Ladies and gentlemen, good day and welcome to the Ratnamani Metals & Tubes Ltd Q4 and FY 2025 earnings conference call hosted by Monarch Networth Capital Ltd. As a reminder, all participant lines will be 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 an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Sahil Sanghvi. Thank you, and over to you, sir.
Yeah, thank you, Saisha. Good evening to everyone. On behalf of Monarch Networth Capital, we welcome you all to the 4Q and FY 2025 earnings call of Ratnamani Metals & Tubes. We are delighted to host the management of Ratnamani and from their side, we have Mr. Manoj Sanghvi, Chief Executive Officer, and Mr. Vimal Katta, Chief Financial Officer. So, without taking much time, I hand over the call to Mr. Manoj Sanghvi for the opening remarks. Thank you, and over to you, Manoj, sir.
Yeah, thank you. Thank you, Sahil. Good evening, everyone. I welcome you all and thank you for joining us for the company's performance update for the quarter four and the full financial year 2024-2025. I am pleased to report that our performance for both Q4 and the full year has been strong. We recorded our highest-ever sales during the quarter, as well as for the entire fiscal year. On a standalone basis, our sales accounted for INR 1,575 crore for the quarter, reflecting an increase of 11% over the same quarter last year. This Q4 growth was driven by an increased contribution from high-value-added products, which also enhanced our profitability. Throughout the first nine months, sales were relatively muted due to soft metal prices and delays in certain projects and customer offtake.
However, the strong performance in Q4 helped us recover the decline experienced earlier, resulting in an overall annual growth of 1% over the previous year, in spite of lower commodity prices and water application orders contributing higher to the carbon steel line pipe business, where realizations are typically much lower compared to oil and gas application. With a greater focus on value-added products and these contributing higher to the top line, we saw our gross profit and EBITDA margin improve by 3% and 2%, respectively, over the corresponding quarter last year. On a full-year basis, we maintained a healthy gross profit margin of 34%, though our EBITDA declined marginally by 1%. Our financial position has also strengthened considerably this year. On a standalone basis, we generated INR 521 crore from operations and closed the year with zero debt.
Considering the robust performance for the year, the board has approved a dividend of INR 14 per share, that is 700%, which is subject to approval of the AGM. Now, let me share some updates on the subsidiary performance. Ravi Technoforge, our ball bearing ring manufacturing business, achieved sales growth of 12% in Q4 and 11% for the full year. We maintained profitability margins in line with previous years. Our expansion projects are progressing on schedule. Over the next two years, we will enhance our capacity, supported by increased automation and precision equipment. These upgrades will also help us step into new customer segments. Turning to Ratnamani Finow Spooling Solutions, manufacturing spools and hangers and supports for the nuclear power sector right now, the business gained strong momentum and reported a turnover of INR 56 crore. Importantly, it now holds a robust order book exceeding INR 600 crore.
To support this growth, we are setting up a new plant that will triple our production capacity. Including the performance of our subsidiaries, we have achieved a consolidated turnover of INR 1,715 crore in quarter four and INR 5,186 crore for the full year, which again is the highest-ever sales on a consolidated basis. We are also excited to announce our joint venture with SESCO in Saudi Arabia. We are in the process of establishing a stainless steel manufacturing facility in the region. This strategic move will strengthen our local presence, enhance our brand visibility, and allow us to better serve customers across Saudi Arabia and GCC region. With multiple expansion projects underway and a positive industry outlook, we are confident in our ability to continue scaling our performance in the years to come. That's it from my end. Thank you, and I'm happy to answer questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vikas Singh from Phillip Capital. Please go ahead.
Good afternoon, sir, and thank you for the opportunity. So I just wanted a little bit more color on your order book, which has declined sequentially. So can you just explain that it seems lagging in India? And while your commentary talks about the positive outlook, so what are the green shoots we are looking at? How should we look at our order book and the revenue growth guidance for FY 2026?
Our order book as of 31st March was close to INR 2,100 crore, roughly 55% export and 45% domestic. At the moment, as we speak, a lot of jobs are under bidding, both for stainless steel as well as carbon steel. And for the current year, we can say that roughly 5%-10% growth on volumes is what we can consider. Hello. Hello.
