Jindal Saw Limited (JINDALSAW) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Jindal Saw Limited Q2 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Singh. Thank you, and over to you, Mr. Singh.

Good afternoon, everyone. Welcome to Jindal Saw Q2 FY '26 Con Call. From the management side, we have with us Mr. Narendra Mantri, Chief Operating and Financial Officer; Mr. Vinay Kumar, President and Head Treasury; and Mr. Rajeev Goyal, Senior Vice President, Corporate Finance. Without taking any much time, I'll hand over to Mr. Vinay Kumar for his opening remarks. Over to you, sir.

Thanks, Vikash. So good afternoon, friends. Wishing you all a very happy Diwali and blessed festival season. I now welcome all of you to the investors call of Jindal Saw Limited for Q2 of FY '26. On behalf of Jindal Saw management, we extend our sincere thanks to ICICI Direct for hosting this call. The Board of Directors formally approved the unaudited financial results during its meeting on October 17. The results have been released to the stock exchange in compliance with the regulatory requirements. Hope you would have had a chance to look at the results. I'll now provide an update on the operations of the company, subsidiaries, et cetera. As you would have seen, the quarter -- second quarter of the current year saw significantly weaker performance compared to both the prior year and the preceding quarters. And the prognosis of Q2 is we are providing as Jindal. The overall macro level indicators in domestic and export markets remained robust. The company has recorded one of the highest order books, specifically for the water sector, which means the company has secured a large number of future projects related to water infrastructure, reflecting strong visibility. This is a positive indicator of the company's growth potential. The total volume of order book for pipe business increased to 19.25 lakh tons in September '25 as compared to 15.60 lakh tons in June '25. We believe that this is the highest order book what we have seen in so many years for Jindal Saw. Among our recent achievement is a new export contract for the supply of approximately 6,22,000 ton metric tons of helical pipes for a water-related infrastructure project in Kingdom of Saudi Arabia. Manufacturing for this specific order is slated to start sometime in Q3. We are running into Q3. The margin of this order are in line with the other export business of helical pipes. The company has commenced a trial phase of its new seamless piercing mill with commercial production slated to be in this quarter, sometime next month because this is a technological product and the stability takes time, but we expect that the operations can commence, or commercial operations can commence in this quarter. This expansion is projected to increase the seamless production capacity by approximately 150,000 metric tons per annum. Our DI facilities in India are fully committed for the foreseeable future with the current backlog of 1 year. Thus, although the wider markets were robust, but extended payment cycles from the water infrastructure EPC companies in India have severely impacted the cash flows and operations -- operational stability of pipe manufacturing suppliers like us. The protracted payment timelines often associated with the government-funded water projects present significant liquidity and project management challenges. We recognize that the current uncertain environment will have an effect on our operations and financial outlook. However, we are managing our strategies accordingly. Overall, our business faced significant challenges during Q2, which limited our performance. While export and domestic market demand remained robust. However, tight liquidity and prolonged rain spells hampered our operations in the financial year. These factors were the main contributor to lower output, decreased sales, tighter margins and the rise in inventory. Now, we believe the current situation is expected to be short term. We gain our confidence from the historically high order books, healthy liquidity position of the company and disciplined debt management. The company maintains robust working capital lines to effectively manage all operational requirements. Now, let me address the financials of Q2 and H1. Of course, you have got the results, but still just to repeat and to recapture. On the stand-alone basis, the company recorded total income of INR 3,410 crores as compared to INR 3,327 crores in Q1 of FY '26 and INR 479 crores of Q2 of FY '25. The EBITDA for Q2 FY '26 is reported as INR 335 crores as compared to INR 560 crores in Q1 FY '26 and INR 875 crores in Q2 of FY '25. The PAT for Q2 FY '26 is reported at INR 79 crores as compared to INR 364 crores in Q1 of FY '26 and INR 477 crores in Q2 of FY '25. On consolidated basis, the company recorded total income of INR 4,264 crores as compared to INR 4,103 crores in Q1 FY '26 and INR 5,602 crores of Q2 FY '25. The EBITDA for Q2 FY '26 reported at INR 482 crores as compared to INR 688 crores in Q1 FY '26 and