Ladies and gentlemen, good day and welcome to the Q1 FY 2026 earnings conference call of Jindal Saw , hosted by ICICI Securities 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 our operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikas Singh from ICICI Securities Ltd. Handing over to you, sir.
Good afternoon, everyone. Welcome to Q2 FY26 earnings conference call of Jindal Saw . From the management side, we have with us Mr. Vinay Kumar , President, Head and Treasury; Mr. Narendra Mantri, Chief Operating and Financial Officer; and Mr. Rajeev Goyal, Senior Vice President, Head Corporate Finance. Without taking anyone's time, I'll give the floor to Mr. Vinay Kumar for his opening remark. Over to you, sir.
Thank you very much, Vikas. Good afternoon, friends. I welcome all of you to the investors' call of Jindal Saw Ltd. for Q1 of FY 2026. We also place an appreciation to ICICI Securities for hosting this call and providing this platform. As you know, in the board meeting held on 5th of September yesterday, the board reviewed, discussed, and approved the unobjected results of the company, and the same were also communicated to the stock exchanges. Thus, I presume that the results would have been received and reviewed by all of you so that we can have a meaningful interaction. Now, to provide a broad overview on various aspects about the operations of the company, subsidiaries, and other updates, first about the results.
Q1 of this quarter, the Q1 for FY 2026, by far, we have demonstrated softer results as compared to the previous year and a couple of previous quarters. Despite the demand of almost all the products remaining robust, which is reflected from our order book also, due to various reasons, the production chain and profitability in Q1 remained a bit softer. A couple of reasons include, and you would have seen it in our peer group companies also, there remains a cash flow issue with the customers, primarily the EPC contractors who are normally funded by the multi-regional agencies or the authorities of the world. This impacted the offtake and the sales, specifically in the water sector. You know, 60% of the business of the company is in the water sector. This sector is significantly dependent on the funding and support from the various authorities.
There remains a gap in the requirement funds and disbursements, which has impacted the entire value and supply chain, especially for the water sector, which includes ductile and the helical pipes. In the last several months, we witnessed military conflicts and other geopolitical issues in the MENA regions, Red Sea, Persian Gulf, and other nearby areas. India also saw limited military conflicts with its neighbors. These further aggravated the matter where some of the export shipments were forced to defer to Q2 from Q1. We were basically about to ship some material for exports, but it had to be deferred. It is good to know this has already been shipped in July. This is the deferment of the sale from Q1 to Q2, practically. The company took scheduled maintenance in one of the two blast furnaces in Mundra.
We have got two blast furnaces with ductile iron pipes in Mundra, Gujarat, and one blast furnace is in South India, which was Sathavahana erstwhile . One of the blast furnaces gives a regular revamp and the maintenance. One of the blast furnaces was under the scheduled maintenance. It remained there for two months in Q1. It has since continued till now. We expect that it can be put to operation in August, if not beyond that. Of course, to that extent, some of the production loss has happened, which is a normal feature. It's not like it is the first time. It's a normal feature. Every year, one of the blast furnaces takes some scheduled maintenance. Broadly, anything around 40,000 ton- 50,000 ton of production got impacted for that, for the ductile iron pipes and pig iron.
Similarly, our pellet plant, which is in Bhilwara, Rajasthan , which has a capacity of close to 1.65 million ton, was also under scheduled maintenance for more than a month, let's say a month, in Q1. Broadly, you can say, let's say we would have lost close to 120,000 ton- 130,000 ton of pellets for that. These are the scheduled things, of course, and this happens every year, maybe once in two years. These are the major factors represented in comparatively lower production and, to some extent, lower sale also. Due to all these reasons, our working capital borrowings have also eased up in this quarter. If you compare it with the previous quarter, the working capital borrowings have gone up, whereas the stock loans have gone down. We have prepaid the stock loan, which we took for acquisition of Sathavahana facilities.
In the first quarter, the entire stock loan has been prepaid. Now we are carrying a long-term debt of less than INR 600 crore in our book, which includes INR 500 crore of the LIC bonds, which are payable in 2028, 2029, and 2030. Broadly, other than that, there is hardly any long-term debt. We place on record our sincere appreciation to our banks to reinforce their faith in the company and the business model. We have sufficient working capital lines to manage our operations efficiently, and even we can get it to a higher turnover with the existing working capital facilities. However, you may notice that despite a lower profitability, we have still recorded a bit of approximately 16%+ , which is still better than what we were reporting two or three years ago. Eventually, we were due to be in the bracket of 12%- 13%.
