Q4 24/25

May 12, 2025

Summary

FY25 earnings were affected by maintenance shutdowns and slower H2 demand, while capacity expanded to 9 lakh tons. Management expects demand recovery, FY26 DI sales of 8.3–8.5 lakh tons and medium-term EBITDA margins of 15%–18%.

Ladies and gentlemen, good day, and welcome to the Electrosteel Castings Limited Q4 FY 2025 earnings conference call. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Verma from EY LLP. Thank you, and over to you, sir. Thank you. Good evening, everyone. On behalf of Electrosteel Castings Limited, I welcome you all to the company's Quarter Four and FY 2025 earnings call. To discuss the performance of the company, we have with us from the management team, Mrs. Radha Kejriwal Agarwal, Whole-time Director, Mr. Madhav Kejriwal, Whole-time Director, Mr. Sunil Katial, Whole-time Director and CEO, Mr. Ashutosh Agarwal, Whole-time Director and Chief Financial Officer, and Mr. Gaurav Somani, General Manager, Finance. Before we proceed with this call, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties and other factors which will be beyond management control. We kindly request that you bear in mind there may be uncertainties when interpreting such statements. We will now start the session with the opening remarks from the management team. Afterwards, we will open the floor for interactive Q&A session. I will now hand over the conference over to Mr. Madhav Kejriwal for his opening remarks. Thank you, and over to you, Mr. Madhav. A very good evening to all. I am pleased to highlight the company's performance and the promising industry demand outlook going forward. I would like to walk you through some of the major developments and challenges we faced this year. The first half of the financial year demonstrated growth over the previous half year, while the second half witnessed some slowdown. This was primarily due to two key factors, reduced spending by the central government on its flagship scheme, the Jal Jeevan Mission. The initial budget for FY 2024-2025 was INR 70,000 crore, which was subsequently revised down to INR 22,000 crore. However, recognizing the critical importance of the scheme, the government has extended it till 2028 and allocated a significantly higher budget of INR 67,000 crore for FY 2025-2026. In parallel, work has commenced on long-pending river linking projects. A notable milestone was the inauguration of the Ken Betwa river linking project by PM Narendra Modiji on December 25, 2024. An important step forward in India's water resource management strategy. This I will cover in detail after taking you through the performance of the company. We undertook two shutdowns of the blast furnace at our south units, one during Q2 and another towards the end of Q3, which extended into the early days of Q4. These maintenance activities, while essential, temporarily impacted production volumes in the later half of the year. The company's consolidated total income stood at INR 7,443 crore during FY 2025, reflecting a temporary dip due to two shutdowns, as I mentioned, and a slight slowdown in the market demand. The plant has regained stability since. Our phase-wise expansion to take the capacity from 6.8 lakh tons to 1 million is in progress as per schedule, and I am delighted to share that our installed capacity has now been enhanced to 9 lakh tons by the year-end. This added capacity is expected to yield higher volumes as we gradually ramp up production in the coming quarters, positioning us for robust growth. We have already incurred approximately INR 500 crore of the CapEx for this expansion up to FY 2025, out of the planned CapEx of approximately INR 700 crore. The DI sales volume for the quarter was approximately 1.71 lakh tons and 7.17 lakh tons in FY 2025, with exports contributing 15% of the total DI volumes. I would like to highlight the demand of DI pipes going forward. The government has prioritized revenue growth over expenditure expansion to achieve the reduced fiscal deficit targets so as to keep inflation down. Going forward, the Jal Jeevan Mission has received a budget allocation of INR 67,000 crore by FY 2026 and has been extended to the year FY 2028. This is a reflection of the government's commitment to provide safe and adequate drinking water through household tap connections in rural areas. Respectively matching funds will be borne by the states. Disbursement of central funds is in process and will revive pipe demand in due course of the year. As of the latest reports, approximately 12.38 crore rural households have been provided with tap water connections, with many schemes needing source sustainability and operation and maintenance fixes. In many cases, the projects are still partially complete and the water source sustainability is not fully established. The work left to be executed is more than 4 crore households, and JJM, as previously mentioned, has already been extended up to December 2028. I will move on to the progress and allocation under the AMRUT scheme. The Atal Mission for Rejuvenation and Urban Transformation, launched on October 1, 2021, is a five-year initiative by the Government of India aimed at enhancing urban infrastructure, ensuring water security, and promoting sustainable urban development across the country. The total indicative outlay was INR 2.99 lakh crore over five years, out of which the central assistance is INR 76,760 crore. As of November 2024, 8,998 projects worth INR 1 lakh 89,000 crore have been approved. We expect substantial expenditure on pipe procurement via AMRUT too. Some updates on the River Linking Project, which is