Man Industries (India) Limited ($513269)

Ladies and gentlemen, good day, and welcome to the Man Industries Q4 FY '26 Earnings Conference Call, hosted by IIFL Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Singh from IIFL Capital Services. Thank you, and over to you, sir.

Thanks, Alrik. Good afternoon, and welcome, everybody. On behalf of IIFL Capital, we invite you to Man Industries India Limited 4Q and FY '26 earnings conference call. From the management, we have Dr. Ramesh Mansukhani, Chairman; Mr. Nikhil Mansukhani, MD; Mr. Sandeep Kumar, CFO, Mr. Rahul Rawat, Company Secretary; and Mr. Vijay Gansandani, DGM, Investor Relations. So without any further delay, I will now hand over the call to the management for their opening remarks. Over to you, gentleman.

Thank you, and good evening, everyone, and a warm welcome to our Q4 and FY '26 earnings call conference. Let me begin with a moment of perspective. FY '26, in my view, has been the most consequential year in Man Industry's history, not simply because of the financial numbers we delivered. But because of what those numbers represent. This was the year we achieved our highest ever stand-alone and consolidated EBITDA and PAT margin simultaneously. This was the year we closed our first international acquisition, a landmark that fundamentally transforms the scale and geography of our businesses. Let me take you through each of these. Firstly, the acquisition NPC, National Pipe Company, in Saudi. I want to share exactly what we have acquired. NPC has been acquired for a cash deal of $102 million. And this is including -- NPC carries a $83 million cash and liquid assets on its balance sheet at the time of acquisition. In this acquisition, we acquired 430,000 tonne running plant, which has Elsa and Etsa both API-certified Aramco approved, fully operational and dente profit-making pipe manufacturing business, upgraded with approximately $40 million, $50 million in 2017. And with all German and Japanese machinery, and backed by a 2-decade Aramco relationship and carrying an order book of -- for EY '26, approximately $120 million. The acquisition was announced on 21st of May 2026, executed through our wholly owned subsidiary in Saudi for a total of $102 million. The funding structure is $70 million through debt and the remaining $32 million is through internal accruals. This entire debt will be sitting under the KSA subsidiary with no direct debt on the stand-alone balance sheet. Our Saudi subsidiaries are independently capable of servicing the acquisition debt from the NPC's own cash flows. We acquired NPC at a 1.5 EV by EBITDA, a fraction of the Saudi listed peer multiples of 7 to 10x of the transaction in EPS accretive from day 1. Now, a lot of you would be asking how we acquired an asset this quality at this valuation. Basically, NPC's previous owners, 52% were Nippon Steel and Sumitama. And as we all know, Nippon Steel and Sumitama are investing heavily in the U.S. and their core business is into steel. And at the right time, at the right opportunity, we keep buying a lot of raw materials from them, and they offered us this asset with all its reserves as well as the order book, and we took it as a great opportunity. And that's how due to our old relationship, we managed to pull this deal through. Beyond NPC, we are also investing approximately $40 million to develop the pipe coating facilities in Middle East and Daman and commissioning targeted by mid of 2027. The facility will have an annual quoting capacity of 4 million square meters with an asset turnover 1x and EBITDA margins of between 25% to 35%, depending on quoting type, making it highly capital efficient, high-margin addition to our platform. The USD 40 million will be funded through the KSA subsidiary by a mix of debt and internal accruals. Once operational, Man-NPC be 1 of the very few players in the GCC, capable of offering a fully integrated pipe manufacturing and coating solutions from a single platform, a genuinely competitive differentiator for large time center-sensitive AramanWCC projects. NPC's location in Daman is also 1 of the Gas premium industrial and logistics hub also gives Man a natural gateway esports to the UAE, Qatar, Iraq, Kuwait, Bahrain, Oman and beyond. The GCC as a whole is also committing hundreds of billion dollars to energy, water industrial infrastructure, and we are now positioned at its center. The KSA growth trajectory in the near term, our focus is on stabilizing and ramping NPC's utilization, deepening up penetration into Saudi Arabia's water infrastructure and critical oil and gas projects. Saudi Arabia's $80 billion water infrastructure program under Vision 2030 is a massive and largely untapped opportunity water transmission pipes, a large diameter, high specification and within NPC's product capability. The early traction here could significantly accelerate the revenue ramp-up ahead of our FY '28 target. At 80%, 85% utilization, KSA operations have a peak revenue potential of between INR 3,500 crores to INR 4,000 crores and EBITDA between 15% to 18%, a margin profile we expect to sustain for at least next 3 years, given the favorable pricing environment, tight regional supply and premium product mix in the Saudi market with Aramco being at the helm of it. Combined with the existing facility 1.2 million tonnes capacity in India, NPC and the Daman coating facility together transform our industries into a fully integrated cross-border pipeline solution platform, one of very few companies globally with this manufacturing scale and coating capability. And client access planning 2 of the world's most important energy markets. The order book in FY '27 revenue guidance, our current stand-alone order book stands at approximately INR 3,000 crores executable over the next 6 to 12 months, providing a strong and visible revenue base earnings for '27. On the back of our expanded platform, India operations, NPC in Saudi Arabia and the Daman coating facility, we are issuing a consolidated revenue guidance between INR 5000 crores to INR 5,500 crores for FY '27. India would be approximately INR 4,000 crores, and the remaining would be from the KSA. This represents a significant step-up from FY '26 consolidated revenue at INR 3,500 crores, INR 3,600 crores approximate and reflects our confidence in the combined platform we now operate. I would note this guidance does not include any contribution from Marino shelters, which is expected to be an incremental earnings driver in beginning from Q2 FY '27. As the commencement certificate is already received from Marino shelters. When I look at where Man Industry stands today, over 1.6 million tonnes of combined capacity across 2 countries, a landmark acquisition completed, a greenfield stainless steel plant under construction in Jammu and record profitability and INR 3,000 crore order book, I feel both pride and deep sense of responsibility, right, because the results reflect the cumulative effort of every member of the Man family, years of consistent execution, sound strategy and uncompromising commitment to quality, responsibility because the opportunity ahead of us in India and Saudi across the GCC is the largest we've ever faced as a company. We enter FY '27 at an inflection point. The foundations are in place. The order book is strong, and the rent wayhead is significant. Our best years are still to come. I want to sincerely thank all our shareholders, banking partners, customers and every member of our team for their continued trust and support. We remain fully committed to delivering sustained compounding value for all our stakeholders. With that, I hand over to our CFO, Mr. Sandeep Kumar, for the financial walk-through. Over to you, Sandeep.