INR 944 crores in Q2 of FY '25. The PAT for Q2 FY '26 is reported at INR 138 crores as compared to INR 415 crores in Q1 of FY '26 and INR 475 crores in Q2 of FY '25. So, the stand-alone operations have suffered, but consolidated operations have shown improvement, especially from the UAE operations. The net debt of the company on a stand-alone basis has increased to INR 3,310 crores as at 30th September as compared to INR 3,088 crores as at 30th June 2025. The long-term debt is approximately INR 550 crores. The net debt of the company on a consolidated basis has increased to INR 3,856 crores as at 30 September '25 as compared to INR 3,484 crores as at 30th June '25. The long-term institutional debt is only INR 742 crores on a consol basis. Now to summarize, predicting the near- to long-term outlook is difficult at this point of time as the business environment is affected by persistent geopolitical challenges and delays in the government funding, et cetera. The company's order book has strengthened significantly and continues to be strong with new orders secured across all work business segments. We are also receiving positive market inquiries from both domestic and export sectors. The order book status sets the stage for a progressive strengthening of operations and financial results starting from Q3. We have a very comfortable long-term debt position. Our stand-alone long-term debt is roughly INR 550 crores, of which INR 500 crores is tied to an NCD with LIC that will be redeemed in the 2020 to 2030 period. Working capital usage is directly influenced by our business operations and the broader business environment. We are optimistic about seeing improvement in this area as well. In view of this, we may expect gradual improvement of operational and financial performance from Q3 onwards. Now, a couple of -- let me discuss something about our subsidiaries and joint venture. In our Abu Dhabi operation, the operation -- the entity has done well as compared to previous quarters. It recorded sale of approximately INR 607 crores in Q2 as compared to INR 525 crores in Q1 of FY '26. And the order book of Abu Dhabi operations stands at USD 235 million, corresponding to approximately 215,000 metric tons of ductile pipes. And this gives a visibility of 3 to 4 quarters. Now, this is over and above the order book of approximately 19 lakh ton of what we had discussed earlier for Jindal Saw. In U.S.A., the company had marginal operations, which remains profitable in Q1. Total revenue was INR 173 crores in Q2, which is marginally lower as compared to Q1, where the income was INR 188 crores. But U.S., we have only small operations. So it is not -- in terms of percentage, [Technical Difficulty] that meaningful. We have a joint venture with Hunting, which is Jindal Hunting. And this joint venture has contributed INR 9.4 crores in Q2 for this financial year as compared to INR 9.5 crores. So the performance remains flat. But in previous year -- corresponding previous quarter of previous year, it was INR 6.8 crores. So this year, we are doing better, let's say, INR 10 crores approximately every quarter. Some update on JITF versus the legal suit with NTPC. Now, some arguments took place in the last hearing in presence of -- in front of the honorable double bench of Delhi High Court. The bench has given another date, which is on 27th October. If the continuous hearings happen, we can expect some pronouncement in this financial year. But rest will depend on how the parties respond and how the date goes on. In terms of our -- some updates on the new projects which are announced in GCC/MENA region, like the strategy moved to align with the shifting economic landscape of the GCC/MENA region, Jindal Saw Board approved 3 new manufacturing projects in June 2025. These nations are actively pursuing economic diversification away from oil and prioritizing local manufacturing, a trend Jindal Saw is proactively addressing. As a long outstanding supplier and an existing Abu Dhabi-based DI pipe manufacturer, this expansion strengthens our competitive position in these key markets. The investment includes a new seamless pipe plant in Abu Dhabi, a helical pipe facility and a DI pipe finishing line in Saudi Arabia. These projects may be completed gradually in next 2 to 3 years, and we will be consolidating these with Jindal Saw Limited. Subsequent to these projects overview shared during our last -- couple of last few investor briefings, we are now actively engaged in key development stages. We are currently finalizing agreements with potential partners, joint venture partners and advancing the formal incorporation of the new company. Concurrently, we are focusing on securing land and finalizing the financial closures for each of the project. Now with this, I leave the floor open for interactive discussions. Mr. Narendra Mantri, our Chief Operating and Finance Officer; and Mr. Rajeev Goyal, Senior Vice President, they are with us with me, and we are happy to take the questions from the investors. Over to you, Vikash.