Yes.
Understood, sir. Am I audible?
Yeah, yeah.
Yeah. So sir, in terms of our CapEx plan, if you could give me a little bit more idea about what kind of expenditure we are going to incur geography-wise and what kind of capacity we are looking in order to enhance?
So at the moment for Ratnamani , we had two projects which were ongoing. One was a spiral welded plant in Odisha, wherein the... Hello?
Yes, sir. Yes, sir, please.
Yeah. Wherein the phase I for the Odisha project is already commissioned, and phase II will subsequently happen. So by the end of this calendar year, phase II will also be into commercial production. And then we had the stainless-steel cold finishing capacities. That also, the production has started. However, the ramp-up will take another three to six months. So this is for Ratnamani standalone basis. For our subsidiaries, Ratnamani Finow, we are increasing the capacity. So there, by the end of this calendar year or first quarter of the next calendar year, we will have the expansion, which is INR 250 crore in place. So thereby increasing our capacity threefold. And for Ravi Technoforge, we are going to expand. We are increasing one automatic line. So there, 18 months from now, that will come into production.
How much we are spending on these individual projects?
Odisha and stainless- steel cold finishing facilities, they are already, I would say, commercial production has started phase I for Odisha, and stainless-steel cold finishing facilities is already started. For RTL and Ratnamani Metals, between INR 200 to INR 250 crore each.
Understood. Over the next one and a half year?
Yes. Finow in next one year. Yeah. Ratnamani Finow in next one year and RTL in next 18 months.
Understood. And just a little bit more color on the Saudi JV. What kind of capacity we are looking to set up there? And how we are funding this in terms of JV, our share of CapEx?
Saudi joint venture is 75/25 JV, wherein Ratnamani holds 75%, and we have a local partner who holds 25%. We are at the process of applying for company registration and processes. The funding shall be in the ratio of partnership, JV partnership. At the moment, we have not decided whether it will be debt, equity, so those structure and all going forward in this quarter, we will finalize.
Noted, sir. That's all from my side. I'll come in the queue for further follow-up.
Thank you.
Thank you very much. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Radha from B&K Securities. Please go ahead.
Hello, sir. Thank you for the opportunity. And congratulations for all-time high performance. So my first question was, many stainless-steel players in India are talking about this high-margin SS boiler tubes product for supply to thermal power plants. So I wanted to understand whether Ratnamani is supplying these tubes, and if yes, then out of the total SS pipe order of INR 790 crore, how much is contribution from these boiler tubes?
We have some orders for the boiler tubes at the moment. However, I don't have the exact number. What is the quantum for boiler tubes? There are some in the bidding, and yes, we are one of the suppliers for boiler tubes for NTPC projects.
So secondly, sir, how difficult is it to get the customer approvals in this product? And is it a fair understanding that this is a new opportunity for the industry, considering earlier it was fully imported in India? And do you see this as a big opportunity going forward? What kind of margins can be made in this product?
No. So this particular product, boiler tubes, earlier only extruded pipes were permitted. Currently, NTPC as well as the power ministry has allowed the pierced product as acceptable for boiler tubes. So considering that, the competitive scenario for this product has become intense. So yes, since there is 80,000 MW to be implemented in the power sector, the demand is going to be there. However, the competitive scenario for this particular product, being a pierced product accepted by the government, we feel that the margins for the boiler products will not remain as it was in the past.
But still, 17%-18% margins can be made in this, similar to other SS products?
Yes, possible.
Okay, sir. Thank you. And sir, secondly, with respect to the stainless steel, I wanted to understand. So currently, we have around 50,000 metric tons of capacity for stainless steel. So what would be the total power cost as per your assumption if we utilize this stainless-steel plant at full utilization? And any rough idea of what kind of power units are required to run this plant at full utilization?
I don't have those figures offhand, but if you want to send an email, I can look at it and then revert back.
Okay, sir. Yeah. So in stainless steel pipes, like you rightly said, a lot of players are also adding capacity. So are you witnessing any pressure on margins because of this? And if yes, how are we planning to mitigate the risk?