Thank you, Nikhil. Good evening, everyone. Let me now walk you through the key financial highlights for Q4 and FY '26. Stand-alone performance. On a stand-alone basis, FY '26 was exceptionally good across all -- every metrics. Revenue from operations grew...

Sorry to interrupt, sir, you are sounding a bit distant from the microphone, please come a little closer.

See on the FM alone basis, FY '26 was exceptionally good across every metric. Revenue from operations grew approximately 11% year-on-year basis to INR 3,508 crore, while EBITDA surged 49% to INR 493 crores, with margins expanding 360 basis points to 14%, our highest ever stand-alone EBITDA margin. PAT grew 43% to INR 196 crores, with PAT margin improving 130 basis points to 5.6%. Q4 was a particular standout. Standalone revenue grew 36% year-on-year and 44% subsequently to INR 1,157 crores. EBITDA jumped 69% to INR 171 crore, margin 14.6% plus of 300 bps Y-o-Y. With PBT and PAT growing 57% and 72% year-on-year to INR 95 crores and INR 70 crores, respectively. Now, I will come to the consolidated performance. On a consolidated basis, FY '26 revenue from operations stood at INR 3,592.50 crores with EBITDA growing 31% to INR 468 crores over our highest-ever consolidated EBITDA at record margin of 13%, up to 90 basis points year-on-year basis. Full year PAT stood at INR 171 crores, up 11% year-on-year. Standalone versus consolidated GAAP, I want to directly address the notable difference which some investors might have find between stand-alone and consolidated profitability this quarter, which I know is a key question for many of you. The gap is mainly attributed to ForEx mark-to-mark effect on CapEx supplier payable in our subsidiary, which is implementing Jammu project for the stainless steel and also interest on intergroup ICDs. Two important points to note. This is not a prominent loss. It is a timing adjustment that will reduce and reverse as INR stabilizes. Any residual difference will be recognized in the period the LCR sector in a different noncash nature. The standalone unaffected, the effect is accounted solely in our Jammu project-MS steel subsidiary, mine industry, India's standalone financials are completely unaffected, and appear high as a result. Core pie business like for like business growth. One important conceptual point on the consolidated revenue comparison, Q4 FY '25, that is last year, included INR 369 crores of revenue from our real estate business, Marino Shelter, which was a onetime recognition, which we did as the monetization of our real estate assets, which has not happened in current year. Adjusting to this, our core pipe business delivered like-to-like consolidated revenue growth of approximately 36% year-on-year in FY '26. The number that accurately reflect the true momentum in the underlying pipeline business. Balance sheet and cash position. We closed FY '26 with cash and cash equivalent of INR 657.2 crores. Remaining a net cash positive of INR 157.50 crores and generated free cash flow of INR 132 crores, even after investing approximately INR 340 crores in capital expenditure during the year. This level of capital discipline and cash generation given us significant financial headroom to execute on our strategic priorities. Some of you must have noticed it will increase in our other expenses for the quarter as compared to year-on-year. This was primarily driven by the little change in our business model, which has changed from FOB/CIF GDP, where we have higher freight and logistic costs associated with fulfilling a significant volume of order under delivery duty paid terms. Under DDP, the seller assume full responsibility for delivery of the buyer's destination, including freight, inland transport, import duties and all related logistic charges with this cost fully built into the contract filings. With the revenue accredited contract structure, the cost increase is matched by higher realization and does not compress margin on an absolute basis. With that, we are pleased to open the floor for questions.