managed by the National Water Development Agency under the Ministry of Jal Shakti. This project envisages the interlinking of rivers to enhance irrigation, mitigate floods, and ensure water availability across the nation. The main project that is taken up at present for implementation is the Ken Betwa Link Project. It is a INR 44,000 crore scheme to irrigate 10.6 lakh hectares in Bundelkhand. A number of other projects are also in the pipeline. National River Linking Project has the potential to generate considerable demand for both pipes and fittings in the future. Irrigation is another major demand driver for our pipes. India's irrigation sector has seen significant advancements. The government has prioritized irrigation development. There has been a shift to piped irrigation to lower losses and ease land acquisition problems. There is an estimated growth in the irrigation flood control at the state level of 23% year-on-year. Moving on to exports. The Middle East and Africa pipe markets are valued at $8.13 billion in 2023 and are projected to reach $11.56 billion by 2031, growing at a CAGR of 4.5%. This growth is driven by infrastructure development and urbanization in the region. Similarly, the Middle East's iron and steel pipe market is expected to see steady demand growth over the next decade. Demand is driven by the good growth prospects in many Middle East countries, mainly Saudi Arabia. In Europe, we are the second-biggest supplier of Ductile Iron Pipes, and in the Middle East, we are the largest exporter. The recent U.S. tariffs on iron and steel product imports have introduced volatility in the global steel prices affecting the pipe industry. These tariffs can lead to increased costs impacting manufacturers' margins and pricing strategies. However, the tariff on Indian DI exports to the U.S. remains limited up to 10%, which will be reviewed again in July. I would now like to hand over the floor to Mr. Ashutosh Agarwal, Whole-time Director and CFO, for taking you through the financial highlights. Thank you, Madhavji. Good afternoon to all the investors present in this call. I would like to brief you about the financial results consolidated for Q4 2025. Total income stood at INR 1,739 crores, partially impacted by the plant shutdown, as explained by Madhavji. EBITDA at INR 198 crores. EBITDA margin stood at 11.4%. PAT reported to INR 168 crores, which includes INR 81 crores on account of one-time adjustment of deferred tax. Here, I would like to mention to the investors that in 2017, as per the accounting standard in the act, there was a window given to us and we have revalued the land of the company. In 2024, the Government of India has changed the long-term capital gains tax rate from 20% to 12.5%. On account of that, there is a reversal of deferred tax liability of INR 81 crores. That is nothing to do with the cash flow of the company. It is just an accounting entry for your information, please. Highlighting our consolidated FY 2025 company as a whole. Total income stood to INR 7,443 crores. EBITDA stood to INR 1,159 crores. EBITDA margin, 15.6%. PAT stood to INR 710 crores, which includes INR 81 crores as explained to you earlier. Now I am talking about the standalone results of Q4 2025. Total income stood to INR 1,601 crores, impacted the plant shutdown as mentioned by me and Madhavji. EBITDA stood to INR 213 crores. EBITDA margin, 13.3%. PAT stood at INR 191 crores, which again included INR 81 crores as explained by me in my earlier note. For the year, standalone results are: total income was INR 6,840 crores. EBITDA, INR 1,116 crores. EBITDA margin, 16.3%. PAT, INR 712 crores. Which include INR 81 crores as mentioned to you. Board recommended 1.4% of equity per share. It means 140% dividends. We are maintaining the dividend from last year. On and above the CapEx as mentioned by Madhavji, we had a plan of INR 500 crores and we have spent around INR 514 March 2025 and balance INR 200 crores will be spent later on. The DI pipe capacity will be around 1 million tonne in 2026-27. Now I am opening the floor for the question answers. Thank you very much. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Rajat Sethia from iThought PMS. Please go ahead. Thank you for the opportunity. Sir, just a couple of questions. The capacity that we have, can the same plant or the same line make different sizes, different diameters pipes? Or do you need to have dedicated capacity for different sizes of the pipes? Sir, because of the machine mix that we have taken up as we have expanded our capacity, we do have a flexibility of 10%-15% between different size mixes. Okay. We can play with our capacity basis the requirements in the market. Okay. So you are saying a particular line can make a pipe which can vary in diameter by 10% to 15% of its production sizes, right? Yes, please. Okay. And sir, one question regarding the, a lot of talks are there about the OPVC pipes. How do you see the development of OPVC pipes affecting DI pipes and in what sizes and all? Sir, I can answer this question in two parts. One from the short to mid-term, and then from the long-term perspective. For the short to mid-term, most of the projects that I have spoken about which are under Jal Jeevan, et cetera, for them, their detailed project reports, et cetera, have already been made. The chances of any upcoming recent demand being converted to OPVC is negligible. From the medium to long-term perspective, sir, if you look at the percolation of OPVC in markets where they are being used like North America and South America, yet there is decent amount of demand for smaller dia pipes