Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Shyam Metalics and Energy Limited, hosted by MUFG Intime. 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 has been recorded. I now hand the conference over to Mr. Pankaj Harlalka, Head IR, Shyam Metalics. Thank you, and over to you, sir.
Hi, Pankaj Harlalka, Head of Investor Relations at Shyam Metalics. Wish you all a very good afternoon and a warm welcome to the Q4 FY25 post-results conference call. Before we delve into discussing the quarterly numbers, I hope you all had an opportunity to review our press release and the attendant investor presentation read along with the Safe Harbor Statement, which are available under the investor section of our website and the same are accessible in the BSE and NSE websites. To discuss the Q4 and full year results FY25, I am joined by Mr. Brij Bhushan Agarwal, Chairman and Managing Director, Mr. Deepak Agarwal, Executive Director, Finance and Compliance, and Mr. Sumeet Khaitan from Orient Capital, our investor relations partner. Now, I would like to invite Brij Bhushanji to provide his perspective on the performance. Thank you, and over to you, sir.
Very good evening. Namaskar to all our valued investors and the Shyam Metalics family. Especially for those who are going through this difficult time near the border, our all the best wishes. And it is a very, very crucial moment for our state as we are going with a lot of challenges. And with our capability, our governance of the country, we are pretty sure that we will come with a very good output outcome. And thank you and Jai Hind to all. I am pleased to report that despite ongoing macroeconomic challenges, we have delivered a resilient performance this quarter. Our revenue grew 15% year on year, while the EBITDA recorded a strong 17% year-on-year growth. This was driven by our focus on the operational efficiency, discipline, cost management, and maintaining a balanced product mix.
In line with our growth strategy and better serve to our customers, we inaugurated our new corporate office in Taratala, Kolkata, this quarter. This office will serve as a hub of sales, customer engagement, and regional operations, strengthening our presence and responsiveness across India. A significant highlight this quarter was launched by our new range of color-coated roofing sheets under SEL Tiger brand, introduced in the variant of Royal Elite Azure Alpha, a different brand, a different category, and product and price mix. Manufactured at the heart of an old rolling mill facility with the most modern technology, utilizing the best resources so that in the time to come, we can overcome and prove ourselves, as we have done in our past business, with the best product at the best price. This launch further expanded our value-added product portfolio, catering rising demand in the construction and industrial sector.
Since we all know that we have a huge distribution network across the region, as it caters in the same supply chain management with the dealer distribution network, we expect that it will strengthen our supply chain management and create more comfort and confidence of our customers, dealers, distributors, and entire supply chain management. We have also ventured into a B2C market and launched a food-grade aluminum foil under SEL Tiger Foil, produced at our Jharkhand plant. With the demand of aluminum foil in the food business, we expect that we should be growing around 8%-10% CAGR by 2030, and we will be well-positioned to capitalize on the rising demand and emerging opportunities in this sector. Our glass furnace facility in Jamuria also got commissioned in Q3 FY25 and continued to operate efficiently, leading to a bigger sale in this last quarter.
With full year, we will achieve more than 100% efficiency for the year 25-26. I'm very happy to share that today. In a very few months of operation, we have achieved 100% capacity, and we expect that we should be overcoming the 100% into 110% capacity for this year. We believe our strength lies in driving efficiency through both vertical and horizontal integration, enabling us to enhance the profitability and diversity of our customer base and reduce more cost and increase the more efficiency. Our continued focus on the backward integration will further boost operational efficiency and increase the revenue contribution from our final products. Our production capacity has remained robust, reflecting our commitment to the operational excellence and continued investment in the advanced technology and repeated upgradation and modernization.
On the regulatory front, we welcome the government decision to impose a safeguard duty on the aluminum foil import from China. This policy is a very positive step to support the domestic manufacturer by mitigating unfair pricing pressure. With our established aluminum foil production facility, we are well-positioned to benefit from stronger domestic demand and improve market dynamics. We remain fully committed to execute our growth plan. As of FY25, we have increased the CapEx of. We have incurred a CapEx of INR 6,584 crores, INR 6,584 crores, representing over 66% of our planned expenditure. We have capitalized INR 4,908, INR 4,908 crores as of date. Our ongoing projects are progressing well, and we anticipate their timely completion. We expect the majority of our carbon steel CapEx to be operational by FY26, while our stainless steel and aluminum CapEx are targeted to be commissioned by FY27.