Not at the moment. But yes, going forward, considering so many players coming in and that too with the pierced product, wherein we are not sure of the quality of the product. However, competitive scenario for stainless steel seamless pipes is increasing. We are planning to establish ourselves in grades which are not possible through pierced route. So that's how we plan to save our margins.
A bit of color on what kind of those grades would be and in which industries would that go to?
Those kinds of information, we would not like to divulge.
Okay, sir. Okay. And for the CapEx plan that you have announced, how much do you plan to spend in FY 2026 and how much in FY 2027?
Say for Saudi, about so the total roadmap is that we will be operational by December 2026, so 60-odd% this year and 40 next year.
Okay. And so last question is, in the MENA region, so you're setting up this SS pipe facility. What are the key projects that are driving this demand? And has there been any MOU signed with any customer regarding long-term supply from this plant?
No, there is no MOU with any of the customers. However, we have, at the moment, we'll be the only player who will have stainless- steel cold finishing facilities in the region, and this product is being imported, so we are quite hopeful that we will be able to utilize the capacity, is what we are planning.
So currently, out of the 50% exports of stainless steel, how much are we supplying to MENA?
All products put together of the 50%, I think substantial portion is for Middle East, 25%-30% .
Okay, so if we set up a plant and start supplying from there, so is it fair to assume that the logistics cost would improve substantially and that could drive the margins from the MENA region to above 18% at optimum?
No. When I say 25%-30% is exports, it is the whole product portfolio that we have and what we are setting up in MENA is only stainless-steel cold finishing tube making facility where the freight cost is not a big element.
Okay, sir. Understood. Yeah. Thanks and all the best.
Thank you.
Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Pranav Mehta from Equirus Securities. Please go ahead.
Yeah. Thank you for taking the question. Sir, I wanted to understand on how soon are you expecting the domestic market to start seeing the order inflows coming in? And how is the order inflow coming from, let's say, apart from MENA, your EU and U.S. markets? If you can throw some light, where are we seeing the next leg of orders coming from?
So, domestic, as we see, stainless steel and the carbon steel process pipe products where there is no problem with the demand. The demand, especially for line pipes, is quite muted. And that too for the oil and gas segment. Water segment, we are seeing some demand in Gujarat, Rajasthan, Maharashtra, Madhya Pradesh. But for oil and gas line pipes, the demand is quite muted at the moment. And to answer your second question, both Middle East as well as U.S. f or LNG projects, for stainless steel, we are seeing quite a healthy order inflow as well as in the MENA region because a lot of oil and gas projects are going on in Abu Dhabi as well as Saudi and Qatar.
Okay, sir. And sir, what about EU?
EU is slow at the. moment. However, for stainless steel, we still manage to have the same order inflow.
Sir, it's safe to assume that you see or start seeing the bulk of the order inflow coming in from second half of FY 2026, or is it the right way to look at it?
Yes. If you see, currently our order book is close to INR 2,100 odd crore, which is good for, say, four to five months. So by that time, there are certain projects already in the bidding. And we will see. And normally during the monsoon, most of the water projects are bid. And post-monsoon, the execution happens. So yes, from the middle of second quarter, we will see the uptake in line pipe segments.
Okay, sir. That's information. Thank you.
Thank you.
Thank you very much. The next question is from the line of Sahil Sanghvi from Monarch Networth Capital Limited. Please go ahead, sir.
Yeah. I said congratulations for amazing last quarter and also a very good margin. My first question was just to clarify, sir, 25%-30% when you said from MENA region, is that 25% of your total exports or your total revenue?
Exact number, Sahil, I would not have. It is a rough estimate that of the 50%, say approximately 1/3 would be MENA region.
Okay. Okay. Got it, sir. And what would be the Europe and U.S. exposure?
U.S. would be 15%-20%. And similar would be Europe.
And would you be able to give the total CapEx number that you target to spend, say in FY 2026 and FY 2027?
Including the subsidiaries or just on staff?
Yes. Yes. Yes.
Subsidiaries, we will have a different percentage, right, depending on the shareholding. So that number, we still haven't worked out. But for standalone, we have only one project, of course, phase II of Odisha and one this Saudi project. So 60% of the total Capex planned for Saudi, we plan to spend.
What will be pending for the Odisha one?
