Ratnamani Metals & Tubes Limited (520111) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ratnamani Metals & Tubes Limited Q3 FY '22 Earnings Conference Call, hosted by Monarch Networth Capital Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Sahil Sanghvi from Monarch Networth Capital. Thank you, and over to you.

Yes. Thank you, Zaid. Good evening to all. On behalf of Monarch Networth Capital, we welcome you all to the Ratnamani Q3 FY '22 Earnings Call. We are delighted to host the management of Ratnamani today. And from their side, we have their MD, Mr. Prakash Sanghvi sir; their CFO, Mr. Vimal Katta sir. And joining this time is Mr. Manoj Sanghvi sir, who heads the Carbon Steel division. So without taking any much time, I will hand over the call to Mr. Prakash Sanghvi sir for their opening remarks. Thank you, and over to you, sir.

Yes. Yes. Good evening. I will give the opening remarks today. Manoj Sanghvi, here. Okay. So although the numbers would have been seen by everyone, but I would repeat again both quarterly and 9 months. So we did -- this quarter was highest for us, INR 937 crores of revenue and 9 months was INR 2,192 crores. EBITDA, INR 140.47 crores quarterly and INR 353 crores was for the 9 months. Q3 revenue split, if we see between carbon steel and stainless steel, quarterly 77% was carbon steel and 9 months 75% is carbon steel. Orders on hand as on 1st February was INR 1,900 crores, of which roughly INR 665 crores is stainless steel and balance is carbon steel. So this is on the earnings and orders on hand. On the market side, between carbon steel and stainless steel. So carbon steel line pipes, we have already bid close to 4 lakh tonne in oil and gas and 2 lakh tonne in water segment. Of this, we are expecting good orders [indiscernible] tonnes. And stainless steel under bidding is 27,500 tonnes, both stainless steel seamless, welded tubes and pipes, which is close to INR 1,700 crores, of which we plan to book around INR 300 crores to INR 400 crores in this quarter. So this is from our side. In detail, on the projects, if anybody wants to know, we can add further.

Can we begin the question-and-answer session, sir?

Yes. Yes.

[Operator Instructions]. The first question is from the line of Ashutosh Tiwari from Equirus Securities.

So firstly, on this bidding data that you shared, so we said that in oil and gas, carbon steel, bid for 1 lakh tonnes and 2 lakh tonnes in water?

Yes, correct.

Okay. But in the past, you have said that we'll probably avoid booking too much in water because of the low margin and maybe sometimes higher receivability as well. Is there a change over there? Or is just that for the sake of bidding we have bid so much?

No, this is the total bidding. We've always been selective on the oil and gas segment. However, whatever is under bidding, we have informed on the call. So -- and these projects are in Gujarat. So it is not like I'm -- we're bidding in north or south, where competition is -- where we don't have that competitive advantage. So in Gujarat, some projects we might target.

Okay. Okay. So -- and oil and gas, is this largely domestically only, 1 lakh...

Yes, this is largely domestic. One of the order is what we are already executing, it is an extension of that.

Okay. So can you provide some color on, let's say, in oil and gas segment, whether it's India or overseas for carbon steel segment, where we expect orders to come from? Or where bidding is going on over the next, say, 1 year, which are the likely projects which are happening or already announced by the customers?

Yes. So breakup of this 3.5 to 4 lakh tonnes would be NRL, Numaligarh Refinery Limited. So phase 1, we are already executing. Phase 2 tender is submitted and reverse auction will happen sometime next week. So that is one tender, which is close to 1 lakh tonnes. Then we have another line, which is IOCL has announced a project is called P25, which is from Kandla-Mundra going to Uttar Pradesh. So that is 240,000 tonnes, for which tender is submitted. Reverse auction might be in another 2, 3 months. So these are all which -- projects, which will be finalized in the next 2, 3 months. Then GAIL, Mumbai, Nagpur, Jharsuguda extension because Mumbai, Nagpur already tender was done and awarded. Now that line is being extended to Jharsuguda. So that tender is also announced. It is out. Bid is submitted. Reverse auction will happen in the next 2 to 3 months. That is 70,000 tonnes. So these are 3 major tenders. Then we have -- of course, we have small, small tenders, all adding up to close to 4 lakhs tonnes.

So you mean to say 4 lakh tonnes is there in the oil and gas itself?

Yes. 4 lakhs tonnes is in the oil and gas.

Okay. I think I maybe missed that. Okay, so basically higher in the oil and gas, okay. And also, we are looking at opportunity in the export side as well in this carbon steel segment?