[Operator Instructions] The first question comes from the line of Sailesh Raja with B&K Securities.

Sir, we have an export order backlog of 8 lakh tons, which includes 6.2 lakh tons of job work. So you mentioned during the call, which is entirely for HSAW pipes. So typically, our LSAW orders are fully export oriented. So should we understand that balance 1.8 lakh tons pertain entirely to LSAW or it will be a mix of both HSAW and LSAW? Because if it is a mix, then it appears that the visibility of LSAW is quite limited. So could you please give clarity on this?

Okay. So let me answer the question in a different way. I'm sorry, I could not fully understand the question, but let me answer the question in a high level so that it includes, let's say, a couple of subsets of the question. So we have -- in totality, we have, let's say, in the pipe sector, we have order of 19,25,000 tons. And this includes exports of approximately 30% to 32%. Now the order -- helical pipe order for water sector to KSA is 6,22,000 tons, which represents what roughly, I think, 12% or 13%. So there are orders from -- for longitudinal pipe -- there are orders for export market for longitudinal pipe, for other helical pipe, even seamless pipe. Now, why we mentioned this order separately is that this is an export order and this is a job work order. So eventually in the job work order, we are not buying the steel only. Rest of the things are included in this. And I mentioned in the briefing that in terms of margin, the margins are comparable to the export business of, let's say, helical or even longitudinal. So we have order book for export, which is right, which is for every product.

Sir, still it is not very clear. You said -- in the presentation, it is mentioned that the 9 lakh tons, that includes 6 lakh tons of job work, right, sir?

Yes. Also in the presentation, it is mentioned that the overall export order is 8 lakh tons. So in this 8 lakh tons includes 6 lakh tons of job work. Yes, correct.

So the balance is only 1.8 lakh tons.

Yes, which is longitudinal, helical, as well as some portion of [ inlet ]. And in fact we have the ductile also.

So in this case, when the LSAW visibility is very less. That is my question actually.

Also you want to understand the quantity yes, you want to understand the quantity of the rest of the product.

Not only quantity, just wanted to know the visibility of the LSAW pipe.

Okay. So let's say very quickly the longitudinal for export, longitudinal is close to 1,15,000 tons for export purposes, which is oil and gas and this is longitudinal which where is the ductile and all? And approximately 60,000 ton for export is called ductile and seamless.

Okay, okay. Got it, sir. My second question, if you see the GP2 gross profit for EBITDA conversion in this quarter it stands at only 24% on the standalone basis, so because of lower volumes, our utilization level is very low at 3 lakh tons. So that's why it's low at 24%. But if you see last year we have done around 4 lakh tons. And our conversion rate, that is gross profit to EBITDA it is 40%. So assume it that it is normalized. At normalized level, we can do around 40%. Is there any scope to improve the conversion rate going forward, both to mitigate the impact that we are seeing currently and also to enhance the financial metrics once the recovery begins. Because if you see the competition level, some of the competitors are reporting 45%, 48%. So is there any scope to improve this conversion rate?

So let me put it -- okay, good. So let me respond it in this way. Now we have the capacity -- Okay. If you see the last year, last year we did close to 2 million ton of sale. Okay. Close to 2 million ton of sale. And we already have the order book of similar magnitude broadly, correct. We have the capacity, we have the capability to execute the projects. I'm talking about the standalone. We have the capability and capacity, and it has been already demonstrated, number one. Number 2, over last 1.5 year time, we have worked on increasing the capacity in seamless where the trial operations have started. And we mentioned that the capacity would go up by another 1,50,000 tons. So we would be ready in future to take more business in seamless for oil, gas and other industrial products. So to answer your question in a way that these are the extraordinary circumstances and which we keep seeing after every 3 to 5 years’ time, if you remember, 22, 23 was a very challenging year when the commodity prices were going like anything. I mean, even the NSE, BSE are not going the way the commodity prices were going. And the coking coal had moved from $150 to $500 and iron ore price had also moved accordingly. And again, we had serious challenges in terms of managing the inventories and the business operations and financing and liquidity and everything. Today the scenario is different primarily because of, let s say, liquidity, which is controlled by the, let's say, the federal and the state government where the orders are there, business opportunities are there, orders have been issued by the government or let's say the end user to the EPC or directly to us. But because of liquidity, I mean, you will be hearing it from everywhere because liquidity there is a backlog. So, I mean, we can only speculate, but we understand from the market value that it might take a couple of months before the normalcy begins. Now, when the normalcy begins, presume next year. So if everything works well, we might come back to what we were doing in the last 2 years rather we can [ improve ] it because, and I'm saying it from the perspective the orders are there, there are inquiries, the capability is there for the -- capability is there in terms of manufacturing facilities. And we have invested and we are investing and we are doing a lot in terms of cost optimization and rationalization.

Sir, one last question. So after a gap of 10 to 12 months, several state governments, they have recently announced large projects, let me say, on 14th October, I think, Gujarat, they have announced INR 16,000 crores worth of order under the AMRUT scheme. And also, I think, 2 days back Andhra government also announced INR 10,000 crores of order. And Odisha also, I think, 4 or 5 days back they have announced INR 1,700 crores for the river linking projects. So are we participating in any of these projects? So what are the -- at what stage we are in bidding our qualification process? Can you please explain that?

Yes. Mr. Narendra Mantri would respond to this.