in those markets. Coming to Europe, we are finding that OPVC is practically not there. The other aspect also is, sir, that because of many characteristics of a plastic pipe versus a metal pipe, the use cases are not overlapping in its entirety. There is an overlap, but it is not that you can use a metal pipe wherever a plastic pipe is used, and you cannot use a plastic pipe in a lot of use cases where only a metal pipe can be used. So I do not find OPVC to be a real threat. This sort of mindset, or rather this sort of concern had also come up when HDPE was introduced in the domestic market. But we find that smaller diameter pipes still run the demand for Ductile Iron Pipes. So that in itself gives an answer of whether OPVC really would become a threat going forward as it was felt HDPE would. So you are saying it is kind of a replacement, but it is not really affecting the larger application or use cases of DI pipes, right? Yes, please. There might be a small percentage of the demand that can get converted at a local level, but that is not going to have a material impact on the demand of Ductile Iron Pipes. Up to what diameter, sir, is it going to present as an alternative to DI? Sir, if any replacement, then it would probably be up to diameter 150 or 200. Not beyond that. Okay. They do operate till dia 400, but above dia 200, there is practically no chance of replacement. Our total capacity for the sales, what is the sales mix for us? Let's say up to 200 or 300 or more than that. Sir, our demand scenario is that we will have approximately 40%-50% up to dia 400 and another 50% to 60% up to dia 1,200. The 40-60 is out of mix, you can say, going forward. Okay. For our increased capacity also, the mix will remain about the same. I am sorry, your voice is a little- Sorry. Is it any better now? Yes, much better. Please. Okay. I was saying for the increased capacity, when our capacity grows to 1 million tons, the mix will remain in the same range, right? Yes, please. Our mix is to make between 40% to 50% up to 400 and approximately 50% above 400. Okay. It is in line with the market demand. Okay. All right, sir. Thank you so much. Thank you. Thank you. The next question comes from the line of Akshay Deshpande from Ashika Institutional Equity. Please go ahead. Hello. Hi, sir. Am I audible? Yes, please. Very good evening. Hi. Sir, I just wanted to know, have you received any cash from JJM projects in the previous 3 months? Have we received any cash from the? JJM projects, Jal Jeevan Mission. Sir, the project- Or any bids? No, there has been an ongoing movement in JJM. It is not that because the center has temporarily halted the CapEx, that the projects have stopped. As you must be aware, the state takes care of 50% of the expenditure. So the states which have reasonable resources like Odisha, MP, over there, we are seeing movement. It is not at the same term as it was, say, six months back, but not that there is a complete switch off on the JJM front. Understood, sir. Would you be able to quantify it? That will be a little difficult for me to exactly quantify what has been the state-wise expenditure over the last six months. I would not have that information. Okay, understood. It's something I can- Understood, sir. gather and get back to you if you like. Understood, sir. My second question. How was the price volatility in the previous 3 months for coking coal and iron ore? On the coking coal, in the last 3 months, the prices have been actually varying to the tune of, say, $20 or so. More or less, we can say that the coking coals have been more or less steady for the last 3 months. As far as iron ore is concerned, there is a small upward trend, not really much, to the tune of, say, INR 200 to INR 300 a ton or so. Broadly speaking, both of these are remaining steady. Understood, sir. Thank you. The next question comes from the line of Aashav Patel from Molecule Ventures. Please go ahead. Thank you for the opportunity. My first question is that we have been hearing on the JJM outlay from the center side is expected to be significantly cut down from INR 2.8 lakh crore to INR 1.5 lakh crore, almost a cut down of INR 1.25 lakh crore, which would largely has to be borne by the states, which we also know is quite difficult to get funds out of the state governments. What is your view on this ongoing shrinkage of the JJM allocation? Sir, as I had mentioned, and I have been mentioning for many investor calls, the initial outlay for Jal Jeevan Mission was INR 8 lakh crore. That was during 2019. Post that, there has been a shift in prices of all materials and even manpower. To finish the project, they will require the estimated INR 9.10 lakh crores. There is no two ways about it. Your apprehension is well-placed when it comes to certain states where they are running into financial troubles. But there are specific states where there will continue to remain central support, such as Bihar and Andhra Pradesh and Madhya Pradesh. Also there are certain states which are reasonably well-to-do from their fiscal perspective, such as Odisha. So your concern is limited to specific states, sir, for me. I think Karnataka probably is one state where there might be some work which will take longer than what it should to finish. But again, most states which are struggling financially, fortunately, are double engine, sir. So they have the support from the center. In some garb or the other, I am very certain that the government would like to finish the work to completion, have it completed. Got it. And sir, as per the JJM progress which is mentioned on the website, they are claiming