Exports, most of the countries, longitudinal submerged arc welded pipes are used for oil and gas. So our LSAW plant, we've just started commercial products. And last quarter, we are going to get some revenues from that. So that approvals -- once international approval -- so next year, we will target something from them.

Okay. Okay. Okay. And now coming to the stainless steel segment pipe, you mentioned 27,500 tonnes is what we have basically bidded for. This will be, I guess, mix of export and domestic both, right?

Sorry.

So this stainless steel tubing where we have said that we have bid for 27,500 tonnes, that is -- that would be including our exports as well, right?

Yes. Yes, that includes export also. So right now, also, if you see our order book, INR 665 crores, of which INR 285 crores is export, so roughly 40%, 45%. So overall -- yes, overall put together, carbon steel is 25%. So that -- around that percentage, in totality, we will maintain our exports.

So on this new seamless plant, which got operational during this year, basically, how do you see the volume ramp-up happening next year, where that is where I think this can provide a bigger delta in terms of growth. And what we are targeting basically in terms of -- we have already discussed in the past about distributor basically also. So can you throw some more line on how do we see volume in this as a single segment next year versus this year? What are you doing?

See this year, I don't think any major contribution can come. It might be in the range of INR 30 crores to INR 50 crores only in this quarter. Next year, 30% to 40% capacity utilization is what we will be targeting.

Of this 20,000 plant?

Yes. Yes. So 6,000 to 7,000 maybe there, yes.

Okay. That will include the volume next year from the new plant?

Yes. Yes. Yes.

Lastly, I -- globally, there's a lot of talk about this green hydrogen and hydrogen usage also in the steel plant, so maybe over a longer period for that it reduced iron through hydrogen growth. So are we also -- because there also piping will be used, whether it's the stainless steel pipe in the plant and maybe carbon steel pipe or transportation. So are we looking at maybe initial -- we're doing some initial work on that as well and future prospects? Any higher color over there?

No. As of now, see, it is very in nascent stage. The hydrogen -- the fuel itself is trying to make a statement in this field. So once that happens, then eventually what mode of transportation will be used, what kind of pipeline will be used. Some -- only some work has been done on that segment. So still a long way to go I believe in that.

Okay. But I think the global competitors have started talking about at least, in the [ social media ] at least. So I think that could be an emerging area over the longer term.

Yes.

Next question is from the line of Abhijeet Bora from Sharekhan.

Can you just -- is there any change in the revenue and margin guidance for FY '22 and you can guide for FY '23 revenue potential?

See, for the entire year FY '22, INR 3,000 crores is the top line, which we can look forward to, plus/minus maybe INR 50 crores, INR 100 crores sort of that depends on how the financial arrangements are made, how the clearances are given by the customers. And margin range same, that 16% to 18% plus/minus we continue to hold because looking to the product, which we have been targeting, this range should be maintainable in the longer run also.

Okay. And any specific reason for lower margin in this quarter at 14%, maybe you do a higher share of carbon steel? Or any other -- sorry, yes, sir.

Yes, mainly because of the higher contribution to the top line coming from carbon steel line pipe business, nothing else, yes.

Yes. And I was a bit confused on the bidding part, just some clarification on the numbers. We have bid for 1 lakh tonne in the oil and gas segment and 2 lakh tonne from the water transportation segment in Gujarat, right?

No, 4 lakh tonnes in oil and gas and 2 lakh tonnes in water.

Okay. And out of that 4 lakh tonnes, you highlighted at some part for NRL refinery, some from IOCL and some from GAIL. Can you just give those numbers once again?

So NRL is roughly 1 lakh tonnes, 100,000; IOCL is 240,000 tonnes; and GAIL is close to 70,000 tonnes.

Okay. Okay. Okay. And finally, on like, like, we have order book close to INR 1,900 crore, what is the execution time frame for this?

6 to 7 months.

Okay. And in terms of the quarterly run rate of order intake, what -- can you give any guidance given the kind of bidding you have done?

We plan to book close to all put together carbon steel, stainless steel between 800 crores to 1,000 crores in this quarter.

Incremental orders, right?

Yes, incremental.

Next question is from Abhishek Ghosh from DSP Mutual Fund.

Sir, a few questions, just starting with the bid pipeline. So while you talked about the oil and gas and water, does it include the bid pipe -- the only LSAW and HSAW? Does it for carbon steel include ERW pipes as well?

This is specifically SSAW and LSAW. ERW is another -- some sizes, like, for example, the GAIL 70,000 tonnes. Some players can manufacture ERW also. So there is an option, it can be ERW, spiral, LSAW. But few tenders like NRL and IOCL is only and HSAW and LSAW.

Okay. So out of the total capacity that you have is almost about 340,000 tonnes, right, in LSAW, HSAW?