Of course, the last two years were very good. We are still, it's not like despite all these things and despite lower raw material, lower utilization, we're still reporting 16%+ EBITDA. The geopolitical situation and the renewal of funds by authorities still remains challenging. We expect the situation to improve. The interactions are happening by the industry with the authorities. If the situation can improve, we expect that it should improve. Yes, it is challenging that it is difficult to predict and provide a very clear outlook that what is likely to happen in the short to medium to long-term time. We believe that we have a robust order book. We have one of the best order books in the last couple of quarters. We are geared up after the ductile, the blast furnace would become operational. We believe we can ramp up very quickly.
It will depend on how the funding support is provided. The outlook, we believe that the outlook maybe in the very, very short term could continue what it was in Q1. Beyond that, the outlook looks much better considering that government can come and start disbursing the funds. We have provided details of our order book in our notes, and we have orders in hand, plus the LOI in what we have received. We have an order book of approximately $1.5 billion and above. In terms of tonnage, we have 16 lakh ton of confirmed orders and close to 265,000 metric ton of the LOIs, which are for ductile domestic market. In case of ductile, we normally don't export from India. We primarily do export from, we primarily send in the international market to our Abu Dhabi facilities.
The overall long-term debt position, as you mentioned, remains very comfortable as we have prepared the long-term debt. The only debt remaining in the book primarily remains with the LIC bonds. Working capital inflation is subject to working capital cycle measurement. We hope to see improvement there as well. We believe that once the inventories are getting out of the book, there will be collections and there are receivables which are yet to be collected. We believe that in a couple of months, the working capital utilization level will come to a more acceptable level and its overall debt will come down. We also consider that these events as exceptions, and thus, they are being dealt as exceptions without impacting the relationships at any level with the customers, with the authorities, with the inventors, and on. Further, now let's move to U.A.E operations, where we have ductile iron pipe operations.
We have done well in U.A.E as compared to previous years. We have recorded a sale of approximately $60 million with comparatively better profitability. Now, since the corporate taxes have been implemented and introduced in U.A.E, these operations and consolidated results reflect the same as well. You would have seen that the impact of the taxation in U.A.E. In U.A.E, we have an order book of close to $270 million, which is also higher as compared to the previous couple of quarters. We are practically booked for the next one year in U.A.E, and we still are receiving more orders in that market. The company also has marginal operations in the U.S. It's not a big facility. They are doing the quoting, double jointing, and few drawer work. The Q1 for the U.S. was also comparatively better than compared to previous years. It reported better profitability than that.
Now, moving to Jindal ITF, the legal conflict, what we had with NTPC, there is nothing much to report as compared to what we reported earlier. The matter came to the double bench in Delhi High Court twice, but the court has deferred the same to another date, which is now scheduled on 25th of September. We want that the argument should start at least. Once the argument starts, it should not take much time because the matter has already been heard by the single bench court. We are waiting for the arguments to come out. In June 2025, the board approved three new projects in GCC and MENA region. You are aware that the majority of India's ice is exported to GCC, MENA region, and Persian Gulf region, including U.A.E, Saudi, Iraq, and other countries.
These nations are now looking for economic diversification to reduce their dependence on oil on the long-term basis. In the long term, they want to see the manufacturing sector growing locally. To remain competent and be present on these markets, one has to work proactively and align as per their vision statement. Vision statement from these countries. As Jindal Saw is already a meaningful supplier to these regions and also a local DI pipe
Helical might take two years' time. Ductile maybe take another one and one and a half years' time. We will take gradually these will come in operations. As and when these will come in operation, they will get consolidated and the financials would get reflected. We would, as and when there is any meaningful progress, keep updating the investors on subsequent conference calls. As of now, we are in the process of doing the basic work, groundwork, incorporating the company. Nothing much concrete has been done, but we are in the process of setting up the company. We are in the process of, let's say, doing the basic corporate processes. We provided briefs about these projects in the last call, and we're happy to, let's say, answer all these things. Now, I'm not discussing the results very specifically because the results are already communicated.