Odisha phase II, say about INR 40-50 odd crore.
Okay. Okay. Thirdly, sir, if you can throw some light on Ravi Technoforge. I mean, on the margin front, we were quite flattish. So what are the obstacles over there, and how do you see what will be the levers for margin expansion at Ravi going ahead? Also on the demand side, how do you see that?
No, demand this year, we are quite optimistic for Ravi. We have a sales plan of almost INR 350+ crore for this year. So with all the fixed cost and more or less whatever automation and all we have done, remaining same, we feel that the margins should be closer to 14% at EBITDA levels.
Right. Right. And lastly, on the spooling side, there was some delay in the receivables. So are we fairly confident of executing in FY 2026?
For RFSS, we have.
For spooling. Spooling.
Yeah. For Ratnamani Finow, yeah, we have plans that too INR 350+ crore. So yes, we are quite hopeful that we will achieve that number. Orders are already in hand. Capacities are available for INR 350+ crore.
Okay. Okay. Fine. Thank you, sir.
Thank you.
Thank you very much. The next question is from the line of Parth Bhavsar from Investec. Please go ahead.
Hello?
Yes, sir. So please go ahead.
No. I am waiting for the question.
Yeah. I'm asking Mr. Parth to go ahead. Seems like the line for Mr. Parth has been disconnected. The next question is from the line of Dhiraj Dave from Samvad Finance. Please go ahead.
Hello. Can you hear me?
Yes. So you're audible.
Yeah. Thanks a lot, and congratulations on good set of numbers. My one question on consolidated financials. When we look into segment-wise results, we see a good amount of volatility in pipes, spools, and auxiliary support. So for December quarter 2024, the sales appear at INR 74 lakh, and the segment result shows profit of INR 5 crore. So is it some typo or something?
No. There is.
No. Manoj, if you don't mind, I like to answer.
Yeah. Please.
See, basically, in case of Finow, last year was the first year of full operations. And a lot of inventory, I mean, stock was lying on the shop floor in various stages of production. So the expenses were loaded on that WIP, which resulted into profit turnover being low then also. Yeah. So it will equalize over a period of time because in current financial year, we are expecting it should give a turnover of anything above INR 300-350 crore. So then things will be normal because capacities and everything was created, and dispatches were on the lower side.
Yeah. Okay. And how do you see basically, say, three, five years down the line, we started with stainless steel, and then we went into ancillary supporting segments, and we announced. And now we are trying to develop two new segments, bearing rings and spools. And also internationally, we are going there. So how do you see basically what is the management thought about? Where do you see your business going, particularly segment-wise? What is the potential, if I may put the question, particularly for the new products or acquisition which we have done for Ravi Technoforge and kind of it? What is aspiration? If everything goes well, what we aspire to be after three years, what can be the peak sales one can assume in this segment?
Let us break down each. For example, say we see Ratnamani on a standalone basis. We have two expansions, Odisha and Saudi, which will bring in the additional revenue, plus 1,200 tons of cold finishing capacity expansion, what we have done in the existing plant. All these put together and plus some capacity expansion in the welded segment, we will be able to achieve a growth of, say, 10% year on year unless we plan something bigger. Then for RTL, we have already told you that this year we have plans of INR 350+ crore . That is what the visibility is. For Ratnamani Finow Spooling Solutions, this year, again, INR 350 crore. With the expansion in place, we will have the capacity to do anywhere between INR 600 to INR 650 crore in next two to three years.
Okay. That's good. And sir, how do you see basically competition intensity? So because we have a wonderful year with top line and we did a record-breaking record sales for us, but we do not see margins are moving. So is there any products? Broadly, is it because of product chain? Because we see that raw material price also declined. Metal price, because in your opening remark, you did say that metal price was soft vis-à-vis last year. Then despite that, we achieve a phenomenal revenue. But when we look at bottom line, we do not find that corresponding operating leverage and kind of it, which should have translated. So is it that the product mix was more in favor of low margin and that resulted a kind of?
No. If we see the last quarter, the margins were quite good. So margin is actually we have a lot of production.
I want to ask you something.
Carbon steel, stainless steel put together. So quarter on quarter for us to compare, maybe one quarter is close to 16 and another quarter where...