Yes. LSAW, HSAW is close to 340,000.

And out of that, you have a bid pipeline of 4 lakhs?

Correct.

Okay. And sir, just to understand, if you were to compare this number of that 4 lakh bid a couple of years back, was this more like 4 lakh only or what this used to be 2 lakh, 3 lakh, if you can give us some color, it will be helpful, sir?

No. So on an average, every year, oil and gas, spiral and LSAW put together 5 lakh tonnes is finalized in domestic market. So of which 4 lakh is right now, so we feel that this year, that number might go up.

So 9 month already would be at a higher -- at least 2 lakh, 3 lakh plus this 4 lakh. So this size has gone almost to 6 lakh, 7 lakh something directionally?

Yes, it's in that direction.

Okay. Okay. And sir, in terms of -- you spoke about 2, 3 major projects, which are contributing to this bid pipeline, but anything -- so this will be onetime, but beyond this, what's the visibility? Are there more talks about major refineries coming up or petrochemical plants coming up, any visibility or any color?

So 1 refinery that we know of [ HRRL ], of course, the work is going on, which everybody is aware. But one major refinery will be Kaveri Basin refinery. So that [indiscernible] has been awarded the PMC. For that, the first MTO will start in the first quarter of next year.

Sorry, sir, I missed you. You were breaking up. If you can just repeat, in terms of Kaveri Basin refinery, what is -- when is it going to start, the tendering?

First quarter of next year, we expect a few underground piping tenders.

Okay. And you said PMC has been awarded to -- I missed to which...

Engineers India Limited, EIL.

Okay. Okay. Okay. Got it. And how big is this opportunity, sir?

This will be a huge opportunity, very good for process piping and stainless steel pipes. Line pipes will follow later once the refinery is established.

Okay. Okay. But this will be like -- like you mentioned about the NRL and other ones, almost 1 lakh tonne each. It will be in that range or will it be like 2, 3 lakh tonne range?

No. So these are all -- these will -- see initial MTO will be huge, but not in likes of tonnes because we cannot compare line pipes with process piping and stainless steel pipe.

Initially, it will be value, later it will be volume, that's that way to think?

Yes. Yes.

Okay. Got it. And sir, just one broad thing, for this carbon steel, the new bid, while you did mention that SS will be executable over the next 6 to 7 months. In terms of carbon steel, what's the usual lead time for you to kind of finish the orders or execute the project?

Between 6 to 9 months for line pipes and process pipe within 6 months.

So line pipe is 6 to 9 and process pipes, you are saying is within 6 months, okay.

It depends on the size of the order, the quantum. So we start anywhere from the third or fourth month and finish within 9 months.

Okay. Got it. And sir, just a couple of things. If we look at you just coming back to CS in terms of broadly at the 340,000 tonnes capacity, this bid of 5 lakh tonnes is it highest ever for you in the last 2, 3 years because you said 4 lakh of this and 2 lakh of water. So how should we look at it?

See, every year, if you see one big project has come, like a year before this, it was the LPG pipeline, which IOCL had come up with, so which again was close to 2 lakh tonnes. And then GAIL, HPCL also had some tenders. So every year, we've seen 5 lakh throughout the year. But this time, it has happened that 4 lakhs has come altogether, which will be finalized within 3 to 4 months only in oil and gas.

Bunching of...

In oil and gas. Sorry, I missed you.

Sorry, I think it's got bunched up this time to that 4 lakh tonne...

Yes, it's got bunched up. So there is an advantage, there is a disadvantage also because you have got a stipulated delivery time. So everything one player cannot take.

Very true. Very true. And sir, just one last thing, and I'll come back in the queue for more questions. In terms of stainless steel, the whole import substitution element, now when we see freight rates from China has moved up significantly, so is that -- in this current environment, will it help you to better price your product vis-a-vis an imported SS tubes, some thoughts around it, if you can just help us with it will be helpful?

Freight rates have gone up, but on stainless steel tubes pipes, it is not -- it is a marginal element.

The value is high.

Yes. So that's why our exports are not affected. Otherwise, our exports would have also been affected, right?

But in terms of your ability to substitute those imported assets, what are the efforts that are you trying to make? And just some thoughts because that is a very big piece in your coal capacity that you have put up and to be able to ramp up that well. That will be a very big piece. So how should one look at it?

Various efforts are being made, like antidumping, because a lot of Chinese [indiscernible] material is coming in the country, right? So that is one front. Then, of course, the BIS certification. So mills here would definitely have BIS certification and would manufacture pipes of certain quality. So international mills also is required to have that certificate. So those will be some moats, which will be created.

Next question is from Kunal Shal from Carnelian Asset Management.