I must say that all these things are very recent. The tender will come in due course of time. And definitely we will be participating in all these tenders. But again, from the announcement to the actualization, we think there will be some time gap. That is why we are saying that the improvement from where we are currently will take some time. And at this point of time, I can only say that we will be doing. Hopefully, we will be doing better than the Q2 in Q3 and Q4.

Next question comes from the line of Praveen Agarwal with IVP Engineers Private Limited.

Happy Diwali to all participants and executives of Jindal Saw. My question is, we have seen numbers, financial figures. How was the production in Q2 as compared to previous year, previous FY Q2? How did we increase or reduce? Or was it more or less same? How are production figures?

Because of lower off-take, the ductile iron or the water sector, we have controlled the production also. And that is why the production was lower in Q2 as compared to Q1.

Okay. So you don't have things stockpiled in inventory. It was lower. Off-take was met by reducing the production quantities.

No, I'm not saying that inventory has not piled up because the decision making takes certain time to reduce. In fact, if you have seen our balance sheet, there is an increase in the inventory level. But this will be corrected in Q3.

Yes, I understand. And how this has affected cost per ton of pipe or material, your output in this quarter Q2 vis-a-vis previous year Q2?

Because of the cost only we have shown this kind of result. You can understand this.

I understand. [Operator Instructions] Next question comes from the line of Radha with B&K Securities.

Sir, my first question is that the 6 lakh tons of job work orders, how much execution are you expecting in FY ‘26? And in your opening remarks suggested that margins in job work will be good. So assuming current pricing scenario, is it fair to assume that at least INR 500 crores, INR 600 crores of EBITDA can be done from execution of the entire 6.2 lakh tons of job work?

Okay. To answer your first question, we should receive the first consignment of steel in next 1 or 2 weeks time at our factory, number one. So the production would start in this quarter itself. And we expect that in this remaining part of the financial year, we should be producing close to 1,25,000 tons to 1,50,000 tons. And the shipment and sale would depend on coating and the availability of ships. That's one. In terms of EBITDA, we don't want to let it put in exact number. But what we have said that the profitability based on the current estimate and the based on the quotations -- sorry, [ core ] profit given. Because this includes the transportation cost also to the site of the buyer. The profitability would be similar to what we get in normal export order. So it will be better than the domestic business.

Okay. And for the working capital requirement of job work, is it fair to assume that it will be 20 to 30 days lower compared to manufacturing?

No. So basically because it is job work, so steel is not being procured by us. We will only be procuring only the coating material. So this will be -- I mean, the steel is not on our account. So there'll be no inventory on account of steel in this order.

Yes, sir, that's why I was asking that overall net working capital cycle should be at least 20 to 30 days lower compared to if we would have done manufacturing for the same quantity considering the inventory position and just asking.

Yes, yes. In totality, yes. If you look at from this perspective.

Okay. Lower by 20, 30 days or much lower than this?

See, eventually this will depend on how we are executing the order because we would be committing maybe initially one facility, subsequently second facility, also depending that how we are getting the consignment, because the steel is being supplied by the, let's say, the buyer. So it is meaningless for us from this perspective that how much inventory would be there because inventory doesn't belong to us. But if you are saying that in overall in blended side, whether inventory will be lower as compared to the sale, it will be lower…

Sir, not in inventory. Overall working capital.

Yes. So overall working capital -- that's a thing. Overall working capital, you have to measure with something. So if you're managing the overall working capital with the sale, the sale will include only the job work charges, not the sale of the total price.

Yes, sir, I understand that. So that is why, since it includes only the job work prices, that's why I'm taking at least lower by 30 days because inventory would not be there. So is this the right understanding?

You can consider it.

Okay, sir. Second question is, I wanted to appreciate and despite the challenging situation, the gross profit per ton on pipes has been good in this quarter. So I just wanted to appreciate because of the mix has been maintained by the company. So with regards to this, until there is a revival in government CapEx, are there plans or opportunity to export more of DI pipes from India either to the Middle East or to nearby regions?

Okay. So see, we have a very different kind of, let's say, situation because we are already present in Middle East where we have a manufacturing plant in Abu Dhabi. So what we focus on the export market from India are the products which our Abu Dhabi factory is either not producing or they are full in that particular site. So for example, we already have an export order for ductile, which is going to again MENA region, but that is a size which our Abu Dhabi facility is currently not producing. So we would be eventually not competing with our Abu Dhabi. We will be rather complementing that. Having said that, we are looking at various geographies across the globe wherever in Indian pipes can go which are at this point of time are not subject to anti-dumping or whatever. So we are looking all possible opportunities that is the role of the marketing to see beyond their regular areas in the geographies. It always remains there and that is why we get the order and we have a better position because we can reach out from India as well as from our UAE operations.