Yeah. So let me rephrase the question. If I look at the FY 2024 consolidated number, I'm just looking at PBT so that it's simple. We have INR 827 crore kind of profit, which has declined to INR 340 crore approximately during this year, FY 2025. So while we sales has increased, volume has increased, and despite that, we see profit declining in 12 months period. So if I just take FY 2024 as well as FY 2025, and if I need to understand the numbers, what were contributing the pressure on margin despite a good amount of operating leverage?
No. So one major shift between 2024 and 2025 is majority of the orders in 2024 were for the oil and gas segment in line pipes.
Which is?
As in 2025, yeah, it was, say, 50% of line pipe business was from water. So that is one major, say, event. Another, until unless you grow at above 5%, of course, your costs keep on increasing, right?
Mm-hmm.
So, that and the product mix as a whole. Because oil and gas, if it is muted, it is muted for, of course, for line pipes, the volumes is quite high. But even for stainless steel and even for carbon steel other products, overall. And then we have some competition intensity in other stainless-steel products also.
Okay, so all those factors similar, so just one more, if I may squeeze out. In oil and gas sector, basically, how do we mean, how much is the sales in India and how much is export? If you can just give us a broad idea, and which actually segments slow down during FY 2025?
Currently, I do not have the breakup of what is the oil and gas in India. But roughly, say, out of INR 2,100 crore, whatever outside India is mostly for oil and gas.
Okay. And do you expect, do you see a window of improvement there, or is it still lackluster on exports?
No. The current order book, we have good amount of export orders. Actually, the domestic order book is muted, but however, the export order book is quite strong considering the demand from Middle East, U.S., and Europe.
Fair enough. Thanks a lot for giving me opportunity and wish you all the luck. I will again connect next year with the record performance on both.
Yes. Yes. Thank you.
Thank you very much. The next question is from the line of Parth Bhavsar from Investec. Please go ahead.
Yeah. Hi, sir, so thank you for the opportunity. Sir, I have a few bookkeeping questions in terms of utilization for stainless steel pipes and tubes and carbon steel pipes and tubes for the year FY 2025. I want to understand what was the utilization?
So on an average, say, stainless steel, about 60%. And carbon steel?
For carbon steel?
For carbon steel, spiral and ERW, 55%, and LSAW close to 50%.
Okay. And for FY 2025, right?
Yes.
Perfect. And sir, wanted to know that this INR 2,100 crore of order book that we have, that is executable in how many months or years?
It can be executed in four to five months. However, some delivery would be delayed. So delayed meaning the agreed delivery between the customer and us would be for a longer period.
Okay. Okay. Fair enough. And sir, I wanted to understand that your working capital cycle in FY 2025, it went up over FY 2024. And this was largely mainly, I believe, because of the inventory that was built up for spooling business. So how do you see this? Do you see this normalizing in FY 2026? And by how many days? I think the cash conversion cycle is 163 days for FY 2025. So how do you see this improving in FY 2026?
So working capital cycle may be because of the product mix, as I informed earlier on the call, that a lot of orders from the water sector were executed, where normally the working capital cycle is a little higher than the other products.
Okay. So, sir, roughly in our revenue mix, what would be the share of our revenues from water segment?
Of the total revenue?
Yes. Yes. Of the total revenue. Yeah.
Roughly between 15% to 18% odd.
So how much was this earlier, roughly, in FY 2024 or even the last five-year average or something like that? Just to understand how much was.
2024 was not much. A lot of it was for oil and gas. Maybe it would be 5%-7%.
Sir, where do you see in over the next two, three years, where do you see which sector do you see that there would be some green shoots and we would be able to achieve a good 10%-15% volume growth on all of our products? Is there a specific sector that you can see would come up?
No. No particular sector. But yes, for the oil and gas, like petrochemical plants, refineries, that is one sector which India is planning, maybe two greenfield refineries which might come. And then there is a lot of petrochemical plants coming in and the expansion, plus the LNG. So oil and gas is a sector which we see going forward, which will again give that push.
All right. Thank you, sir. So those are my questions.
Thank you.