to have 80% of the penetration. But ground-level scuttlebutt from our side suggests that the actual penetration is much lower, closer to a 60% level. So what is your view on the same? Have we penetrated 80% of the targeted JJM market? What I was saying, I find that that has now come out in public. But this is a reality that I am noticing on the ground because of our network. We are well aware of the ground realities. We have probably the strongest sales and marketing network in the country for Ductile Iron Pipes. And that helps us get a better understanding of what is happening on the ground. And that is the reason why the past few quarters I have been mentioning that the real work on the ground is far lower than what it is stating. Yes, the tap connections are there, and yes, we have made commendable progress. There is no two ways about it. But we are a very big country with a huge landmass and a huge population. So it takes time. I draw parallels to countries like the U.S.A. and China since they faced similar population growths recently, and you will find that even today they have a substantial demand. Okay. Should we expect by FY 2028 we would be largely be able to achieve the JJM target? Or it could even then further fall off even after 2028? Sir, if the situation happens so that the burden of the INR 1.5 lakh crore goes on to the states, then in my opinion, this might get pushed to maybe FY 2030 for those specific states which are going to be struggling financially. Apart from that, I think by 2028, 90%-95% of the work should have been done. Got it, sir. But then There is a population growth that is also constantly happening. So that is why I say 90%, 95%. To reach 100% will take some time, sir, for our country. Mm-hmm. Makes sense. And sir, we have also been hearing in terms of funded flow slowdown specifically across, and that is something which is across the B2G companies, but specifically to the Jal Jeevan Mission and water infrastructure, it has been the most impacted industry. So what is your view on that? Are you seeing challenge in terms of working capital over last couple of quarters, and do you see it easing out anytime soon? Sir, there has been a marginal increase in the debtor cycle for the company, but we adhere to a very strict policy when it comes to our supply chain, outward supply chain especially. Okay. Wherein we do not allow for open credits beyond a certain number of days and beyond specific customers. Because of that, we have not seen a major impact. If anything, going forward, things are to only improve. I think from the cash flow perspective, although not much impacted, I think we are at rock bottom. Okay. But you have visibly seen the slowdown over last couple of quarters. Very marginal, sir. As I was mentioning, there are also other demand drivers today in the market. It is not that there is ever a time that suddenly because Jal Jeevan has slowed down or stopped, there is a zero cash income inflow cycle. Mm-hmm. Absolutely agree. Sir, last question on my side. As per Coal India website, almost 70% of the pending compensation regarding the suspended coal mines have already been settled. What is the update on our expected compensation? Are we seeing any positive development there? Sir, there are definitely some positive developments. So far I've been mentioning that I don't want to comment on timelines because I've been proved wrong. But with recent developments, I'm hopeful that this financial year we should see this matter settled to a very large degree. Mm-hmm. Makes sense. Okay, sir. Thank you and all the very best. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Abhishek Yogesh Shah from Valcore Capital Advisors. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, I was looking at the numbers. We have seen a sharp fall in your margins and realizations also. Just wanted to get some understanding on how you are seeing the realization shape up, say, in the coming quarter. Also on what sort of bottom line could we be looking at because EBITDA per ton, last year we were looking at upwards of, say, INR 16, INR 17, INR 18 per kg. We have seen a fall. I am just trying to understand where you see it for the year ahead, sir. Sir, I would prefer answering margin-related questions in percentages because I think that is a better metric. Our product is 60%-70% iron and coal cost dependent, so the absolute value per unit is moving because of that. It is better to talk on percentages, in my opinion. As this particular financial year, we have hit an EBITDA margin of approximately 16%. I have been mentioning that 15%-18% is the range that we are looking at in the mid to long term. In good years, we see ourselves operating sometimes even above that. Historically, Ductile Iron Pipes as an independent operating business has never gone below 15%. Moving forward, for this particular quarter, things have started moving now in the center because of the revamped estimates. There is a lot of paperwork and administrative approvals that are going to take maybe another two, three months to come into place. Since it is a big mechanism, it takes some time to move. Things are moving forward, as you must be seeing articles coming out every week or so about what the update is on Jal Jeevan spending. Things are moving forward at the central level, and very soon, the money will start coming in. I think starting quarter two, there will be an upcycle again. I am very hopeful that we will be able to stay on the upper side of this bandwidth for the medium term. Got it. Sir, how are you seeing capacity additions? We are adding substantial capacity, which