Okay. Sir, actually I asked this because a follow-up question which is that Saudi has started a probe on anti-dumping duty on DI pipes from India. So just wanted to understand with respect to that what is the total demand of DI pipes in Saudi and what percentage of Saudi demand is being catered by import overall and how much of it is coming from India?

Okay. You are aware that we are putting up or we have started working on putting up a ductile iron plant in Saudi considering the -- which is a finishing line, considering the demand there. You are right that there is a anti-dumping investigation there. But again, we have said from India we are only supplementing our Abu Dhabi plant for the sizes where that plant is currently not in a position to supply. So we will be either through our subsidiary or through the sizes which are not in a position to serve through Abu Dhabi. We are focusing in Saudi only for those sizes. But other than Saudi, the GCC market and MENA market is much bigger and we are trying to supply more on the export side for our ductile iron facility in India.

What is the market price of GCC?

It is very -- actually it depends upon when are the projects announcement and we are hopeful say as far as the water pipelines are concerned, we expect lot of work all these countries are doing. So we at present I don't have that figure currently with me that how much is the current demand or what are the new projects that is coming but considering the market potential we have announced not only the ductile iron facility but the helical pipeline also for pipe manufacturing plant we are putting up both the facilities there in Saudi. And you can see that one single order we have received from that country for 6 lakh ton for helical.

Yes, sir. Sir, lastly, for modeling purposes, sir, wanted to understand how much CapEx should we take for FY '27 and FY '28?

From India perspective?

Yes. Growth CapEx and…

CapEx in Saudi?

Growth and maintenance.

For maintenance CapEx. So on Jindal Saw perspective, the maintenance capex remains in the range bound manner maybe INR 600 crore to INR 700 crore considering the various location all across India roughly 12 locations and things are moving on account of efficiency and debottlenecking. So you can take roughly INR 600 crore to INR 700 crore annual CapEx -- maintenance CapEx from Jindal Saw perspective.

And growth CapEx, sir?

Growth CapEx.

Growth CapEx.

Growth CapEx is something in India we are not looking for any Growth CapEx per se other than this seamless activity where we put that additional piercing line which is now under trial run. So CapEx would be over maybe in the coming quarter only. So beyond that we are not looking for any growth CapEx in India Jindal Saw.

In coming quarter?

So in coming quarter as well as in coming years in FY '27 and '28, as of now there is no growth CapEx on board.

Yes, sir, I wanted to understand the bifurcation of this INR 2,600 crore CapEx. How would it be divided between FY '27 and '28?

So FY '26 in general rather we are doing maintenance CapEx in the range of INR 600 crore to INR 700 crore annually. And if you are talking about the new CapEx, growth CapEx, Jindal Saw perspective where all the 3 projects, 2 in Saudi, 1 in Abu Dhabi, that is something you can take broadly '27 would be 40% to 50% and again '28, 40% to 50%, roughly, based on our present estimates.

Understood, sir. Sir, last question. So for in Oman for the Fahud-Suhar loop line project. As for the media articles, Jindal Saw has received 193 kilometers of pipeline project which is expected to be executed in the next 24 months. So one is that is it included in the current order book? And is it fair to assume that these are for the Longitudinal SAW pipes? And we can do at least INR 50 crores of EBITDA from this project.

So this order has yet not been finalized. To our understanding, these discussions are going on.

Is it for LSAW, sir?

So it will be -- that will be LSAW. But there could be a mix also. But it has nothing is fine like. It's not included in our order book.

Next question comes from the line of Rajesh Agarwal with [indiscernible].

This quarter the margins have come down. It is because of volumes or there's any other one-off?

The margins primarily is a function of, let s say, the production quantity as well as the cost. Because the overall production and the sale remains low. So eventually absorption overhead and all those things, the margins are low accordingly. So we don't expect that --while we believe that this quarter onward situation should improve that is in terms of overall business as well as the profitability.

So this quarter margins also will come back to the old margin?

No, no. So that will be the gradual thing because the fall can be sudden, but the improvement will be gradual.

Okay. It is not because the job work has lesser margins. No?

Come again. Sorry?

The job work doesn't have lesser margins than the production margins, no?

No, no, no.

No, no. Okay. The margins are same. And second, sir, how is the outlook for the DI pipes in India? The old payments are getting released and any new tenders?