My question was in 2 parts. One part was that we have done approximately 186,000 or 187,000 tonnes in 9 months FY '22. So -- and you have given a guidance of INR 1,000 crores revenue to do in the last quarter, which would be more or less similar to what we have done in the current year. How should we look at for FY '23 and '24, considering the capacities that we have built up and the utilization for the coming years? And the second question was also on the stainless steel part, right? I mean, taking forward the question from the previous participant, I mean, what would be the kind of cost differential that would be there in the imports that would be happening from China in comparison to ours? And when do we see this ramping up now of the capacity, especially that we have built up on the stainless steel part because still, I believe, in comparison to the previous year, we are more or less at the same level that what we have done despite the capacity coming out. So if you could help with those questions?

So your first question was revenues this year, last quarter. It is -- it will be between INR 800 crores to INR 1,000 crores. So that's -- you answered that question yourself. Second question, '23, what is it looking like and '24, what is it looking like? '23 growth in revenue somewhere between 15% to 20%. And similar going forward in '24 until we reach the peak capacity utilization for LSAW and stainless steel [ extrusion ].

So in terms of tonnes, how should we look at the overall utilization for FY '23 and '24?

It will be range bound, but near to that 60% on an average of the total capacity.

Okay. Okay. And the blended realization and blended EBITDA should be more or less in the same range of 16,000 to 17,000 or blended EBITDA, I mean, it's more related to the second part of the question as well, how do you see the ramp up in the stainless steel?

No. So both -- see, the contribution would be from both carbon steel and stainless steel in the revenues going forward, the increase in revenue. So we see it to be in the range of 15% to 18% going forward also.

Okay. So if you could specifically help understand the ramping up more on the stainless steel part, I mean, what is stopping that? And how do we see that scale up in the year FY '23 and the price differential, if any, from the imports and our products? Or how do we see that ramping up basically, sir?

So this year, I think so we will be doing close to 1,000 to 1,500 tonnes in the extrusion pace. Next year, what Katta Ji has already commented that we are going to do close to 6,000 tonnes. So that ramp-up is happening. Since this is a hot process, ramp-up is not immediate, plus the approvals from various oil and gas companies. With the current situation, where travel is restricted, it is getting delayed, plus it is a hot process. We start with base grade 304, 316. And as you have that comfort and confidence, then the higher grades, nickel alloys would be manufactured. So not only the ramp-up will happen, but also the value addition will increase.

Okay. Okay. Okay. So basically, if I understood correctly, it is more to do with the approvals from the time side and we ourselves are ramping up greater than the demand side as of now, is that understanding correct then?

Yes, it is -- one is approval. Second is this product is -- actually the size range is new for us, which you have to establish distributors, distributor network, say, in Europe, U.S. So that process is going on.

So this should get sorted in another 6 months, now since things have started to open up. So...

Our target is to do 6,000 tonnes next year, close to plus/minus, say, [ 500,000 ] tonnes. But to utilize 30% capacity -- 20% to 30% capacity is our target next year.

Okay. Okay. And also on the last call, you were thinking of setting up capacities at the [indiscernible], and it was discussed that it will be taken at the drawing board and all. So any thoughts on that how -- because this we will ramp up the utilization in the next 2 years, whatever capacities we have built now, okay? So anything on that particular front? Or it is still on the drawing board and nothing to comment as of now?

It is still on the drawing board. We've appointed someone who is doing the market study. Once we have that [indiscernible] any gap and opportunity, then we will go ahead.

Okay. Okay. So as of now, it is still a little far away...

It will take another 4 to 6 months.

Next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, in the LSAW segment, in particular, sir, have you seen the tendering being slow than what the past had been because of the steel prices, the high steel prices and the pass on? Are the EPC players holding on to the tendering, waiting for the prices to correct? What is the scenario on this front? And also, sir, on our portion getting -- what we have prescribed to the order, what was the total size of the order in which we have got 2 lakh or the quantity, which we have mentioned?

No. So both LSAW and HSAW, as I said earlier, 4 lakh tonnes at a given point of time has come for the first time actually, which will be finalized in the next 2 to 3 months. So the increase in steel prices have not actually curtailed the demand. Future demand, we are not aware, but yes, this budget also they have -- and plus with the increasing oil price, definitely, the investment because the realization would be more for the oil companies also. So eventually, the infrastructure has to be built up. And for gas supply also, so many geographical areas have been bid across India. Now once anybody has taken the geographical area, the government has the responsibility to provide gas to -- at least to the [ type of ] point. So we don't see the demand going down.

Okay. So for this 4 lakh, [Foreign Language] what percentage we have got? That was my question? Or was it totally...