We want that to, let's say, make it more interactive to attend more of questions. I leave the floor open for the questions and answers. My colleagues, Mr. Narendra Mantri and Mr. Rajeev Goyal , are also here, happy to address any of the questions upon us. Thank you very much.
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 your touchtone 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 Sailesh Raja from B&K Securities . Please proceed.
Thanks. The space, the product needs, geography, exposure, and recent plant shutdowns, we have managed to deliver a stronger EBITDA per ton in the pipe division during the first quarter. The operation is commendable. Congratulations to the team. I have two quick questions to ask. First question, over the past two years, we have achieved over 1.8 million tons in pipe volume, which helps us generate significant change benefits. Amongst the favorable product needs, especially given the soft pipe exports and strong DI market, also contributed meaningfully to our improved profitability and return ratio. Given the near-term challenges, such as the slower government trends and the weakness in the overseas markets, how do we see volume growth in the current year? What kind of growth do you see in the current year? If there is a growth, what are the key user categories that are going to grow
within the pipe segment?
Thanks, Sailesh for asking this question. I think this question will tend to tone for the rest of the next 45, 50 minutes. You have already answered half of the question for me. We don't see if you have seen the order book of the company. As we mentioned, we have made a robust order book at this point of time with the scenario remains supported that what we can do. Effectively, we have close to, let's say, June 25, we have announced 1,560,000 ton of orders, which includes a single order. This is from MENA region for job work that is close to 400,000 ton. I don't know if it's good or bad, but the revenue would be limited to the extent of the job work, this thing. The percentage is probably higher because we don't have the raw material to our account.
I don't think that we have, and on the top of that, we have said 265,000 ton of LOI for ductile. Now, why we don't include this into the regular order book? It's a process of the company. It's not like we don't have the order. Basically, this was received at the fragment and as per the now the system for the company. Unless these orders are, let's say, converted into sale order and entered into sale, we don't consider the sale order. If you include this 265,000 ton, we have order book in excess of 1.8 million ton or maybe close to, let's say, 1.9 million ton, including job work and all put together. One part of your question is that what is the visibility in terms of volume? The visibility is very strong in terms of volume. We have, I mean, one quarter has become history.
We have nine months or, let's say, three quarters to perform. In the normal environment, we should perform better than what we have done in the last quarter. Right? There are two things. The performance of the company is very strong with the numbers. Number starts on the turnover. The turnover is a function of the volume and the value. Now, volume, we don't have any issue. In terms of value, you will have seen the moderation in the raw material prices in the last, I think, three to four quarters. The prices of the coal, the prices of the steel, the prices of iron ore, all raw material prices have moderated to a reasonable level, which is a good sign. Eventually, that leads to lower in time to come, that will lead to the lower top line also.
If we consider whether the company can perform and deliver better than what we have done in the first quarter and maybe in the last quarter, I think yes, in the nine months, or three quarters, proportionately, value is likely to be lower driven by the lower realization. Profitability is looking for volume growth.
For volume growth only.
Yeah, volume growth is there, but the caveat is, as you started your question, the caveat is because we don't want to sell if we don't collect. Right now, if let's say the situation of the cash flow starts, it's become poor. We have some inventory. We have the production capability. We can roll out very fast. In fact, EPC contractors are also holding back. The rollout across the country can happen very fast. Having said that, it is purely the water sector which is getting impacted because of this.
If you talk about exports, if you talk about, let's say, to somewhat extent the Seamless, that doesn't get impacted because of the, let's say, the funding by the multilateral or the government agencies. That remains broadly on course, and we believe that we can do better than what we had done earlier in those segments.
Okay. Okay. Great, sir. Sir, my second question, if you see standalone Seamless and DI pipe companies, we have reported a subdued performance in 1Q. Yes, we have posted an EBITDA of INR 671 crore. Despite two months of shutdown in DI plant and one month shutdown at the pellet facility, what were the key drivers of this robust performance? Was it largely led by power segment? And also, I wanted to know, last year, we reported scrap and export incentive value of around INR 700 crore.
How much have we reported in one queue?
I have not understood your question properly . Can you please repeat the question?
Yes so standalone companies
Yeah.
Okay. Yeah. Standalone Seamless and DI pipe companies have reported these set top numbers in 1Q.
We have posted of the companies.