[Operator Instructions] Our first question comes from the line of Subham Purohit with SBI Securities.

Yes. So sir, my first question was regarding the Jammu plant. So what would be the capacity utilization that we are looking for the plant in FY '28?

Yes. You just asked -- Subham, just ask your questions, and we'll answer one by one, all your points.

Okay. So the first question was regarding the capacity utilization for FY '28 of the Jammu plant. Second is regarding the INR 300 crores of preferential issue that we had done previously, so I had a question if any amount is left to be received from that or we have received all the amount? And could you also quantify the ForEx loss that we had faced during the quarter?

Yes. Okay. So regarding the Jammu plant, for the FY '28 for the first year, once the plant starts is between 35% to 40% of the utilization as per our plan. Regarding the preference, the preference got closed out already and in last year itself. And regarding the ForEx, like we have mentioned, the INR 25 crores ForEx due to the equipment. And once that will be recovered once the plant is up and running and the stainless steel plant is up and running. That would be recovered once the plant starts.

Okay. Sir, could I just squeeze in 1 more question?

Yes.

So sir, previously, we had a plan for a pipe facility in Daman. So my question is, are we on track for that? Or have we scrapped that project given our acquisition of NPC? Or is it that we are using that infrastructure for coming up with the coating facility instead of the pipe manufacturing?

Yes, correct. So because we acquired NPC and we got the opportunity, we have continued to just put the coating facility over there and not the pipe. Already NPC has 2 pipe mills, so we are not putting any more pipe mills, just the coating facility.

The next question comes from the line of Fenil Brahmbhatt with Choice Institutional Equities.

So my first question is on this revenue contribution. So what percentage of revenue contribution we can expect from the NPC to overall revenue for FY '27-'28? And also, if you throw some light on the revenue from the real estate segment for next 2 to 3 years. So -- and the margins for the same segments.

So Fenil, for FY '27, for NPC, we are looking between INR 1,500 crores to INR 2,000 crores of top line with the EBITDA margin approximately 15-plus percentage. And for Marino, for '27, '28, '29, we are looking at approximately INR 70 crores to INR 80 crores of profit coming from Marino for the next 3 years. In total, basically, Marino will generate us approximately INR 800 crores to INR 900 crores of top line in the next 7 years.

Yes. Okay. Okay. Got it. And any guidance on the CapEx for next 2 to 3 years or next FY '27, '28.

So Jammu is almost completed, which would be completed FY '27. And the thing which is approximately $40 million, which will be also completed by FY '27 by March, so which -- that CapEx of the coating plant will be done by the Saudi company.

Okay. Okay. And 1 more question on this day raising for this acquisition. So at what percentage of -- write-off percentage we are getting this new debt or new this borrowings?

Approximately 6.5% to 7%. 6.5% in USD.

In USD, okay. Okay. And can we expect some more additional order book from the gas market considering the ongoing this West Asia conflate and the damage happened over there. So the company is expecting any significant order book in the coming quarter or year?

We have quite a big bid book, and we are awaiting some of the orders to be awarded. So hopefully, in the near future, once we get it, we will be announcing it very soon.

So this INR 5,000 crores to INR 5,500 crores top line that includes this expected order book, right, FY '27?

Yes.

[Operator Instructions] The next question comes from the line of Anant Sarda with Chatiskro Investment.

May I know the reason for the increase in other expenses like from year-on-year from INR 350 crores to about INR 800 crores. And also what is the nature of business in Taiwan and in your Dubai branch, right? And also, the increase in noncurrent receivables as well, from INR 95 crores to INR 238 crores year-on-year, please.

As I explained earlier, the other expenses has gone up mainly because of the change in our business model from FOB to DDP. So we are executing all the big orders in Taiwan as well as in Central Asia on DDP model. So all the freight costs, transportation, duty, clearing, logistics, all these costs are getting built to us, and we are charging it to customers by keeping some margins. So that is the reason of increase in the other expenses. I think I covered this in my speech also. The second question was the increase in other noncurrent debtors. That is because of some overt debtors are getting realized in this quarter. We have some amount, which will be getting realized in this quarter, and this thing will normalize within the next 3 to 4 months.

