P&L, we have not booked any inventory losses. And as I clearly explained you that due to that efficiency, cost efficiency and our raw material cost also, if you check with our raw material cost also quarter-on-quarter basis, that is also remain constrained because we are not purchasing in a bulk mode and not dumping the raw material. Therefore, the fluctuation of rate or change of rate or lower rate is not impacted to our financial.

So we are basically -- the strength of the management and how we have managed the inventories incoming and outgoing. The price fluctuation do not impact us and we are [indiscernible].

And moreover, we are able to pass on the cost difference to the -- in the market itself. It's an integrated process.

Okay. And the second question was on the EBITDA per tonne, if you can see sequentially EBITDA per tonne has declined from INR 7,600 in quarter 1 to around INR 7,500 in quarter 2. And in this quarter, it has declined to INR 6,900. Like what are the key reasons for this decline? And also what is the guidance for FY '26?

So basically, if you check with the realization price, that is when the realization price quarter-on-quarter basis, it is coming down on an average 5% to 6% in terms of EBITDA decline mode is not in terms of that much of percentage, okay? So due to that our efficient operating -- operational capacity and efficient management skill, we are able to manage the EBITDA. It is quite a common thing that when the steel price is coming down, the realization price coming down in absolute figure value, something is lower, but not that much as the realization price is coming down from the market.

But like you just passed on the prices to the customers. So like why are we facing a decline in EBITDA?

We have passed on that our -- whatever the additional differences we have passed on to our customers because we are not dumping the raw material in our premises, as well as the finished goods. Therefore, the price fluctuation is not impact to our P&L and profitability. And as far as future questions per tonne EBITDA, yes, we are very much optimistic and whatever our earlier FY '22 also, we are earning that much of percentage of EBITDA, again, we are confident it will be coming given by the market and demand also.

Okay. So like we can expect same EBITDA per tonne for the coming quarters?

Exactly, specific numerical figure, I cannot say. But yes, we are expecting positively.

Okay. And just one more question on the sponge iron CapEx status. So like what is the status of the same plant?

Regarding sponge iron expansion?

Yes.

So presently, just 20 days back, we have got the CFO approval, renewal approval from the Andhra Pradesh Pollution Control Board. Now we have applied for the EC and as well as CA to the Pollution Control Board. As you are aware that the new government has formed. So last 1.5 years, all the policy of the state government was not actively doing. Now, the new -- after the new government, now they have started to work functioning properly, and we have already filed our application, which is into the pipeline. Recent past we have got the CFO renewal process for the 100 TPD. And now we are again applied for another 100 TPD for CAC, which will be -- which is in pipeline, and we are expecting within a month or 2, it will be received from the department. As and when we receive we will start the construction for additional 100 TPD.

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

Sir, I wanted to highlight that do we plan any export plans in coming year? Like do we -- are we planning to expand our geographical presence outside India?

Sir, we are -- as I said earlier also, we have SKU-wise, we have a lot of product baskets are addition in Hariom. So therefore, yes, very true that options is also open for us, and we are closely working on that also. But when and how much it will happen, at present, I have no practical data. So therefore, I cannot disclose it. Otherwise, we are working closely on export market also.

Okay, sir. And do we need to incur any significant CapEx for at least next 2 to 3 years to reach that 4 lakh metric ton goal? Because I think post FY '27, our capacity would be exhausted. So any strong CapEx plans or not, sir?

So CapEx investment, particularly in the high-margin product categories like galvanized pipes already I told in the first discussion also, it takes some more time, but we are doing in the phased manner and new present CapEx we are doing whatever into the pipeline, we are -- complete it first and then we have to expand as per the demand and requirement basis.

Okay. So no major CapEx plan for next year at least?

At present, we do not have, only on the basis of the demand and case manner, we'll be doing discipline on the financial management.

Okay, sir. And just the last question, sir, can you give a revenue or volume split up between MS tubes, GP and scaffolding as a percentage of total the way of revenue?

For Q3 '24?

As well as 9 months it would be great, sir.

As well as 9 months?

Yes.

So basically for MS tubes and scaffolding is 9 months total contributed in terms of volume 77,000 -- near to 77,000 roughly. And galvanized product is given almost all 77,000. So both together earlier 77,000, 77,000 majorly given.

Okay. So GP will remain the greater part, which would be more than 50% for the coming year?

You can say that way also. GP means not only pipes, in terms of pipe, coil and cold rolled coil, pipe are there and other product baskets is also there.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal Financial Services for closing comments.

Yes. So, sir, do you want to have a closing comment?

Yes. No, we do not have any.

Okay. Yes. Thank you so much. Thank you, everyone.

Thank you all.

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