Yeah, yeah, yeah. We have reported INR 671 crore, including two months of shutdown in DI and one month of standalone in pellet. What was driving this INR 671 crore of EBITDA? Was it largely led by SAW segment?
Okay. Eventually, yes . In our case, it is a combination of all the products. It is very difficult to say whether it is because of SAW or because of one or other. Of course, ductile, as we have given the information, ductile we did in the first quarter, we did close to 133,000 ton. And Seamless, we have done close to 55,000 ton. Overall, the tonnage is lower. As compared to Q1 of last year, or you just said Q4 in the last year, the tonnage in all the segments are lower except that the Seamless is, let's say, as against 16, we are 55, which is broadly okay.
Okay. My question is, what was driving the INR 671 crore of EBITDA? If you give the same bottom line investors reported EBITDA in Seamless and DI pipe, Seamless is around INR 12, INR 13 crore .
No, no, sir.
No, sorry.
No, it's okay. Here, the EBITDA for standalone is INR 560 crore. EBITDA for console is INR 688 crore.
Yes, sir.
So INR 671 crore, that's why I was getting a bit confused .
Which was other income?
It is not other income.
We don't have much other income. We don't have much of other income, which is included in there. In the standalone for June 30, 2025, our EBITDA is INR 560 crore.
Okay, sir.
Consolidated, we have INR 688 crore
Yeah, yeah.
If I do back calculation now, sir, this is coming and getting very high EBITDA per ton in soft pipe . Do you agree this will be sustainable?
That way, it is a product.
No, no, we don't calculate that way. Okay. I appreciate what you're asking. See, internally, we know, but we don't calculate for the others. That way, what is the EBITDA per ton for each of the individual products? We consider pipe as a pipe, all put together. Of course, I appreciate what you're saying. You're trying to benchmark my Seamless with Maharashtra Seamless, my ductile with Electrosteel’s ductile also let's say Man or Welspun. This is the status of the company which we adopted for accounts and for everybody, that we do not distinguish between the products and we consider pipe as a pipe. You have to do that by departing separately on a memorandum basis.
What was the scrap export incentive value of this quarter?
I don't have this number right now, but I don't think that we have anything, any major amount in this.
Okay. Last year it was INR 700 crore full year. One last question. There is no doubt our valuation remains highly attractive. However , we see the major overseas projects, is expected to contribute meaningfully only after two three years . What are the impact and drivers that will support EBITDA growth in the three months period? That is my last question.
Okay. You're asking what is on the outlook of, less the profitability and the performance of the companies?
Yes.
Okay. This is a question. Number one, we can give a very helicopter level kind of outlook because we normally don't give the guidance. That's what we follow very consistently. In terms of outlook, our outlook of whether it is us or any of the pipe companies, the outlook of any pipe company is judged from the order book. That's the number one. Number two, we mentioned in our note that we are consistently doing efforts in terms of valuation and in terms of cost optimization. We have taken initiatives in the past one or two years' time, and we are doing additional initiatives, which is a continuous process, which is likely to reduce the cost. At the same time, the cost will, where the profitability will increase.
For example, we have implemented and we have replaced one of our coke oven battery in Mundra, where we are installing the wasted-basted power plant. That would contribute to, let's say, the lower cost of the coke and lower power cost. These are the initiatives which will help in terms of improvement in the profitability. Right now, we are not working on changing or increasing the capacity by organic or inorganic. Whatever inorganic we have to do, we have done by way of acquisition. We are not in the process as of now for any additional capacity, specifically in the pipe.
In India?
In India, of course, off shore, we have already made a formal announcement. If the environment reports remain supportive, you will see growth.
Okay. Thank you, sir. Thank you, sir. All the best.
Thank you very much.
Thank you. The next question is from the line of Darshil Javeri from Crown Capital. Please proceed.
Hello, sir. Good evening. Thank you so much for taking my question. Firstly, congratulations on delivering a good set of profitability, sir. I just wanted to ask about the shutdown, sir. I think when we mentioned that a blast furnace is in a shutdown for the last two months, and I think even two months in Q2, was this similarly shut down in FY2025, sir?
FY, sorry?
FY.
Last year, was it shut down?