is due to come soon. At industry level also, we have seen significant capacity addition. Maybe if you can throw some numbers on that and give us some idea, how do you see the demand and supply shaping up for the next say, year or two? Sir, the demand scenario at the moment with the river linking projects, the irrigation business, and the reinstated budget of Jal Jeevan Mission, I think demand, which was earlier beyond supply by 25%, will remain to be ahead of supply by approximately 10%-12% for the next two years. Coming to 2028, 2029, I think that is when the demand and supply cycle will meet. Got it. That is all, sir. Thank you so much. Thank you. Thank you. The next question comes from the line of Subhash from Value Investments. Please go ahead. Hello. Am I audible? Yes, please. Okay. I just had a question on your revenue. Sir, I understand that from the last two quarters, you had some maintenance in your manufacturing units, right? I think maybe one or two quarters ago, you even said that the maintenance was almost complete, but the output was not as per the expectations. But I see in your investor presentation that you have mentioned that the production will be stabilized going forward. Is the revenue down because of that, or is it because of the state is not spending much money, as you mentioned about Jal Jeevan Mission. Is it because of that you are seeing less income? Sir, I would say the bigger part of the reduction in revenue is owing to the maintenance shutdowns that we had. Okay. Definitely, the slowdown in expenditure has played a part in the reduced revenue for the second half of the year. First half remained strong. Yes. One of the reasons why also the decision for taking a shutdown was taken, although we had taken one in Q2, was because of the slowed demand situation. We are very certain of the fact that going forward, the demand will pick up, so it was an opportune time for us to take the shutdown right now, rather than having to do it at the time when the markets are high. Got it. Thank you. Also, how do you account the revenue? Is it as soon as you supply the materials from your manufacturing units to the sellers, or do you record the revenues after you receive actual cash? The moment material is reaching to the customer site, we are recognizing in the income. Okay. Got it. For this quarter, you are around EBITDA margin of 11.4%, and I understand it's because of the maintenance. But going forward, as you said, it would be around 15%-18%, right? Sir, I am very hopeful that for the medium term, after 2027, 2028, we will be on the upper end of this band. Okay. That's great to hear. Okay, thank you. Do you have any update about the latest land acquisition that you did around Odisha, I guess, right? Which you announced maybe three quarters ago. Yes, please. We are very closely in touch with the government to get our approvals and other auxiliary requirements in place. I think there was a bit of a slowdown due to the government change in Odisha as well. It was taking a little longer. They took a couple of quarters to really get everything back in order. Plans are still on, and I think I am very excited to bring about some good news very soon for the investors. Yeah, that is great to hear, because the next questions I had about was, in your presentation, you have mentioned that by FY 2026 end, you will have 10 million tons of production capacity. So, this is without considering the latest land acquisition, right? So this could go up- Sir, 1 million. 10 lakh tons. Sorry. Yeah, 1 lakh tons, right. 1 million is in our existing facilities. Approximately 1 million will be our capacity in the existing facilities. We are still in progress for that, sir, because that has no nexus with the expansion in Odisha. Yeah, this plan does not include the Odisha land acquisition plans, like whatever you have it for future, right? For that land. Yes, please. Oh, that's good. Okay. Yeah, I think that's all I have. Thank you. Thank you. Thank you. The next question comes from the line of Rajesh Agarwal from Manior. Please go ahead. Sir, this quarter we have taken a maintenance shutdown. Can you quantify the production loss or any one-off for the shutdown? Sir, owing to the maintenance shutdown, we have had a reduction in the output by approximately 50,000 tons. Okay. For the one that was there in Q3, Q4. Okay. Any other expenses also for the Any other expenses? Yeah, expenses for the shutdown on this one, maintaining the plant or whatever. One-time expenses. We have incurred around INR 13 crore for that. Okay. Second, you said tariff. The 10% tariff will affect our export? Not really, sir. Not really. Okay. Just to give some further clarity on this, please. Our total export to the U.S. tantamount to around 1.5% to 2% of our exports. Okay. We are not very dependent on it to begin with. Okay. To add to that, a 10% tariff will not make our competitiveness in the U.S. market any lesser. I do not see it impacting the 1.5% to 2% either. Okay. Other countries will not have advantage to us, huh? Either in Saudi and all Middle East also, no? No, sir. So then apart from Electrosteel, there is no other company who export into the U.S. market. Understood. Sir, why the working capital days have gone up? If you see the three years now, working capital days have gone up. No, it is reduced. It was INR 1,800 crores earlier, working capital debt, now it is INR 1,400 crores. Not the debt, number of days. Number of days, yes. Number of days it is. Sir, that is in two parts. As mentioned earlier, we have seen a slight slowdown in the customer payment cycle. Understood. We