Yes, sir. But a follow-up on the first question, sir, like your revenue has not increased. So like as a percentage of user...

Revenues stand over almost 37% revenue has gone up in the external basis.

I'm talking about the...

Steel prices in the start of the year were at the lowest. And compared to the previous year of FY '26, the steel prices were, in fact, 25% down. And we've talked a stand-alone last year at 3,100 versus 3,600 stand-alone this year. So in fact, after the steel price is going down, we are still up by 20% and the steel difference. So competitively, we've actually outdone.

The next question comes from the line of Viraj Mahadevia with MoneyGrow.

Congratulations to Nikhil, Mr. Garg on the results, and more importantly, on the astute deal making on NPC. I had 2 specific questions on the NPC acquisition. One is Nikhil, can you give us a sense as to how we managed to buy this at such a terrific valuation? 1.5x EBITDA in isolation is extremely cheap. Given the peers, it's even cheaper. So were the sellers -- was it a bit of a distressed sale? What happened? Was there an auction? Or were you the only bidder and it was an overnight fire sale that played out? My second question is, again, regarding financing of the deal, you mentioned roughly $32 million of equity and $70 million of debt, can you articulate that further to let us know what is the amount of debt that we are taking on, on the Man India's balance sheet? And what is the nonrecourse debt, presumably this is an LBO at the Saudi level? And what is it at that level?

Thank you, Viraj. Thank you for the compliments. Yes, it is a very good valuation that we picked it up from. It was a lot and a lot of hard work behind the scenes. The only good part is that we have been dealing with Japan for many, many years now, and we do share a very good relationship with Nippon and Sumitamo, and we buy a lot of steel for them. This was an opportunity. They wanted to exit. They are looking at their core business, which is in the steel industry, and we got this opportunity. We were not alone -- there were a lot of ups and downs, but we managed to patiently wait on it, and it took a lot of patience and time. And the good part about the transaction was that when we did the transaction like a lockbox system, all the profit and the business which came from signing the transaction until completion will be remaining in the company. So because of that, we managed to pull off with $102 million with $83 million almost cash and cash equivalent in the company and no debt in the company and with all the formation. So it's fitting right in what we wanted to do by putting a new plant. It fit in much better. And yes, so that's what we got a good deal for the company. And regarding the financing, the $70 million is debt, $32 million was self-funded. Nothing on the India balance sheet. It's purely on the asset, which we have bought, which is NPC. And the only thing which is India has given a corporate guarantee, that's it, nothing else.

The next question comes from the line of Divyansh Thakur with Finterest Capital.

Sir, first of all, congratulations on a great set of numbers and the acquisition that you have done with NPC. Sir, I'm still not able to get my head around that. We had got this company so cheap. We had our relationship with Mittal and Samita that they wanted to exit, but it is quite cheap. And with looking at the cash and cash equivalents on the balance sheet, like can you then explain something more if there were some bidders. Why they didn't they ask for some more money or whether additions are not high? Is there some specific reason that like they wanted to exit? And what is the specific reason that they wanted to focus on the core business, but like they wanted to exit with such a good asset?

So Divyansh, thank you, firstly, for the compliments. I know it's difficult to digest. But there's a lot of hard work that went behind the work, and it was quite a sensitive transaction for the longest time until the last minute we completed. They are the Japanese, I don't know if you're aware, are very competitively straightforward because they were looking to get out because they wanted to come -- go on in their core business. So that was their main agenda. Also, 1 more important thing was their style of running the company was quite different because of multiple partners. They were always looking at buying Japanese raw material. And that's why they were losing out also quite a lot of business. They could not ever fulfill the capacity versus the peers who are running absolutely full of the last 3, 4 years, if you pick up the balance sheet of the listed companies there. All of them have been doing extremely well, and they've been running at 80%, 85% efficiency. But Japanese were not buying Chinese steel with their internal conflicts, and we got an opportunity, which we grabbed both the hands. And we came out successful, so that's the best I can tell you what happened. And the good part is that our strategy is to obviously get more business to fill up and to get all the orders which are available in the market and go aggressive and to take our share in the market. That's what we are here to do.

Sir, just the last question from my end that, sir, have you taken this NPC acquisition into our estimates when we have given a guidance for fiscal year '27 or is it not included?

Yes, it is there. INR 5,000 -- INR 5,500 crores of the top line estimation includes the NPC as well.

The next question comes from the line of Harsh Vasa with SBI Cap Securities.