Okay. Okay. I tried to cover that portion in my preface . See, we have got three blast furnace across countries in India. Two blast furnace in Gujarat, one blast furnace in Andhra. It is a regular process. This time, the normal maintenance and normal shutdowns always remain on a rotation basis in one or other set in other blast furnace. There are major shutdowns because you have to do complete overhauling. This time, it is a bit longer, which took two months in Q1, and it is continuing in Q2 also, and which might, at any point of time, they can start firing. They can test that it works. To answer your question, some of the blast furnace would have remained under shutdown in last year also, may not be for three or three and a half months.
These are normal things in these kinds of businesses.
I was coming to that point only, like if it's normal. The production volume would have impacted last year also. In the current year, when we say we've lost around 40,000 tons of production, and we might lose a similar amount in this quarter, how much of that would be incremental as compared to previous years? Could you quantify in terms of, you know, rupee value? How much loss would that be, sir?
Okay. There is no loss, number one. It's a loss.
It's not a fortunate thing though, sir.
Yeah, yeah. It is, it is, and when you make the plan, you count those things because they are not sudden. It doesn't happen suddenly. Eventually, last year, we sold close to 680,000 ton of ductile iron pipes. When we talk about our capacities, theoretically, we have capacity of close to 7 lakh-7.5 lakh tons in India. It doesn't mean that by doing fine-tuning, by doing improvements, you cannot produce more. That is number one. Number two, we sold 680,000 ton of ductile iron pipes last year. On top of that, we sold the pig iron and of close to 22,000 ton. From that perspective, you can see that we actually sold hot metal of more than 7 lakh tons last year, which is theoretically, it is more than 100%.
Effectively, if we are not able to produce 40,000 ton in Q1, or we are not producing 20,000, 25,000 in Q2, these are the overall projected numbers for the year. Normally, consider all those things. Secondly, you always have certain quantities in your inventory. To answer next to, I can answer your question in a different way. If the environment remains supportive in all respects, can we match or improvise our performance of ductile iron pipes as we did last year? I think yes. Last year, we sold 680,000. Despite that, we have done only 133,000 ton in Q1. We can still reach to that level. We remain optimistic for that. For that, we need to be supported by the environment.
Okay. Fair enough. That helps me a lot, sir. Sir, when you were saying that, you know, some, because of the, you know, prices in iron and iron ore, our realization has, you know, come down a bit. Any kind of color, like how do you see that going forward in the year? Do we think it'll remain stable? You know, how do we see that portion happening, sir?
Difficult to predict because the way the global markets are reacting, even the raw material suppliers are unable to predict those scenarios. The best-case scenario could be let's presume what is happening remains as it is. Instead of, let's say, taking a call that it will go down, it will go up, we can presume that if what happens if the raw material prices remain where it is today. We are not a very big buyer for any of these commodities. In totality, we don't sell more than 2 million ton, which includes iron ore, coal, and steam, and everything, which includes import, which includes domestic also. But as you know, your day would have been started every day that what Trump has said yesterday. Okay. The best-case scenario is presuming that what is the price today remains as it is and how to, let's say, make your strategy around that.
You have to counter what you have to make strategy with the changing environment.
Correct. Correct. Correct. Fair enough, sir. I just wanted to know, like in terms of our new CapEx that you've announced, we were, I think, going to budget our payback period and peak revenue. Any kind of comments on that, sir? What could we expect from those three new capacities, sir?
See, the new, between rationale, why we are setting up the new capacities in foreign soil, at the foreign soil. As I mentioned in my preface, it is important to diversify your geographical profile and what India is doing, India first, what America is doing, America first, MAGA. Eventually, all these oil-producing countries are also trying to reduce their dependence on the oil in the long term. Now, whether you have gold markets or you want to lose those markets, we are the first in countries, among the first, if I'm not the first, who are already present in Middle East, the MENA region, by working manufacturing facilities, as well as doing the majority of our export from India to the Middle East, MENA region, and Persian Gulf.
While it's a very important thing that whenever you are projecting any new capital expenditure or capacity or any business that you consider, like what is the payback, what is the IRR and all, the profitability on the current basis is likely to be better than the profitability what we are having in India. They are likely to be much better as we have in India in all the three products.
Okay. Okay. Any kind of peak revenue or payback could be just a fair gains for I know.
We have not broken the ground. We don't, we have just started working. It's too early to say because to project that what the revenue would be clear down the line, we don't know what the raw material pricing and other things would be there in that point of time. It's too early. We are difficult to predict what the raw material prices are going to happen next year in India.