So as you can see that we mentioned that our capacities in India are booked for a year Practically we have order book of 7 lakh -- approximately 7,50,000 tons. And we have a capacity of approximately 7 lakhs tons. So orders are not a problem. The problem is like the liquidity issue because it's a supply chain. We are the last person in the chain. We supply to EPC or directly to the government. 80% of our business is through EPC. Now, EPC is waiting for the money for almost 1 year and that s way their business has also gone slow. Now eventually the governments are working out through the state government. Let the state do arrange the funds and start releasing the funds to the EPC and to the, let's say, the pipe supplier. It is a gradual process. As we said, look, as we believe that the disbursement of INR 40,000 INR 50,000 crore will not happen immediately. But now the business will start and with some hiccups back and forth we can believe that maybe in 2 or 3 months' time the business might come towards normalcy.

So can you quantify the dues from the EPC contractors? How much do think…

Yes. 80%, 90% business is through the EPC. I mean, we don't have the numbers right now for the receivables and all but 80%, 90% business is through the EPC, and that is the norm world over.

And sir, how is the outlook of the oil and gas in Middle East, Abu Dhabi and Saudi Arabia?

See, the Middle East -- okay, so there are 2 things. One is the scenario of oil and gas. Second is the scenario of the pipe business for oil and gas. Typically, the oil and gas business is a regular business for the Middle East or world over. The issues relating to India buying from Russia or production cost going up and down, it really does not impact the pipe business very significantly, because pipe is a large thing, when somebody is putting the -- announcing the new pipeline. So this does not impact the pipe business very significantly. It could impact, let's say -- if let's say the pipe -- the oil producing countries are becoming, let’s say, cash deficient. They may defer their CapEx, which happened I think 5 or 6 years ago. But at present, they are making decent amount of money by sale of the oil which can improve actually further. So there is no impact on the new pipe demand. The only thing is how they are planning the new pipelines and when these orders are coming in secondly. Now everybody is focusing on the indigenization and they might be maybe 2, 3, 4 years down the line. They would ask the global investors and all to put up the facility in their countries. So there will be a paradigm shift in next 3 to 5 years' time globally.

Okay. So the imports will not come to Middle East, you're filling the Saudi and all. So you'll have a better opportunity.

The import will happen but gradually these will reduce. And that is where the producers have to let the people like us or others, they have to focus like -- if you have to be in the market then you be present there also, or you lose that market.

So our growth CapEx which we announced for the 3 projects that will continue as usual or there's a think over it?

No. So as of now what we have announced in the in last 6 months' time is one project for seamless pipe is in Abu Dhabi. One project of helical pipe which is primary for water sector is in Saudi and the DI finishing facility only because we have a full-fledged DI plant in Abu Dhabi. So to sell in the domestic Saudi market, we are planning to do finishing there. So as of now, these 3 projects have been announced and we are working on that.

So how will the inter -- this means of finance, how will this CapEx cash flow will be met?

So this is like -- these projects will take 2 to 3 years' time to let's say set up because these countries are very slow in terms of let's say doing the things. And we mentioned that close to $350 million, let's say, $400 million or $425 million in all put together for the project where the equity would be approximately 30% in 1 or 2 small projects we have a joint venture partner. In totality we may require only $100 million, $120 million equity over next 3 years' time. Rest will be the debt owned project, which will be from the local market.

Next question comes from the line of Shweta Dikshit with Systematix Group.

Am I audible?

Yes, yes. If you can be louder that will be helpful.

A couple of questions from the [ clients ] who are starting with the seamless pipe plant, we've started trial productions there. Any outlook or guidance that what is going to be the quarterly number for 3Q and 4Q, which we are looking at and what is likely going to be the capacity utilization over FY '27?

So Shweta, in terms of seamless, we did roughly 2 lakh plus ton in FY '25 and by putting up another piercing mill, we would be able to increase the production capacity roughly 1.5 lakh ton additional. So from Q4 onward, we can see annually the production levels may increase from 2 lakh plus ton to 3,50,000 ton something. So that is something which you may see numbers in the coming quarters.

That roughly if you look at, I mean, the quarterly run rate still comes to be around higher than -- close to 90,000 tons of quarterly run rate that we re looking at from 4Q onwards?

Yes, yes.

Okay. Secondly, on the new projects that are announced for the MENA region, I mean, I do understand you said there have been regulatory delays in these regions. But any part of the CapEx that has already been sent or what is the status of these projects exactly.