Congratulations for fantastic number. I just have 2 questions. So the first question was, sir, what would be the sales volume or capacity utilization for FY '26 of NPC? And what will be our overall blended tax rate for FY '27 and FY '28?

So Harsh, they have EY. So EY '26, they would reach around between INR 1,500 crores to INR 2,000 crores of top line for NPC. And the blended rate would be approximately between 20% to -- 22%, I guess, would for the '28 and '29 will be approximately 21% to 22%.

The next question comes from the line of Darshil Jhaveri with Crown Capital.

Firstly, congratulations on the acquisition and a great set of results in Q4, sir. Sir, I just wanted to know in terms of the previous CapEx that we are doing in Saudi plant, I thought that you already have spent some money. So out there, the CapEx, I think, is going to commercialized by Q1 FY '27, if I'm not wrong. So what is the status of that? So that is now getting converted into the coated plant? Or could you just help elaborate on that a bit, sir?

Yes, Mr. Jhaveri, Basically, the land, all the approval, the construction permits and ordering of all the coating equipment has already been done. The infrastructure is being built in place. Originally, yes, we did buy the extra land, but we will have that extra space over there because the lease is very, very low amount. And we would be completing by Q4 FY '26, '27. We will be completing and operating the coating plant.

Okay. Okay. Fair enough, sir. And sir, just wanted to understand, right now, you have a net cash position, and we want to take, I think, funding for the NPC acquisition, but that also has cash. So are we going to use that cash? Or will we have like an additional finance cost of around INR 50 crores, INR 55 crores because of NPC acquisition on a consol level? So what would you feel about the consolidated interest cost going forward?

We are using that cash for the coating upgrades and the plant upgrades, which NPC needs, certain plant upgrades, and this, we would be using that cash for that. And certain cash also would be used for the repayment to lower the debt.

Okay. Fair enough, sir. And sir, so overall, sir, in FY '28, we would have NPC for the full year as well as Jammu and the coating plant. So what kind of growth can we see in FY '28. We've given FY '30 vision, but looking at the way we are going, we might be able to achieve that fuller, right? So how would you look at FY '28, sir?

So FY '28 would be around 25% to 30% growth from FY '27.

The next question comes from the line of Sandeep with MoneyGrow.

Yes. I have 1 question regarding order book. Sir, the order book has declined to INR 3,000 crores and have been trending downward over the last 2 quarters. Why is this happening? Are we seeing any improvements in new order? And what level do you expect the order book could reach by end of Q1 FY '26?

So yes, the order book, opening order book is -- all the executions are going on. So it's at currently INR 3,000 crores. And hopefully -- and we have around a very large bid book currently, which has increased to almost INR 15,000 crores, INR 16,000 crores as we speak, so -- and plus NPC. So the order book is, in fact, now much, much larger, the bid book. And we are expecting certain orders, which we've been working on since quite a few months. And including in NPC, also, we are looking forward for that. So definitely, in the next quarter, and the next coming few months, there will be more orders in the pipeline.

Could you just throw some numbers, like any kind of range like?

I can't throw the numbers, Sandeep, but I can give you like the range which I said that we would be definitely achieving the top line between INR 5, 000 crore to INR 5,500 crores for FY '27.

The next question comes from the line of Shruthi Agarwal with Chatisgra Investment.

I just have 1 question. What is the volume of business that shifted...

I'm sorry to interrupt, Shruthi, you're not audible. Could you please change your location a little bit for better coverage?

Is it better now?

Yes, please go ahead.

I just want to know what is the percentage volume of business that got shifted to the DDP model?

For this year, it's almost more than 70%.

The next question comes from the line of Viraj Mahadevia with MoneyGrow.

Just wanted to confirm this NPC transaction is completely closed now. Are there any pending approvals or any conditions precedent or subsequent to the deal. Also, the financing you've taken at the local level, I'm assuming is a U.S. dollar financing, and hence, it's cheaper?

Yes. Viraj, it's completed. We are the official owners, 110%, where everything is completed fully. Nothing is spending. And yes, it's a U.S. dollar loan taken locally from there.

Brilliant. My second question goes back again to the bidding competition. I mean, given that there were other bidders, I'm surprised, you still won out of this kind of a bid. And -- so that for me is still a little unclear. And secondly, can you guide towards a consolidated interest cost for FY '27 on the consolidated P&L?

Since we have taken a $70 million loan for the NPC acquisition and plus we'll be completing Jammu project in the coming quarter. So after completion of everything, I'm not talking about FY '27, but FY '28. Our cost will be something around INR 160 crores to INR 170 crores.

Understood. So marginally higher than this year, sir, after everything being completed?

But we will be also contributing to reaching around...