This is under bidding, and this is direct bid to PSUs. So it is not from the EPC and what is that for -- water normally is EPC, but oil and gas is direct to the PSU.

So that entire size is of 4 lakh. We have bid for the entire 4 lakh tonnes. That was my first question.

Yes. You are correct. Yes. We bid for entire 4 lakhs tonnes.

We have bid for entire. And this is pertaining to a refinery project, sir?

No, no, this is not pertaining to refinery...

I'm sorry, sir, for the water project, yes, yes.

It is mix of -- it is line price. It is mix of product pipeline, which is crude or any other product. It is gas because Mumbai, Nagpur is a gas pipeline.

Correct, sir. Sir, when we look at the P&L, we have seen this inventory buildup, sir, over the last 2 quarters. So if you could explain what the key reasons for the same? And how is this inventory going -- for quarter 4, this inventory will be diluted?

See, actually, this is an answer which is more equipped answer, but it's still, I will say, yes, you know we follow the practice of covering our raw material on back-to-back basis because all our orders are on fixed price ratio, okay? So -- and in a rising price scenario, any way volumes remaining same, in value terms, again, impact has been there because carbon steel prices have moved up by almost 70%, 80% compared to what they were earlier. So one reason is that. And in my opinion, going forward also to the extent of our made-to-order business, this situation will more or less continue, rather for our new hot extrusion facility also looking to the size range and the material range. For us, more inventory carrying will be required for the new hot extrusion also. So this is the thing. And fine-tuning for this inventory holding will keep on happening. But once we need to have the experience of carrying the required inventory for our new hot extrusion products. So it will take some time.

Right, sir. Sir, as you were telling about the more thrust the government has provided in this budget. So sir, what are the pillars on the ground? The CapEx cycle -- what kind of CapEx is now anticipated? And how is our companies, like us, in the sector going to usually benefit from the same, whether it is the Jal Se Nal, the interlinking of rivers, Jal Se Nal and also the CapEx in building up greenfield refineries and also the brownfield expansion in various refineries. So what kind of thrust can be build up, sir, depending upon the national investment pipeline announced. So much thrust being given on the CapEx part. So just -- this is the beginning of a very strong run, which companies, like ours, can expect in the -- at least in the coming 2 to 3 years?

Yes. Yes. So one area, which I previously informed, is CGD. Because of that, the infrastructure -- the gas pipeline infrastructure across country will have to be improved. Then second is for Jal Se Nal, so this is all linking of river, one reservoir to another reservoir, so that water -- last mile connectivity to the household, the water is to be provided, right? So the main trunk lines would be water pipes. We've seen already a few tenders coming in Gujarat, Rajasthan, Madhya Pradesh. So things have started. So main lines are the first, then the distribution network and then the last mile connectivity. So where our product goes is to the mainline. So next 3, 4 years, there will be major thrust in water projects also. This is for carbon steel, and stainless steel, of course, one is Kaveri Basin refinery, which is going to come. And we have BPCL. And then one petchem project by GAIL.

Right, sir. And from the fertilizer space, sir, any fillers? And also for the Ken-Betwa project, lot had been spoken about the huge project of INR 42,000 crore. How is our company going to benefit from this project being on ground, commissioning on ground?

Yes. So fertilizers also 3 major contracts were awarded. So a lot of tubes are yet to be -- urea grade tubes are yet to be procured. So that will happen. Yes, and as like water, a lot of irrigation projects are going on. So agriculture will increase. And effectively, the requirement of fertilizer will be there. So it is all connected.

Next question is from the line of Dewang Sanghavi from ICICI Securities.

Congratulations on a good set of numbers. My first question is regarding the stainless steel segment, sir. As you are planning to ramp up volumes next year in the SS segment, any guidance of the fresh order booking we expect in FY '23 for SS segment?

FY '23? Sorry, can you repeat your question?

Fresh order booking, what we are targeting for FY '23 in the SS segment?

Okay. Stainless steel order booking for the next year, you mean to say?

Yes, sir. Yes.

What our internal budgets are like INR 1,200 crores of...

See, basically order booking of -- significant order booking plans will be there because we are going to target at least 40% growth over whatever we are going to do for the FY '22 in stainless steel. So plants are there. We should end up somewhere between 1,100 crores to 1,200 crores of top line for stainless steel. And accordingly, matching order booking will be there. And opportunities are also there. So for the new extrusion, of course, newer markets are also being explored, including European markets and other overseas territories also. So it is like that. And a lot of things will be known as we move forward in the coming financial year.

That was very helpful. My second question is regarding the other pipelines of stainless steel. As we have guided that we have just said there is [ 25,500 tonnes ] of stainless steel with pipeline. Is it possible to break up in terms of project-wise?