Okay. Fair enough, sir. Just last question from my end, sir. What I get, the source is that India, because of the segment, it is a bit slowing right now. Our current units can maybe export more. Once our export-oriented, like our units in the new geography start to come up, what is the thing that you think of cannibalization? How do we see that process? If our current facility has enough capacity, even because we are putting up with new major capacity, do we see that we might be in a situation where we have a lot of supply, but the demand constraints can come up in the market? How do we look at that? Hello? Hello?
Ladies and gentlemen, teams at the management line are being disconnected. Please wait while we reconnect them. Ladies and gentlemen, we have the management on the line connected. Yes, sir, you can go.
Hello. Hopefully, I'm audible, sir. Hello. Operator, is the management on the line? I can't hear you.
Yes, sir. Hello. Sir, can you hear us?
Thank you so much, sir. I just wanted to ask, because of so much capacity that we are getting, setting up in the U.A.E and Saudi Arabia and our existing domestic, we also export to those countries. What do you feel about cannibalization? I am concerned that we should not be in a situation where there is oversupply available to us and that there is demand constraints. What would you like to say?
It's a very good question. Eventually, from India, we are supplying primarily to, let's say, the Middle East and Persian Gulf. In the Persian Gulf, we are supplying to Iraq. We are not setting any capacity in Iraq at this point of time, and we have no intention to do something in Iraq at this point of time. As you know, as we have seen, we are setting up a Seamless pipe plant in U.A.E, Abu Dhabi.
The majority of that capacity, when it will come into production, will be for the U.A.E and nearby markets. As of now, there is no Seamless pipe production which takes place in U.A.E. Yes, there is one plant in Saudi, but it caters primarily to Saudi, and Saudi can absorb more. Otherwise, they are imported. They are fully import substitution. Secondly, from India, we do not export meaningfully. We don't export Seamless pipe meaningfully to the Middle East. We don't foresee much in the U.A.E market or nearby markets because of Seamless. That's one. Number two, about the helical pipe plant, the helical pipe plant would be able to cater to the oil, gas, and water sector in Saudi, primarily to start with. A good thing is that our local joint venture partner is a significant EPC contractor, and there is a huge amount of demand in and around Saudi.
Saudi is producing locally and importing. Saudi's government is focused that imports should be allowed only when domestic capacities are fully utilized. It is important that if somebody wants to have a lab in Saudi, he should be present in Saudi. The Saudi investment is not a very significant, not a very big investment. By having this facility in Saudi, which could be set up in, let's say, 1.5 year-2 year time broadly, one can catch up with the growing Saudi economy very efficiently. We don't think that this will impact our Indian operations. We believe that this diversification will help us in terms of improving our consolidated financials in a meaningful way.
Okay. Okay. Fair enough. Sir, all the best for that. That is from my end. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Gaurav Shah from Harshad Gandhi Securities. Please proceed.
Yeah. Thanks for the opportunity, sir. Sir, I have a couple of questions. Firstly, on the business outlook, sir, can you just provide some more color on the Jal Jeevan Mi ssion currently? First question is that.
Jal Jeevan Mission has, yeah, okay. As you know, Jal Jeevan Mission has already been extended by the government up to 2028 in this phase . I believe that they would keep extending it beyond that, because the targets have yet not been met. Secondly, because of constructions happening, colonization happening, this will happen. This is only Jal Jeevan Mission, which is Nal Se Jal. There could be a second phase, which is, let's say, connecting the industrial water or river water and all. Leaving aside that, number two, the allocation on account of Jal Jeevan Mission, which is already there, AMRUT 2.0 scheme is also there. There is enough as far as the water sector in India is concerned. These are the issues we are discussing, what we have discussed today, what you would have heard from the other calls of the pipe company in India. I believe that they are short-term issues.
They would be taken care of in some time.
Okay. Do you expect this quarter also there should be a slowdown in the order, and from next quarter onwards, which would be some tractions ?
O kay. Orders is not a, could see that we have a huge amount of order book, which is, you need, like it is an order book which is better than the last two, three quarters. Order book is not an issue. There are plenty of orders which are there, which somebody wants, they can take. The third important thing is, as I mentioned, that the execution on the ground has slowed down because we are not EPC contractors. We supply to EPC. We don't supply directly to the government. That's a model globally. EPC contractors, when their statements have been slowed down, they are not doing a full job on the ground. Presume that the cash flow becomes normal. You will see a significant uptick on the physical activity on ground.