Thank you very much. Participants who wish to ask a question may press star and one at this time. As there are no further questions from the participants, I now hand the conference over to Sahil, sorry to interrupt, but the next question is from the line of Radha from B&K Securities. Please go ahead.
Hi, sir. Thank you again for the opportunity. Sir, I wanted to understand what would be the non-oil and gas mix for the SS pipe division of the order book currently? And in terms of that, do you see nuclear aviation as the key growth drivers for the SS pipe division in terms of the quantum of orders going forward?
Yes. Majority of the revenue, both for stainless steel as well as carbon steel, is from the oil and gas segment. However, our product portfolio or the customer segmentation in stainless steel is quite varied. Yes, nuclear is picking up and will pick up. We are supplying to the defense and aero industry. That also going forward will pick up. But to what extent and to what size, it is very difficult at the moment because these are all long run and long lead time projects.
So do we have approvals to supply to all these user industries? And how difficult would it be for?
Yeah. We are supplying to the nuclear power industry as well as to the aero industry. Yes.
How difficult is it to get approvals for competitors in this segment?
It is quite difficult, and even once you are approved, it is difficult further to maintain it also.
So it would take more than one year to get approved. Is that a right understanding?
Yes. Definitely. More than a year.
Sir, just one last question, and pardon me for my ignorance. We are one of the largest and the oldest companies in the steel pipes. I wanted your thoughts on what do you think about, or have you ever thought about, is it viable for a steel pipe player, a stainless-steel pipe player, to backward integrate into bars? And if it's viable, some thoughts on that, if not, some thoughts on that would be really helpful.
Okay. We are also thinking of maybe going backward. Whether it is viable or not, that study is going on. However, difficult to say at the moment because the capacity for manufacturing pipes is quite less than what a steel plant would be viable at. So standalone only for supplying to your pipe manufacturing may be not viable. But we have to see the whole picture because certain grades, if you want to develop, it is only possible with the steel plant. All the major players around the world, major stainless-steel tube and pipe manufacturers, they have their own steel plant. So dependence on availability of raw material, timely availability, plus the grades, what they can develop. So in long run, yes, it helps. But standalone, just to support your pipe plant, maybe not viable.
It has to be supported by sales to the other industry.
Okay, so you're talking about only stainless steel or carbon steel, sir, for the backward integration?
It can be a mix of stainless steel and alloy steel.
Okay. Sir, what are the global stainless steel tube and pipe manufacturers that you think the product portfolio is very good, and maybe you'd want to lead our company to their level in terms of product portfolio, in terms of new product launches, etc.?
There is one in Japan. There are two or three based out of Europe. A couple of them in the U.S., mostly European companies who have manufacturing units in the U.S. So if we name the one in Japan, it is Nippon Sumitomo. Then in Europe, there's Tubacex. There is Alleima. So these are the two manufacturers. And then we have some good manufacturers in China who manufacture tubes through extrusion route. So these are four, five players whom we look up to. And definitely some grades, what they manufacture, we want to reach there as soon as possible.
Tubacex India would not have backward integration in India. Is it correct?
Tubacex India manufactures pierced product. So in that category, I mean, we don't manufacture pierced pipes. Of course, we compete with them. But then for that low margin or high competitive intensity product, our focus is not so much.
And sir, you mentioned that some of the players in the industry.
Sorry to interrupt. M a'am, sorry to interrupt. Can you please rejoin the queue for a follow-up?
Yes. Yes. I just wanted to thank you, sir, for explaining everything in detail. It was really helpful.
Thank you.
Thank you so much. The next question is from the line of Deepak from Sundaram Mutual Fund. Please go ahead.
Yeah. Hello. Am I audible?
Yes.
Yes, sir. You're audible.
Yeah. Sir, I had just one question. If we assume that stainless steel prices at current level, what kind of revenue growth number are we looking at in FY 2026? Given that our order book has been weaker since last two, three years in comparison, what kind of revenue growth are we looking at, and what is the sustainable margin, let's say, for FY 2026, EBITDA margin for our standalone pipe business?
So this year, the growth can be anywhere between 5%-10% in terms of volume. Or maybe if the steel price remained at the same level, yes, then on the revenue numbers also. And on your second question, which was EBITDA margins, EBITDA margins, again, depending on the product mix, anywhere between 16%-18%.