Shweta, in terms of amount spent, as of now we are in the process of identification of the vendors and land acquisition and all. So not much amount has been spent. If we say, let's say as of the 30th of September, hardly anything. Okay, that's one. And when we say that these territories take time primarily because of not many things are well defined as compared to the other countries, even including India. And we have experience of setting up a project in Abu Dhabi, we include certain delays in our execution cycle and that is why we say like the project can be executed in a period of 2 to 3 years' time. So having said this, these things have been factored, working is being done on parallel basis in terms of joint venture agreements. We have started finalizing those in terms of land identification. So that is a long lead item in terms of identification of the vendor. So that we can immediately the moment we are in the process of incorporating the company, the moment the companies are incorporated, the accounts are open, we can start placing the orders. All these things are happening. So I believe that this year, by the end of this financial year which is March '26, we would be in a position to let say place the order for the equipment. The company would have been incorporated, land would have been acquired because everywhere these are leasehold land unlike in India where you have the freehold. So broadly from there you add, let's say, 2 years plus when the production can start. So '27 and '28 -- starting '28, '29, we can have some operations in the seamless facility as well as in the helical facility. Ductile can start earlier because that's only finishing facility.

Sir, my question again comes back to the point when you talk about the seamless that are existing that we're doing even having a -- this being a brownfield expansion has taken quite some time then having -- and then a similar project of the same scale setting it up in a new -- in a greenfield capacity, it feels unlikely to be generating, in fact, operationally contributing in FY '28.

So '27 and '28, I said that '27, '28 the period of implementation. So nothing will come in '28 FY '28, because '26 we are completing. So '28, '29 also there we expect that partial operations can start in seamless and in helical. Now to answer your question that they are like -- because these are the greenfield projects for this. So like greenfield projects can be actually faster also in terms of implementation because in the brownfield project where we are being expansion and all, you have to do lot of accommodation within the same premises and doing all those things. So it is, let's say, adding a floor onto your house or creating a new house. So adding a floor is more complicated rather than making a new house. So having said all the things, we don't expect any contribution from even sale or profitability from seamless and helical in '28. '29, '29, we can expect some production and contribution. I mean profitability we can't count right now, but we can of course. And secondly, in case of seamless, there will be a process of approvals and accreditations from the different authorities and the buyers and all. So that is also a process which we have to count. In case of helical it might not be an issue.

But the certifications and approvals would run parallel or would it be once only after the fall…

Yes, it can only initiate and start after the trial run has started because the product will go into the approvals and it's a process. And there are not -- unlike the ductile when you have, let say, huge market. In this case there will be very handful of the customers. So let's say the government approvals or the standard approval and the approval by the potential buyer. So this process will be parallel the moment the production commences.

And what can be the typical approval cycle here?

It's difficult to say because it's in -- for this territory, we will be doing the seamless work first time. But I mean if we had that, let's say, it could take 3 to 6 months' time, maybe more.

Understood. And the last question, just your thoughts on this thing that Saudi initiating anti-dumping investigation on imports of DI pipes from India. This is something which all the companies, at least the domestic producers have been very positive about. There's a lot of demand from that region. Now what's the domestic -- what's the internal capacity over there? Is there a risk to this business overall from the -- overall industry perspective? What has been the reason why such a…

Let me answer it different way. Currently, the domestic ductile capacity in Saudi is not much. Okay. So there are only 2 ailing plants. But having said that, both the ailing plants have some, let's say, stake from the government. So governments are, of course, they will try to protect them. Secondly is that they are -- they want, the Saudi government want that the manufacturing and in country value addition should happen in Saudi. So like they are following the Indian Prime Minister, they are following Trump. So they are also trying to do like you should do production in Saudi and there are norms which they are setting up for the in-country value addition. So they will mark for that and gradually they would reserve the domestic production facilities for giving a right of first refusal, giving protection for the tariffs, giving protection for pricing and all those things. It's a process which is happening in almost all the industries. Now, we won't like to comment, let s say, on the initiation of the anti-dumping duty because we are a producer in Abu Dhabi. So we won t like to comment on that matter primarily because as you said that there are Indian exporters to that, let's say, jurisdiction. So we will refrain ourselves from commenting on that matter because we are an interested party that is supplying pipe from Abu Dhabi to Saudi. But Saudi has good potential for the overall water sector including the ductile pipe, including the helical pipe and other pipes. And because geographically they are expanding, expanding everywhere within Saudi and currently we are not selling much in Saudi market from India.

Next question comes from the line of Bhavik Shah with Invexa Capital.

First question is, sir, we saw a decline in volumes in the current quarter and it is mainly set due to the DI volumes being decreasing in domestic. So what gives us confidence? So in the next 2 quarters, these volumes will pick up. Have we seen any traction over there?