No, no, absolutely. Absolutely. Yes. So revenue will be much higher and finance costs will be 10% higher than FY '27.

I think the acquisition, Viraj, let me tell you, it's -- everyone does feel that we bought it at a good rate, but we lost a lot of time and that's equivalent to a lot of business. So for me, this -- though we've acquired it at a very good opportunity and rate. I think, now, looking forward, we need to push and get the business and the numbers going. So I think we were, in fact, delayed, but it happened, and we got the right opportunity, and we took it. And that's what. So I'm happy to take the win and now move on to get more business.

The next question comes from the line of Yash Mehta with ART Ventures.

Sir, I just needed 1 clarification, sir. Sir, the Saudi project of 3 lakh MTP of capacity, which was going to be commercialized in Q1 FY '27. Is that still on? Or is it going -- or is it scrapped because of the NPC acquisition?

No, it's not scrapped because of the NPC acquisition. NPC itself has almost 430,000 to 450,000 tonne capacity. So then we did not need to go and put a greenfield.

[Operator Instructions] The next question comes from the line of Ajith Sethi with ACO Quantum Solutions.

Sir, what is the amount of CapEx we are spending FY '26? And what will be going to spend in FY '27 and '28?

In '26, we spent around INR 340 crores on the CapEx. And in the coming year, FY '27, we'll be competing quoting, which is a $40 million, that will be the CapEx and Jammu project. It was roughly INR 200 crores plus INR 380 crores, around INR 580 crores at the consolidated, total CapEx for this year.

Okay. And sir, in the opening remarks, we said that the NPC operation can generate INR 3,000 crores to INR 3,500 crores at 85% utilization. So when we can expect this utilization purchase, in which year?

At FY '28, FY '29. Both the years we should be able to.

The next question comes from the line of Abhishek Jain with Chris portfolio.

Congrats on a good set of numbers, sir.

Sorry to interrupt, Abhishek, you're not quite audible.

Are you able to hear me?

Yes. Please be a little louder.

Okay. So first up, congratulations for the strong set of numbers and acquisition of NPC. Sir, my first question on the standalone front. So just wanted to understand that what kind of the growth we are looking on the stand-alone front? And what are the key figures of the business? I mean to say that if you can throw some more light on the business like on the order book and the demand scenario on the India and the Middle East.

Yes, Mr. Abhishek, the order book currently stands at INR 3,000 crores stand-alone level. And looking forward, we are looking at -- with the consol level with India and Saudi, we are looking at a 30%, 35% growth constantly for the next 3 to 4 years in the company.

So that means that 30% to 35% growth that will continue for the next 3 to 4 years, right?

Correct.

So just wanted to understand how is the demand for in India and Middle East at this point of time? And what are the growth opportunities there?

So currently, like you know, energy sector is quite troubled because of the war, and every country wants to now secure energy for themselves for any such events to come up in the future. So we are seeing a lot of rebuilding a new infrastructure, including in India, which should be coming up in the next, you'll see 6 months. This ramp-up will come. And even in the Middle East and all the regions, including MENA, Africa and Far East, all the countries are now wanting to be energy -- supply and energy sufficient by themselves. And so we are seeing a lot of traction worldwide in the -- currently in the oil, gas and the water sector. And we feel that this -- post the war, in the next 6 to 8 months, there is a lot of tractions around the world. And we see field, including South America, and there are a lot of new businesses coming up, which is also a growing region for us. So I think we are in the right segment at the right time for the next 3 to 4 years to gain the boom of it.

Got it, sir. And sir, on the margin front, what would be the lever for the margin expansion. One thing that would be a better mix and better geography, better product mix and development. And just wanted to understand how much benefit we can get in terms of the synergy. In term of the operating leverage because of this acquisition?

Yes. So the advantage of the acquisition definitely adds up to the immediate business, which gets added from day 1 into the company. Number 2 is Saudi itself is a higher-margin country, currently between 15% to 20% EBITDA margins are ongoing due to the demand-supply shortfall. So with the acquisition and with the current, we are looking at a constant 13% to 15% EBITDA going forward in the company. And also by adding value-added products like coating in Saudi and stainless steel in India, this we will further push it up. That's the idea. That's the goal.

The next question comes from the line of Shubham with Vcast.

Just 1 quick question. Q4 FY '26 on stand-alone level, you have shown INR 170-odd crore EBITDA, but on a consolidated level, the EBITDA goes down to INR 144 crores, INR 145 crores, but there's no addition to top line. What are these additional costs, which have kind of taken down the EBITDA by INR 24 crores, INR 25 crores. And why have the margins being lower than the last quarter in this quarter?

I think your question -- you are asking question about the EBITDA in standalone and EBITDA in the consolidated number, right?