Okay. Because last year, means I meant to say FY 2025, we have seen a bit of negative operating leverage where we were able to rake in some gross profit. But due to higher employee and other expenses, our EBITDA has actually de-grew in the pipe business. So from that prospect also, actually, I was asking.
Yes, I agree on that. However, our focus still remains on growth in the sectors where there is less competition, high margin. So we strive to do that. However, it depends on the projects to come at the same time.
Okay. Thank you, sir.
Yeah. Thank you.
Thank you very much. The next question is from the line of Samyak Jain from Marcellus. Please go ahead.
Thank you for the opportunity. Just one question from my side. In the spooling business, on a steady-state basis, what kind of margins can we expect for FY 2026 and going forward?
So what we have targeted this year is a revenue of INR 350+ crore and EBITDA margin of roughly 20%.
Got it. And sir, any particular reason for the negative margins in the quarter four?
In the?
In the latest quarter.
Latest quarter negative in comparison to?
No. So it is - 20% margin. We made a loss in spooling business in quarter four. So.
Okay. Consolidated basis.
Right. Yeah. Yeah.
Okay. Consolidated basis, see, RFSS, we could not dispatch what was planned. Plus, there was some foreign exchange fluctuation loss. However, if you see on standalone basis, the last quarter was the best quarter for the previous financial year.
Understood. Got it, sir. Thank you.
Yeah.
Thank you so much. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, my first question was on backward integration. Just trying to understand what is the motivation over here? Is it the availability of grades, alloys, wherein the lead time is more, and that's the reason why we are going into it?
Yes. Security of the raw materials, grades, timely delivery, and development of newer grades.
Okay, so are we looking to put on an electric arc furnace, induction furnace? How should one read into this?
We haven't decided on it yet. Once we decide, we'll give you further details, more details of this. We are still working on it.
Correct. But sir, fair to assume basically we will go into backward integration to the level wherein we make alloy on our own, correct?
Yes. We make the stainless steel as well as alloy steel on our own.
Okay. That's great. Sir, my second question is on approvals. The company has been there since quite some time. We have most of the approvals in place. But when we look at defense, aerospace, nuclear, are there any approvals which are not there in our kitty that we are looking to secure, say, over the next six months, 12 months? And are there any variables that we have started to actually get to these approvals?
So within India, we are approved everywhere. Maybe outside for aerospace or other applications, we are still in the process of getting approved.
Okay. But do you think this is a limiting factor, a constraining factor to our growth, or is it not a problem at this point in time?
Not a problem at this point in time. But as we increase our cold finishing capacities, yes, we are looking forward to getting approved in other geographies also.
Sure. And sir, just last question. We have always been very focused on profitable growth and profitability, shied away from, as you indicated in the prior question, high volume, low margin businesses. Possible for you to quantify what is the minimum margin and the ROC threshold that we look at if we had to commit anything incremental on capital allocation, be it downstream or upstream?
Difficult to comment anything on that because, see, when we talk about steel plant, maybe the dynamics will change. It's more of a need than all these parameters are still very difficult to say right now for the steel plant.
Sir, for downstream, if it's a seamless or a welded facility, then what is the threshold that we would look at for margins or ROC?
Upstream, downstream, depending on the product. But more or less for stainless steel, we see if it is seamless, we see 18%+ of EBITDA margins.
Sure. And ROCE post-tax?
About closer to 20% or higher.
Sure. This is very helpful, sir. Thank you so much. All the very best.
Thank you.
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As there are no further questions from the participants, I now hand the content over to Sahil Sanghvi for closing comments.
Yeah. I just wanted to thank the management for very elaborately answering all the questions and also thank the participants for joining the call. Manoj sir, would you like to give any closing comments, please?
No, I would just like to thank everybody. Thank you for being patient and listening to me. If there are any particular questions with respect to our operations, both in stainless steel, carbon steel, or any of our subsidiaries, we would be happy to answer them. You can always send by email. Thank you very much.
Thank you very much. On behalf of Monarch Networth Capital Ltd, that concludes this content. Thank you for joining us, and you may now disconnect your line.
Thank you, Saish.