Similarly, the value of the supply chain, let's say the pipe supplier, they would start supplying the pipes to them. Today, we do not want to expose ourselves to the open credit. That is where the situation is. We understand that the chambers and the industry is meeting and representing to the government for doing the needful.
Okay. My second question is on the debt management. It seems that in this particular quarter, we have reduced the long-term debt and increased the working capital loan. How much interest saving is expected from this particular exercise?
Saving means?
Saving on interest because we have reduced the long-term debt and increased the working capital.
There are two different, let's say, buckets. Long-term debt investment is like we had the cash, and we want to prepay the cash so that the long-term debt, we have the space for the in the long-term debt. We now have accessed a small, less than INR 100 crore of small, small long-term debts where the cost would be higher for prepayment. We only have an NCD of INR 500 crore from LIC, which is repayable in 2028, 2029, 2030 . In the working capital, the working capital intensity has gone up a bit, primarily on account of slow selections, slow realization. We expect the situation to improve. On the top of that, the interest, our weekly average interest cost has gone down. My weekly check average interest cost has gone down by almost 50 basis points in this quarter.
Despite that, even if there is no cut by RBI, we expect the interest cost to remain in the normal average control level. This quarter, my finance cost is in the vicinity of ±INR 80 crore . We expect that it will be the same, or we can improvise it further.
Okay. Sir, my last question is on the oil and gas sector. Do we, by any chance, supply to ONGC in Oil India? Are we active in the oil and gas sector?
They are our customers.
Okay. Do you see any increased allocation to the oil and gas sector from the government? Because we are, from other players, we are seeing there is a lot of demand from the oil and gas sector right now.
We are not the largest in Seamless, but we are a meaningful player. The demand, whatever the orders come, they get allocated almost to everybody. We would get our priority share. We already have all these people in our order book.
Okay. Okay. Thank you, sir, and all the best.
Okay. Thank you.
Thank you. The next question is on the line of Deepak Lalwani from Unifi Capital. Please proceed.
Hello, sir. Thank you for the opportunity. First question, how much is the impact of the export order in this quarter? How much was export in terms of volume?
You're asking what is the volume for export in this quarter?
Yeah, the volume that got deferred. You mentioned about the volume.
Deferred, sorry, my mistake, Deepak . It is approximately 20,000 tons.
Okay.
One shipment.
Understood. Sir, the second question is on the environment in general. You mentioned that, you know, the funding issue still continues, but you expect it to get better. Any color on that as to what gives you the confidence that it is going to get better and by when? If it's not, that it doesn't get better, yeah, just complete my question.
Okay. To answer this question, then we can take another question. Sorry to interrupt you. Basically, you know, like this issue for cash support, or let's say allocation, is going on for the last three to four quarters. Initially, it was the general elections, which is the code and conduct , continued by the elections in the states. After that, I mean, we also reached the Google, the audits and all those things. There is a huge backlog, and the industry is now talking to the respective government and government representatives about the implementation of these projects where government has a specific focus. We understand that there are discussions within the government circle at serious levels. How much it will mature, nobody knows. There is a government understands that a lot of support is required at this point of time.
Okay. Understood. If the situation stays in the same run rate, then what is quarterly volumes of 3.4 lakh tons, I mean, coming to the export order is what it was. The quarterly run rate of 3.4, should it be maintained, or is there any risk on this execution as well?
Okay. Deepak, if you see the quarter four 2025, like last year, Q4, the problem was still there. We did 435,000 ton in pipe and 400,000 ton of pellets. This quarter, we can attribute, let's say, 50,000 ton on account of deferment of one shipment of export and two months of the operations. Let's say 60,000 ton. If I add 60,000 ton to 325,000 ton, and we expect that some of my team should improve in case of LSAW, HSAW, and Seamless, I think we can go back easily to the Q4, which is 435,000 ton. That would be a normal quarter, despite the changing issues the water sector is facing today.
Okay. Perfect. Understood, sir. Sir, the next question is, in the following raw material scenario, coking coal and iron prices, do you expect to pass on this benefit because the environment is on the lower side today? Do you expect to pass on this benefit in terms of pricing, lower pricing orders for the new orders in the ductile iron segments?