had pushed some of our material to our subsidiaries across the globe because we were expecting sales pickup, which we will see in due course are reflecting in our figures. Okay. There is some extension in the overall. Okay. Going forward it will improve? The days will improve? Absolutely. Okay. And sir, I heard state government is trying to do a water project in HAM model. So for tying up the funds with the investors. So will that affect our business? Will the business go up? I am hopeful that it will, sir, on this regard. Because earlier whenever HAM has been tried, it has not been very successful, so I cannot be very confident about it, but the mindset of the investors towards public-private partnerships has considerably changed over the last five, six years. So I am positive about it, yes. So after April, the allocation of JJM has increased. So you are seeing a movement in there, tender movement, inquiry or- Sorry, you mean JJM? JJM. Sir, there has been a lot of positive movement at the central level when it comes to approval of funding, et cetera, which has been seen a bit of a stalemate for six months. I think impact on the ground will start coming in from quarter 2. Okay. Sir, you said Ken Betwa, the project cost is INR 45,000 crore. Can that result into a huge DI pipe order? What percentage can be DI pipes contribution in that? Sir, that is going to be a mixed bag of canal dam and pipe irrigation, and we will see demand come up mainly in DI and HDPE. Okay. I would say approximately 15%. 15%. Yes, please. 15%-20%. That will start by when? The demand for DI pipes, you know? Sir, I think second half of this financial year, we should start seeing some demand from Ken Betwa coming to DI pipes. Okay. And sir, the last question on this Indus Water Treaty, whatever has been kept in advance, the government starts activity of their building a dam and other water infrastructure, that can also result into orders to DI pipes? Absolutely, sir. It is not something we want to highlight much right now because it is very nascent, but this is something that we have at the back of our mind. I have a feeling at the moment that will be very fast. That is what my guess is. I am very certain of it, sir, but as there is nothing concrete. Understood. But the DI pipes will be required now there. Absolutely. What will be the CapEx for 2025, 2026? Rajesh, if you could please join back the queue. Last question, only one question. CapEx only. I am asking the CapEx for 2025, 2026 and maintenance CapEx. 2025, 2026, the CapEx will be somewhere around INR 200 crore. Okay. And maintenance CapEx? Additional CapEx including- Additional CapEx. Maintenance CapEx. Okay. CapEx and maintenance. Maintenance will be how much and CapEx will be how much? Maintenance CapEx altogether will be INR 35 crore or INR 150 crore will be some new CapEx. Understood, sir. Thanks a lot, sir. Thanks, sir. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Ankit Puri, an investor. Please go ahead. Hi, good evening, Mr. Madhav. I want to check up, can you please comment on the reasons for the increase in the inventory levels and how do you see it panning out going ahead? Also, if you can provide insights into the current and future capacity utilization. Sir, the increase in inventory level is owing to a slight slowdown in the market demand. In regard to the capacity utilizations, I am expecting that over the next 2 to 3 years for the industry, the capacity utilization should be somewhere between 85%-90%. We will probably be operating at a slightly higher level than that. All right. What has been for this particular quarter and for FY 2025? For this particular quarter, our capacity utilization has been probably 60% or so, but that is owing to the shutdown. Subsequently, I think, going forward from quarter 1 to quarter 2 to quarter 3, we should see a ramp-up of 10%-15% each quarter as we are coming out of the maintenance shutdown and ramping up. Also support from the markets for demand. All right. Lastly, what updates can you provide on the traded products through the Singardo acquisition panning out? One very good movement that we've seen that we've managed to do due to the acquisition is to enter the Vietnam market. Although we started with very small orders, but because we improved our presence in the area, we have now started discussing reasonable size orders with the local contractors and business houses. That's one big benefit. We are also being able to procure a small quantity of products via Singapore from countries around like Vietnam and China, et cetera, for products in the basket which we are adding, like coupling adapters, et cetera, for our subsidiaries in the Western Hemisphere. It's just a beginning sir. With time, we will see this grow substantially. All right, sir. That's very heartening to hear. Thank you so much for the update. Thank you. All the best. Thank you. The next question comes from the line of Rajesh Bhandari from Nakoda Engineers. Please go ahead. Good afternoon, sir. Very good afternoon, sir. Yeah. Sir, first of all, this coal mines one which is about to settle, how much amount are we expecting? I will not be able to tell any figure right now. There is no exact indicative amount. No, not exact sir. An approximate like INR 200 crore, INR 500 crore, INR 1,000 crore, like that. It will be very difficult to say, but we will definitely recover a reasonable chunk of our claim. How much is our claim, sir? INR 1,200 crore, sir. Oh, okay. All right. As much claim as you can, sir. Thank you. Second, sir, right now as Russia-Ukraine is also getting settled and other things