Okay. So our confidence come from the perspective. Let's divide the question in 2 parts. One is quantity, second is the price and the profitability. So there are basically some demand has started coming back from the domestic buyer a little bit. It's a lower as compared to a regular demand and where the discussions are happening that when the price can come and work with the current terms and the pricing. So this is basically opportunistic scenario for the buyers where they are trying to, let say, renegotiate some of the positions. Now, state governments have been asked to arrange the funds and, let s say, start making the payments. So state governments are making their own arrangements and from the different multilateral and domestic institutions. So this is where basically we believe that the things are on improvement. The profitability can take -- last quarter like it took a hit. The profitability can start improving from here. But as I said like it is not like it has -- because the profitability has come down from, let's say, above 15%, 16% to let's say in the range of 10%. The improvement will be gradual process. Good part is that we are a multi-product company. So if there is a problem in one product the other product is taken care of. And this is kind of a hedge what we have. But in last 2 years, we saw that all the cylinders were firing. This year, 1 or 2 cylinders having a challenge. So once the situation will start improving, we hope that we would come back to the same scenario, but it will not be in 1, 2 or 3 quarters.

Right. And sir, when we say our order book is of 19 lakh crores of which 7.5 lakh crore you said is of DI pipes. So this order will get only executed as and when the payments get released. So like ideally what should be taken as the execution time line of this order book? Like when can we see this order book getting executed?

Okay. So Bhavik, basically the total order book for pipe right now is close to 19,25,000 ton in which ductile is about 7,50,000 ton, approximately 7,50,000 ton. Now, if I invite your attention to like what we are doing last year, FY '25. FY '25, first 6 months we sold close to 3,30,000 ton ductile pipes, right? So on live basis and that is the time when the Sathavahana facility had just started. So today we are capable. If everything is well, we collect money on time, everything is there. We believe that we can do 7 lakh ton or even more than 7 lakh ton of production and sale in India from all over 3 blast furnaces. So the capability and capacity is there which we have demonstrated in the past. Now the only thing is that we don't want to sell when we don't have conviction of collecting in time. So eventually every buyer is also having the same problem because they don't want to do additional work for them, let's say, the corporations or those unless they are paid for their old running mills. So this has become a bit vicious and this is getting sorted out. But as you know, like, because lot of chaos has happened in this process. So it will take time for, let's say, settlement of the invoices of their bills and then they are making payment to us and they have to actually start working for the new project. [Foreign Language]

Understood. Sir, what is the one-time write-off which you have taken, sir, in JITF? Like I think we were -- like what my understanding was we have already written that off and no cash outflow will be happening, right?

This write-off, you see, we are showing the comparative numbers. We are referring to our presentation which we have uploaded. This was I think '23 -- ' 23, '24. Not in this year. This year there is no write-off, this year, even last year.

Okay. This year there is no write-off, right. Okay. And sir, when we stay off the job work, we'll actually only recognize revenue to the extent of conversion, right? We will not take the entire revenue and entire cost of goods sold. So our actual increase in revenue will not be much, right?

Yes. So the total order value for this job work is let's say close to $180 million, $190 million only that will be the income in the top line.

Okay, Understood sir. And sir, regarding the CapEx, you told INR 600 crore to INR 700 crore will be CapEx for FY '26. So this is the consolidated CapEx, right? This will include investments in subsidiaries in Saudi and places, right?

No, no. So this is standalone. This is standalone and the CapEx for the subsidiaries in Saudi and UAE will be on the top of it in the current year as we mentioned for the earlier question up to September there is no or no meaningful amount which has been spent. We would see that what we can do in next 6 months' time, which will be let's say some advances to the supplier, some letter of credit to open and some civil work. This year we don't expect much, maybe $20 million, $30 million but next 2 years will be happening here, but that will be on the top of what we mentioned, INR 600 crore, INR 700 crore which is only for Jindal Saw India standalone primarily because we have 12 facilities. We are trying some upgradation, modernization, some capacity improvement, bottlenecking. So everything we are doing parallel so that the impact should be seen when the situation improves.

Next year this index will be much lower, right?

I think next year also will be in the similar vicinity but after that you can expect much lower CapEx in India because we don't have -- every day you cannot have the same maintenance CapEx. And also as per our accounting, the ductile molds are also part of these CapExes, which is actually not a CapEx but this is how the accounting is done because the utilization or consumption of the mold is light based. So this also includes the molds which are used for pipe making for all across 3 locations in India.

Thank you. Ladies and gentlemen, that was the last question for today. Due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Vikash Singh for closing comments.

On behalf of ICICI Securities, I would like to thank Jindal Saw management for giving us the opportunity to host the call. I hand over to Mr. Vinay for his closing remark.

Yes. Thank you very much, Vikash and [ Chorus ], and to all the participants on this call. We hope to see you in the New Year FY '26 for the next quarter's meeting unless there is another announcement prior to that. Thank you very much for attending the call.

Thank you.

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us.