That's correct. That's the first part of the question.

This is the main part of 2, 3 things, which I explain in my opening speech. The interest capitalization on the intergroup ICDs and also the ForEx loss, which happened on account of CapEx LC, which we opened ForEx MTM that loss.

But why was this not hedged?

Actually, if you look at the scenario of dollar in the last 2, 3 months, nobody predicted war -- everybody was having a different view that rupee will become stronger. And all of a sudden, this has a depreciated. This is the worst performing currency in total area against dollar.

Also 1 more thing which is important that this is related to CapEx, and CapEx, a lot of the items were long lead items, which were 18 to 24 months. So even if I hedged it at 24 months ago, we did not expect when we bought these long-term equipments from -- for stainless steel. So that is the reason why this impact has come.

So you didn't hedge because it's sort of a 24-month kind of a period for which...

Hedging of 24 months itself would have come to almost INR 90 at that time.

It was subsidy also.

And also it wasn't area where hedging is not allowed.

So just as a practice, I would suggest that when you're showing consolidated EBITDA, I think the right way to do it is show a business EBITDA, and then, these are all non-business losses. Otherwise, people understand that the EBITDA margins have fallen while they have actually grown. From a business perspective, these are like extraordinary losses from your business perspective.

Or we'll put extraordinary note thereon.

The next question comes from the line of Harsh Vasa with SBI Cap Securities.

So I just wanted to know the depreciation of NPC for CY '25. So what was the depreciation for CY '25 of NPC.

Yes, it's approximately $8 million.

$8 million.

Around INR 75 crores -- INR 70 crores, INR 72 crores, INR 75 crores.

Okay. And sir, could you also tell me the sales volumes for CY '25, if that is possible?

Yes. You please send the e-mail across to Sandeep Garg, the CFO.

The next question comes from the line of Darshil Jhaveri with Crown Capital.

Sir, just wanted to a bit about the margins, you're guiding for around 13% to 15%. But this year, you've been able to do around 13%, and the NPC business, I think, is around 20%, right? So our margins can be on the higher side, right? Like are we guiding a bit conservatively? Or do you see any war impact, which can maybe impact the margins, right? So -- and what do you feel about that, sir?

So Darshil basically, it's a little bit on the conservative side. We have to be slightly conservative looking at the world scenario. Sometimes there is a war, sometimes there is a COVID, unexpected things happen. So we'd rather guide at a conservative level, which is 13% to 15%, which is a good level for us to achieve consistently. And if we are achieving more than that, I think it would be better. So -- our target is obviously higher, but on the conservative level, I think between 13% to 15% is very much achievable constantly for the company.

Okay. Fair enough, sir. And sir, just wanted to understand, like due to this war any shipments being delayed. So how do we see Q1, Q2, usually our H2 is better, but with the Saudi plant also coming up right now -- sorry, Saudi acquisition. So how do we see the mix right going forward, like it being there?

Yes. So yes, a couple of shipments have been not going to Abu Dhabi, which is 1 of the -- and luckily, we have a split of mixed bag of projects. Only 20% to 25% is going towards Hormuz. So yes, that is a slight impact. And hopefully, we hope the Hormuz opens up soon, so things return to normalcy.

The next question comes from the line of Sahil Chopra with KIFS Trade Capital.

So I just -- I'm curious to know how long this discussion regarding acquisition of NPC was going on?

It was on and off for quite some time, but 9 months would be a little bit more -- we were closer to each other, but it's been on and off since quite some long time. I can't give the exact time line.

Okay. Okay. And regarding this ICs, what is the total quantum of IT and what kind of rate of interest these ICDs are bearing?

These are the intra-group ICDs. As you know that for the Jammu project, we have given -- promoters given their contribution in the form of equity in the ICD. This is that interest we are talking about. And that's on 8% is intragroup interest charge between the companies.

Okay. And what is the amount?

It will be -- total, we have spent around INR 200 crores on the CapEx, INR 252 crores on MSCL, Demopoject, that is funded by the Man Industry. That's it. Equity as well as...

Understood. And Yes, yes. So as per press release of acquisition regarding this NPC. In that, EBITDA margins of the entity was around 20%, 25%. So why those margins were higher?

The business, which they did last year was with Aramco, and they had large order book, and they were executing it at that time. So it was slightly higher. And they didn't do any business in the water segment, which is slightly lower, but then obviously, you can build your capacity. So they were only doing business with Aramco.

And so going ahead, what kind of sustainable margin this 15% to 18% range is sustainable ?

Yes.

The next question comes from the line of Vedant with Mass Investment.

Sir, I wanted to say regarding this situation. So I believe this quarter may have some impact. So we can cover the -- any shortfall that you had targeted for this quarter and that's for the 3 quarters?