No, stainless steel, see, like carbon steel line pipe, one single project is INR 500 crores, INR 600 crores. But stainless steel, the order size is INR 2 crores, INR 3 crores, INR 5 crores. At the max, maybe when greenfield project is there, INR 15 crores, INR 20 crores. So it is difficult to break up because this right now INR 1,500 crores to INR 1,700 crores is under bidding. So it will be very difficult to break up project-wise or sector-wise.

Got it. Got it. Got it. And this Kaveri Basin refinery, what we have alluded that our order should -- or tender should start in Q1 FY '23. Can you just guide what could be tonnage opportunity in this particular refinery for the stainless steel one?

Tonnage at the moment, it is very difficult because see, there will be a lot of equipments also, so those tubes, then the pipes and carbon steel welded pipe and also seamless pipes. So at the moment, the tonnage idea is not there for that.

No, no problem, sir. No problem, sir. And what is the cash on hand as on this -- can you just guide that on the 31st of December?

Yes, 31st December was closer to 300 and -- just one minute, closer to INR 390 crores.

INR 390 crores of cash on hand.

But see, in our case, cash will keep on fluctuating because capital requirements keep on changing based on the order booking and the movement in raw material prices. So right now, inventory procurement, [ RF ] procurement is going on in full swing, looking to the very healthy order book. So going forward also, we may -- we should expect by March end also our inventory position is going to be on the high side only, yes. Actually, I was expecting in FY '21 -- beginning FY '21 itself, had COVID not been there, so for us, this situation would have been there in FY '21 -- beginning FY '21 itself because both the new projects are going to require incremental higher working capital because that 120,000 tonnes of carbon steel capacity is also significant. And once the full-fledged order booking gets started, so it will also require a lot of procurement.

Next question is a follow-up from the line of Ashutosh Tiwari from Equirus Securities.

Sir, you talked about entering new products and uses of seamless pipes in the future with the new plant coming up. Can you highlight some of the areas where we are not present earlier and we have developed products over the last 1 year or planning to do over the next 1 year, 2 years?

On stainless steel pipes, you mean to say?

Yes, stainless and seamless pipes. I think you talked about the new plant with the higher diameter also, we will be entering on the product segments, where we are not present earlier?

So the stainless steel extrusion plant what we have right -- what we had until now was up to 3 inches. So we were not present in segment above 3 inches. So this -- all these segments, maybe the sectors are same, refinery, power plant, but this is a whole new addition of size range.

Okay. So have you got some customer approvals over there from this larger range, whether it's domestic, may not be export because travel restrictions and all maybe the overseas customers would have -- there must have been delay in their extrusion in all, but in domestic...

The process of approval has started. We've received some domestic approval. Some -- we had some virtual audit also recently. So that process is going on and approvals are falling in place. With the technology and the latest plant what we have, it won't be challenging. But with the constraint of COVID and people not being able to travel, it is taking a little longer time.

Okay. And secondly, on this LSAW segment, that 1.2 lakh tonnes planned in new plant, as of now, let's say, what visibility we have in terms of utilization of the plant in the FY '23?

FY '23, we will -- this year, we will be using close to 15,000 to 20,000 tonnes. And next year, we plan to have anywhere between 50,000 to 60,000 tonnes. So almost 50% capacity utilization.

Okay. And we already have started receiving orders for this...

Yes. Yes. We already have orders on hand right now for LSAW close to 200 crores for the new plant.

Okay. 200 crores will be roughly 20,000 tonnes?

Yes, between 12,000 to 15,000 tonnes, exact number I...

Roughly 25,000 tonnes, sort of.

Next question is from the line of [ Pratiksha from First Capital ].

So I just want to know about the revenue breakup for carbon steel and stainless steel?

So carbon steel, revenue breakup?

Yes. Yes, revenue breakup.

[ Pratiksha ], I have already...

Quarterly or 9 months?

Quarterly, quarterly?

Third quarter revenue breakup, 77% is carbon steel and 23% is stainless steel, which is roughly 210 crores.

The next question is from the line of Abhijeet Bora from Sharekhan.

Sir, can you give up -- CapEx plan for this year and next year? New CapEx plan?

As of now, we have no CapEx plan.

It will be only debottlenecking and maintenance CapEx only. So maybe around -- and whatever little is still pending, that will also be there, maybe around INR 70 crores to INR 100 crores sort of thing. Everything combined together.

For this fiscal year, FY '22?

No, no, no, next year.

No, no, FY '23.

'23. '22. Yes, yes, '22 will be maybe around 100 -- just -- it should be closer to -- roughly this year again, around don't roughly INR 100 crores sort of thing.