like Hamas etc. are also cooling down little by little, will the demand increase because of that, sir? Yes, when there is a little settlement on the Hamas issue, our supply chain will become very streamlined in our existing markets. For the last one and a half years, we have faced a lot of problems there. We have to keep higher stock levels in the subsidiaries. Our freight time has increased a lot. Oh. We will get a lot of relief there. Yes. Today we also have this part that when the Ukraine war was starting, we had started entering there from sales and marketing. Sure. Eastern Europe is a very important new frontier for us. When the matter eases up a little there, we will restart those efforts and definitely we will see demand improvement from there. Demand will increase a lot, sir. Meaning, if we have influence, then naturally we can have a good chunk of order. We had started establishing presence over there, sir. Yes. Okay. Now, sir, as we are taking regular plant shutdown, so now that we have already taken it, is there any chance of more shutdowns, sir? Plant shutdown. No, sir. There will be no requirement for any shutdown in the near future. Yes. As I was mentioning, the shutdowns we had taken in the past for Q3, Q4, that was just to further enhance what we could not achieve from the first shutdown, and because the market was slow, we thought that it's a good time to exercise this option. How many months is the order book with you, sir? Rajesh, I'm sorry to interrupt you. Only last question. Okay. Only last. How many months is the order book, sir? Sir, approximately seven and a half months. Okay. We expect it to be better in the future. Yes, please. Okay, sir. Thank you, sir. Thank you very much. Thank you. Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question queue. The next question comes from the line of Saket Kapoor from Kapoor & Company. Please go ahead. Namaskar team, and thank you for the opportunity. Madhavji, only residual questions and some clarification. Firstly, sir, you mentioned that this would be the financial year Where we would be expecting some conclusion on the Coal India compensation part. If you could just elaborate, sir, what factors have endured that? On which ground are you getting this belief? Because sir, our reconciliation of the figure has not yet happened, as to how much we will get in how many INR. There is a dispute about that. If you could shed some more light on this. Activity level or interaction level has increased significantly. There were a few steps, I think, that were not cleared out by the Government of India for JSW to start operating. There are different types of clearances for mining. As and when JSW is also getting those clearances and those steps are clearing out, I think both the parties and even the mining ministry wants to now see the conclusion happen so that the asset can be revived. That is my reason for showing some positivity on that front. Okay. JSW has already paid to the ministry for the vesting orders which they have received. Sir, they have certain breakouts. They have given the money they have to give to the Government of India. What they have to give us, as and when the amount is established, they will reimburse us. Okay. Sir, secondly, you said that for this financial year, we have lost tonnage closer to 50,000 tons because had these two shutdowns not been planned, our tonnages, the sales would have been higher by 50,000 tons. This is what the understanding is? Sir, if both the shutdowns are considered, then probably we would have seen a slightly even higher than 50,000 tons production number. Around 60,000, 60,000-65,000 tons more would have been ours. This number, sir, definitely will add for this year on 717,000. If you can please rejoin the queue. No, sir, I am only concluding my reply from Madhavji. Kindly allow me to complete. Please, sir. Yes, sir. What I was mentioning, sir, that is on top of 717,000. Definitely, we will be adding this 60,000 tons for this financial year. This should be the base minimum that we should be doing because now the capacity is also more up to 9 lakh. The installed capacity is 9 lakh. Since it takes a little time to ramp up, we are expecting to hit something between 830 to 850 this financial year. Okay, sir. I will join the queue for two more financial questions. Thank you. Thank you. The next question comes from the line of Muskan Rastogi from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, for the last few quarters, the company has been guiding that there has been no weakness in the realization. However, the realizations are still on a downward trend. We also interacted with L&T team and we got a feedback that the realization of DI is at INR 58-INR 60 per kg range and demand is also subdued. Can you please give color on this and also what would be your volume guidance for FY 2026 and FY 2027? Well, ma'am, as I was mentioning previously in this call, the absolute realization numbers is a result of both demand and the movement of the iron ore and coking coal pricing. Part of the reason for the softening on the realization is also that the input material costs have come down. Going forward, the movement of the realization is going to be a consequence of the demand moving up, which will create an upward pressure, and we are hoping that the pricing for the raw materials remains stable. Seeing that possibly no major geopolitical issue arises. There might be some upward movement in the iron ore if and when the Government of India starts picking up on many of its infrastructure projects beyond Jal Jeevan Mission as well. This will, I think, lead