Yes, we were able to cover, Vedant.

So this part, I mean, you are on track for your internal target, sir?

Yes, we are on track on our target.

The next question comes from the line of Ajit Shetty with ACO Quantum Solutions.

As the new external capacity will be coming in the next 2 years. So do we expect any overcapacity kind of situation in the coming years?

Not really. You mean in Saudi, right?

So if possible, can you please share the demand/supply dynamics internationally as well as domestically if possible?

It's a part of a presentation, but we can share it to you also.

The next question comes from the line of Viraj Mahadevia with MoneyGrow.

Mr. Garg, regarding the acquisition, what are the costs regarding the acquisition, diligence, bankers et cetera? And what is that total cost likely to be? And will it be booked in Q1?

It will be around 2% to 3%, Viraj.

2% to 3% margin or 2%, 3% deal value. Okay. So about INR 3 crores, INR 2 crores to INR 3 crores.

$2 million to $3 million.

Million dollars. Okay. Okay. Okay. Yes. Okay. Great. And that will be booked in Q1.

That will be -- this will be part of the capitalization on acquisition cost. It will go with the acquisition cost.

It's all in the books of NPC, nothing from India.

The next question comes from the line of Shubham with eCost.

I just wanted to understand from a Q1 perspective, how the Saudi business is looking per se? Is it at the same run rate as it was last year? And India, how is it looking? You told about that 2 ships are kind of out in the passage and your 20% of the business is coming from Hormuz? So you are witnessing a year-on-year decline? Or how do you see the business shaping up in Q1 for both the businesses in India and Saudi?

Thanks, Shubham. So basically, no, we are not seeing a decline. Yes, a couple of ships have been waiting to go because of the Hormuz. We have managed to send 1 across to Pujara with the clients accepting the pipes in Fulgera instead of Abu Dhabi, which is good for us. And we do not expect -- in fact, Q1 is quite strong, and it's a good growth from the last lot of Q1 quarters. So -- as well as Saudi, Saudi we've just taken over. And currently, we are expecting it to do similar levels to last year or slightly below. But it wouldn't be the right time we've just taken over. So I can't give a very accurate probably in the next quarter would be much clearer observation of where we would land in Saudi. But...

Aramco book is still there or the book is...

Back-to-back arrangement with Aramco is already there as well as order book of Aramco is going on. The new order book...

That will be taking up the entire quarter, the Aramco order book?

Yes, it should.

Yes. And what is happening to the management at the Saudi level? You are taking it towards the company management, et cetera, you're changing it? Or you're continuing with the same management.

The key management people are changed. Some are retained. Most of the key managerial people are changed, especially the heads and the SOPs of handling and reporting systems. And the remaining team, which is down the line of production and all of the engineering and everything is continuing as it is, no changes.

The next question comes from the line of Sahil with KIFS Trade Capital.

So what is the replacement cost of that plant?

INR 1,500 crores plus, plus 24 months because API itself will take between 6 months to 1 year. And the new equipments would take at least 12 months for deliveries and then inflation, so 2 years and Aramco approvals, everything. So more than 24 months to 30 months plus INR 1,500 crores of CapEx.

And do we have to incur any kind of upgradation cost for this plant in the next 2 to 3 years?

Yes, yes. We are starting to slightly upgrade. We have a 3-year plan of around $5 million. There is not much requirement, but small, small upgrades, we are starting to do right now. So...

$5 million...

These are off-line upgrades doesn't stop the mill.

Understood. So $5 million every year.

No, no, $5 million for the next 3 years.

For next 3 years, okay. And regarding our real estate venture, this Marino, so we are saying INR 700 crores will be our part -- our share. So this full thing will flow to the bottom line or we have to incur some kind of operating expenses, something like that?

No, we don't have no expenses on us. Everything is to the bottom line.

The next question comes from the line of Vedant with Mass Investment.

See, this -- how much is the contracted capacity? And how much is kind of merchant equity? Because we are hearing that in Saudi because of requirement pipe requirement, the entities are buying at quite higher price versus what it used to be a few months back? So how we are going to capitalize and if we have that banged to capitalize on that opportunity in the near term?

Yes. So we are already -- we have around 430,000 tonne capacity, and we have the capacity available for the new orders and upcoming orders. So we should be able to capitalize on all the upcoming orders, hopefully, post the Hormuz or during.

And we have potential...

So sir, what I mean is for the next 6 to 12 months, can there be some extraordinary margins because of that situation and which will normalize later?

We hope so, Vedant. We hope so.

Thank you. Ladies and gentlemen, that was the last question for today. On behalf of IIFL Capital Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.