Okay. And can you just give me the, like expanded capacity, both in CS and SS? And what is the current utilization rate?

Carbon steel all put together, LSAW, spiral, ERW, our capacity now is 500,000 tonnes -- 5 lakh tonnes. Stainless steel is 40,000 -- 48,000 tonnes.

Okay. And what is the utilization rate currently? And by FY '24, I think in last quarter, you mentioned that you'll be reaching revenue of INR 4,500 crore. So like how the utilization will ramp up until that time?

See basically existing capacity of helicals, ERW and LSAW in carbon steel are more less fully occupied right now, okay? So you can say at around 60% to 70% sort of capacity utilization. In case of stainless steel, seamless is fully occupied. So don't look at tonnage because in case of stainless steel, high-valuated products will not give the tonnage, but value addition will be significant, okay? In case of stainless steel welded, it might be around, again, 60% to 70% sort of thing. And newer capacities, stainless steel, hot extrusion, right now is hardly any utilization right now. In current financial year, it is not expected to give much...

5%.

Yes, maybe 5% sort of things. And LSAW should be closer to, you can say, around 15% sort of thing. And next year, as Manoj Ji has already said it can keep closer to 50%, 60% sort of thing in case of carbon steel LSAW. And new hot extrusion should be closer to 25%, 30% sort of thing only.

Okay. Okay. And just one clarification on one number. The initial question or remarks you mentioned that you will book around INR 300 crore to INR 400 crore of revenues from SS in Q4. Is that right understanding?

Not the revenues, order booking will happen in Q4.

Okay, incremental order booking will happen.

Yes.

Okay. Okay. And lastly, the tonnage number, which you gave for the bidding pipeline, 4 lakh for oil and gas, 27,500 crore for SS, like what is the amount in the value terms? And if we win, say, like what is success ratio for us to win these bids? What kind of amount we can bid here?

So 4 lakh tonnes roughly would be, say, 4,000 crores. It vary between 4,000 crores, 4,500 crores. Stainless steel 27,500 tonnes roughly 1,800 crores. Yes, this...

Hello, can you hear me, sir?

Participants, request you all please stay connected. It seems we have lost the line for the management. Apologies for the delay. We have the management line having connected. Sir, you may go ahead please.

Yes, sir, I was asking about what could be our success rate in this 4,000 crore and around 1,800 crore of bid pipeline because it's a win sizable chunk in this, sir? I think that our revenue growth rate would exceed our like FY '24 guidance of INR 4,500 crore?

No. See, growth, what we see year-on-year is anywhere between 15% to 20%. One is the utilization -- spiral utilization is already at optimum levels. ERW is also at optimum level. Now where we have got some capacity to increase in carbon steel is LSAW. Whereas in stainless steel also, utilization is almost at the optimal level at seamless and welded. We have got some room to increase revenues in the extrusion. So both put together will come as an incremental growth, which is 600-odd crores for FY '23. And further addition of 600 crores. Yes, so FY '24, we can be close to 4,200 crores, 4,300 crores. And that will be the optimum utilization of all the plants.

And with the SS like utilization rate improving, do we expect any change in our margin guidance of 16% to 18%?

No, it will remain same because at the same time, we have LSAW, which goes for line pipe, right? So blended margin will remain between 16% to 18%.

Next question is from the line of Anirudh Shetty from Solidarity Investment Managers.

I had 2 questions at my end. Just a follow-up on the last point you made around how by FY '24, we could do around INR 4,200 crores, INR 4,300 crores of sales, which is more optimal numbers. And so we have a run rate for 2 years. But when can one expect the next round of CapEx to start going through at your end?

So things have already started rolling like the U.S., what we are thinking, we've already appointed a consultant for that study. And once the extrusion place stabilizes, then when utilization is close to 30%, 40%, we might think something backwards. So somewhere in FY '23 plans will be made.

Got it. Got it. Okay, Sir, my next question is on the revenue mix. I think somewhere you shared an investor presentation, wherein the oil and gas sectors, give or take around 60% of our revenue. I just want to know for FY '22, what will the broad mix look like between oil and gas and the others? And within this oil and gas, could you also further bifurcate it into what is gas, what is oil and -- so what is more upstream, more midstream and downstream refinery petrochem related?

Most of it is midstream, most of it. And then further bifurcation of oil and gas is not done because one project -- it will give a wrong indication because 1 year, say, a major oil pipeline comes, but next year [indiscernible] is there. So always it is bunched together, oil and gas. Year-on-year bifurcations can be made, then it won't give any specific advantage to us.