to the average realization going up. Currently, the realization is between INR 58 to INR 60, but that is for new orders. We are carrying over orders from the past as well. The effective realization is always a blend of old and new orders. What would be your volume guidance for next two years? Volume guidance, please? Yeah, volume guidance for sales volume guidance for DI for next two years. Ma'am, I think for the next financial year, we will be somewhere between 8.3 lakh tons to 8.5 lakh tons, and in the subsequent year, we should be crossing 9 lakh tons, please. Okay. Sir, another question. In a normalized spread scenario, if we do INR 9 to INR 10 EBITDA per kg, then post-tax ROCE for the core business comes to around 10%. Just want to understand what is the reason behind going for such large CapEx in the same business in Odisha when the return ratios are just 10%? Well, ma'am, INR 9 to INR 10 would be a conservative figure. I think that the return on capital for the core business would be a little higher than that. We also have to keep in consideration that Electrosteel as a company has historically also exported pipe. We are also looking at expansion in our fittings business, which is a higher capital return business. So we are very certain of hitting around 12% to 13% at a very, I would say, realistic, slightly conservative level. Sir, because this quarter it was INR 8 per kg, I was asking this. Well, ma'am, one has to appreciate that the last six months has possibly been rock bottom for the DI industry. We cannot plan based on that. Last year around quarter three, quarter four, we were hitting 20%+ EBITDA numbers. Even at that point, we had also mentioned that 20%+ is an unsustainable number. We are very certain of maintaining a range of 16%, 17%, 18%. Those are the figures that we have to look at. We cannot get swayed by short-term up and down swings. Okay, sir. Sure. Thank you. Thank you. The next question comes from the line of Rajat Sethia from iThought PMS. Please go ahead. Rajat, if you can please unmute your line and ask your question. Hi. Yeah. Thanks. Thanks for the opportunity once again. Sir, what is the maximum achievable capacity utilization possible at the plant at the company level? Sir, I think between 90%-95%. Okay. You mentioned that we will soon be hitting those numbers, like in the next one year or so, right? Yes, please. Okay. We are adding capacity, so that is where we expect our growth to come from. We will expect to maintain these higher levels as well, right, for the next two, four years. Yes, please. Sir, what is the frequency of shutdowns, generally? I mean, how many years will be the shutdown? Sir, we have an annual shutdown, which averages around 10-15 days, in each unit. Barring that, we have a shorter one or two-day shutdown just the alternate month. Okay. Ajay, why don't you mention the total shutdown days for a unit of- No, no. -our industry. Yeah. But normally, I mean, the running days in a year are in the range of between 346 to 350. Thank you. We take the next question from the line of Aashav Patel from Molecule Ventures PMS. Please go ahead. Thank you for the opportunity for a follow-up question. Sir, my question is, if we end up receiving the coal compensation whenever we receive it, how do we envisage to consume that capital? Sir, in the new project. Okay. We do not plan to deleverage the balance sheet meaningfully from around INR 2,000 crore net level. So sir, I think moving forward, we will probably maintain and slightly reduce our total leverage position while still going ahead with the greenfield project. So that is quite a comfortable level for us, maintaining a million ton plus production capacity in pipe while keeping, say, INR 1,500 crore to INR 2,000 crore total debt level. Total net debt level. I think it is something that we are targeting to achieve and is very much in our grasp. Got it, sir. Just wanted to understand what is your thought in terms of selection of product when it comes to a greenfield expansion. Because what we have also been hearing is that we have been seeing steep competition from some of the non-listed DI manufacturers. In terms of the margins, they are aggressively pricing their product compared to what pricing we are doing. Don't you think there is too much competition in terms of the supply side is also increasing for the DI. Don't we plan to enter into newer products for the greenfield? Most definitely, sir. There are new products that are being envisaged. We mentioned before that as a company, we wish to move towards a manufacturer and supplier of the entire water infrastructure space. Slowly we are covering all products. Very recently, we set up a small production line for gaskets also, which goes into the pipeline. Similarly, in the new production facility, we will add products that go into the water infrastructure space beyond just fittings and pipes. Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I will now hand the conference over to the management for their closing comments. I would like to thank all our investors for dedicating your valuable time and engaging with us during this concall. I want to reaffirm that the company is not only expanding but also preserving the robustness of its balance sheet. Moreover, we are strategically poised to capitalize on the increasing domestic and global investments in water infrastructure. Should the investors have any further questions, please reach out to EY, our investor relation consultants. Thank you. Thank you. Thank you. On behalf of Electrosteel Castings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.