Okay. Typically, how the business is done, whatever new building will be done, that will be based on the current raw material prices. It's a competing market. There are half a dozen BI putting. If I believe that I will consider, let's say, $250 coking coal, I will be out of it. What happens is that we have orders in our order book, which were perhaps built when the prices were higher. This becomes an average pricing scenario, average profitability scenario on a year basis. This happens every year. It is difficult to say that the raw material prices will remain the same for 12 months. We have seen volatility in 2022, 2023 when the coking coal was $500, iron ore was $250. All these things we have seen. Despite that, the prices were going up and down. New orders will be based on current raw material prices.
Similarly, in case of helical or, let's say, steam pipe, in case of steam pipe on the existing orders, there will be no change in pipe price. There will be no change in the steam price. The existing order book will not get impacted because of the raw material prices, whether the raw material prices go up or go down. In case of new orders, it will be based on the current prices.
What I meant to ask was that are we discounting more than required to get new orders because we are having a raw material benefit?
We are booked for not necessarily. If you see my order book, we are practically booked for the next three quarters. In case of ductile, now we are booked for almost one year. I would rather do, I mean, eventually, nobody wants to lose order. We have to see that we should have the production capability also in the time when the customer needs. Typically, we would like to pick and choose.
Understood. Sir, on the.
Hello?
Thank you.
Deepak?
Yes, sir.
We lost Deepak.
Yes, sir. I get it .
Okay.
Thank you. The next question is from the line of Gargi Singh from Value Invest . Please proceed.
Hello, sir. Am I on the first?
Yeah, yeah. Please go, Gargi.
Thank you for the opportunity. My first question is that we understand that most of our orders are backed by regular service and then guarantees. Despite this, delay in payment revisits seems to be impacting our execution timeline. For secured orders, how exactly does a delay in payment translate into lower execution level?
It doesn't happen that you get the LC or bank guarantee for the entire value of the order at the time of signing the order. For example, if we have received an order, hypothetically, as an example, let's say INR 100 crore. There is a schedule of delivery and the schedule of dispatches. There would be a gradual cover of LC or bank guarantee, which will be given by the customer. Accordingly, we plan the production with sell. At the time of dispatch, we should have the credit instrument. Based on the track record of the customer and our relationship in the last 10, 15 years, sometimes we go beyond that also, but not like we will not keep doing everything.
To answer your question precisely, if we have an order book of, let's say, 1.6 million ton or 1.8 million ton or $1.5 billion, we don't have LC bank guarantee for $1.5 billion. Even for export, we would have a coverage by the LC. For domestic market, we would have coverage by work LC or bank guarantee, but for the near-time production. As and when LC and bank guarantee come, we include that portion into the production planning. This is how it is done. If tomorrow the customer is out of LC bank guarantee lines, especially for the water sector, that's where the production, we would reduce the production, and we would only produce for those who are providing us LC bank guarantee or the advanced cash.
Okay. Currently, on the basis of current order book, is it fair to assume that you have LC, BG for three months at least for the next one quarter?
No, this is, see . The business is done on the going concern basis. It's not, it may or may notbe possible that I would have the LC bank guarantee for the next three months also. That is the role of the business development and the marketing department to, let's say, arrange the LC bank guarantees, and then we produce. We, or let's say, the company makes the production plan based on the feedback of the marketing that this much of dispatch will happen, and they will bring the LC or bank guarantees before the dispatch. This is an ongoing process. Despite in this testing scenario, we still keep getting the LC bank guarantees or the different kind of comforts. We are then going, whenever we're flying to detail, that we can come back to the normalized quarter of, let's say, 4 lakh _ ton, what we did Q4.
We know like this much of rotation of the LC bank guarantees remain in the system, and we should be able to do that.
Thank you. Due to your time constraint, that was the last question. I now hand the content over to the management for the closing comments. Over to you, sir.
I place on the call our appreciation to all the participants to the call, ICICI Securities and Chorus , and hope to see you in the next conference call. Thank you very much from me, my colleague, Narendra Mantri and Rajeev Goyal . Thank you very much.
Thank you.
Thank you. On behalf of ICICI Securities Ltd , that concludes this conference. Thank you for joining us, and you may now disconnect your line.