Okay. And -- but do you feel over a period of time, as we see such strong tailwinds for gas with natural gas and the CGD demand is there, do you feel the share of gas will start increasing as a percentage of our overall business?

Yes. As of now also, you see gas has already -- because ERW is most of it is city gas distribution pipeline. Then within spiral, also, most of it is gas pipeline. So the gas share is increasing. At the same time, oil share has remained stagnant or one-off project when it comes, it increases.

Got it. And both of this put together, would it still be around 55%, 60%?

Yes. On -- see, line pipes, majority would be oil and gas, but stainless steel, we have various industries, right? So there the percentage in oil and gas would be on the lower end, say, it will be between 40% to 50%.

Next question is from [ Shivam Parashar ], an individual investor.

Hello, am I audible?

Yes. Yes.

Yes. Sir, I just wanted to ask that like you on the public CapEx, you gave the guidance of the Nal se Jal and the Kaveri Basin. Can you also give the guidance on what's happening or what's the figure of the private CapEx that is happening from fiscal year '22 and guidance for fiscal '23? Any private CapEx on the [indiscernible]?

Private CapEx within the CGD network, a lot of geographical areas have been awarded to private companies. So their major CapEx is happening, which will go on for another 3 to 4, 5 years because the first phase. And then the network will be expanded. So that is one segment where a lot of private players are there, which also helps us in the stainless steel business because of the CNG stations, where our instrumentation [indiscernible] also go.

Okay. Okay. And any guidance on the private CapEx on the steel, cement and like these industrials side?

Yes. That general CapEx, other than -- see, major oil and gas is public sector. But other than that, all is private. Power, some portion is for public and some private.

Yes. So you are seeing the positive side on the power CapEx also?

No, it's stagnant. Power -- nuclear, we are seeing positive, but otherwise, it is stagnant.

Power is stagnant and nuclear is [indiscernible].

Yes.

Next question is from Abhishek Ghosh from DSP Mutual Fund.

Just one question on the CapEx part of it, going forward. Now largely, if you look at the metrics that current Ratnamani is based upon is broadly, you have an asset turn of 3.5, 4x because a lot of the CapEx that you have done in the last 2, 3 years is not getting fully utilized, something on an -- broadly your asset turns at 3.5x today, 3.5 to 4x, with those 16%, 18% market. Now you already have a fair amount of cash, which might get used, but you're also generating almost INR 300 crores, INR 400 crores of free cash to be generating every year. So the next round of CapEx, which kind of comes in, will it have similar metrics in terms of asset turns and margin profile? How should one look at it? Because just to give you a number, sir, your current gross block is INR 1,200 crores broadly, and you'll be generating that kind of free cash over the next 2 to 3 years? Will you be able to deploy the entire part of with similar metrics? How should one look at it? Some thoughts that will be helpful, sir.

Those thoughts maybe 6 months down the line when we are ready with CapEx plan would be appropriate time to answer. But yes, next phase of investment will be close to INR 500 crores, INR 600 crores.

See, basically, as far as margin profile is concerned, it will not undergo any significant changes because we -- while deciding about any CapEx plan, we do look at the return on capital employed, and it should gel whatever we are doing right now. So -- and that is the reason in our case, it takes a lot of time and deliberations before we finalize any CapEx plan. And the management is very clear we don't want to go for any short-term call on CapEx. All CapEx whatever we have done is done up keeping in mind coming 25, 30 years sort of thing, yes.

Yes. No, I appreciate that. My only question was that, sir, since the generating fair amount of free cash, can we expect CapEx in the region of the INR 1,000 crores plus over the next 2 to 3 years? Or will you be able to comment on it only after some time...

Right now, it is very, very, I would say, premature to comment on that.

See part of it will be continued to be used for incremental working capital requirements. And that -- by that time, in the next 6 to 9 months' time, we should be ready with our next growth plans. So that will be the appropriate time, and we will be in a position to say what sort of CapEx size will be there.

And maybe as said turnover ratio also, we will be able to tell you that time because it might not be that the revenues are increasing, but the value addition is increasing because some would be self-consumption.

And there are no further questions. I'll turn the conference over to Mr. Sahil Sanghvi for closing remarks. Over to you.

Yes. Thank you, Zaid. I would first like to thank the entire management of Ratnamani Metals for patiently answering all the questions. And on behalf of Monarch Networth, I would also like to thank all the participants. Manoj sir, would you like to give any closing comments, sir?

No, that's it. We are trying our best to keep up on what we say, and hopefully, we'll achieve better than what we say. Thank you.

Thank you, sir.

Thank you very much, Ratnamani Management. Ladies and gentlemen, on behalf of Monarch Networth Capital, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.