These investments are aligned with our broader strategy of integration, operational efficiency, and sustainability. In conclusion, we are proud of the way our team continues to deliver in the challenging environment while staying focused on building a stronger future. By consistently executing strategic projects that boost volume and optimize efficiency, we are positioned to achieve a minimum of 50% CAGR annually. Thank you for your continued support. We look forward to engaging with you in the quarter ahead. Now, I conclude my speech and would request our CFO, Mr. Deepak Agarwal, to take us through our financial performance. Thank you.
Thank you, sir. A very good evening to all. I will give a quick review of the reported consolidated financials for the quarter under review and for the year-end date of the financial year 2024-25. On a consolidated basis of the company for the quarter four of the 25, reported an operating revenue of INR 4,139 crores, a growth of 15% over quarter four of the last financial year. Like in the previous quarter, in Q4 too, we have been able to sell a higher percentage of volume sales of finished steel at a higher utilization, which has enabled the company to grow in terms of revenue and EBITDA over the previous quarter.
As a result, our EBITDA for Q4 of the financial year 24-25, on a consolidated basis, was at INR 515 crores, a growth of 17% over Q4 of the last financial year, and a growth of 13% over Q3 of the last financial year. There has been a decrease in the realization across steel products in the range of 3%-5% in the financial year 24-25 as compared to financial year 23-24. However, on the back of increased realization in aluminum foil products and stainless steel, we have been able to maintain the gross margin at 27.7% in the financial year 24-25, against 28.2% in the financial year 23-24. The same has also been possible owing to the simultaneous reductions in the per ton cost of our major raw materials.
We have reported a good EBITDA for the Q4 of the financial year 2024-25 in comparison with the previous quarter. In order to maintain this growth in EBITDA number, we have been judicious and cautious on all other cost components. With Q4 -25, on a consolidated basis, we reported an EBITDA margin of 12.5%, which is 30 basis points higher on a yearly basis and 40 basis points higher when compared on a quarter-on-quarter basis. For the year-end date 2025, we reported a revenue of INR 15,138 crores, a growth of 15% over the last year. On the EBITDA front, our company reported an EBITDA of INR 2,097 crores against the EBITDA of INR 1,729 crores for the year-end date 2023-24, an upside of 21.2%. We have reported a net profit degrowth of 11.6% for the year over the previous year, 2023-24.
This is basically on account of adjustment of brought forward losses carried forward on account of acquisition of Mittal Corp during the financial year 2023-24, which has been adjusted against the tax assets. That's why there is a degrowth on account of net profit when we compare with the financial year 2023-24 to 2024-25. We could achieve the above margin owing to increase in our steel volume growth, contribution from the stainless and aluminum foil segment. In the financial year 2025, our working capital days are 22, against 12 days at the end of the financial year 2024. This is against the backdrop of introductions of large furnace, color-coated sheet, and stainless steel. In spite of diversification in the product profile, the working capital days have just slightly increased.
Similarly, we have achieved the massive improvement to our capital efficiency during the first half, and the same trend is being perpetuated. Our ROCE/ROE at the end of the financial year 2025 are at 15% and 14%, respectively. The gross debt to equity, which was at 0.06x at the end of the financial year 2024, is slightly higher at 0.07x at the end of the financial year 2024-25. Our net cash positions are ₹1,062 crores as of 31st March 2025, against the gross debt of ₹768 crores, as we have cash and cash equivalent along with the long-term investments worth ₹1,830 crores. We have incurred a capital expenditure of ₹1,944 crores against the expenditure of ₹1,578 crores in the financial year 2023-24 on the declared projects.
From the net cash flow from the operating activity of INR 1,964 crores during the financial year 2024-25, we have spent the entire amount of the CapEx undertaken at our company. I am glad to share that the financial risk profile of the company is very, very strong. Our strategy has always been to incur capital expenditure in smaller doses in a peaceful manner to ensure the balance sheet is never strained. At all points of time, we closely monitor the liquidity, solvency, and capital efficiency ratios. I would like to assure you that the company sustains the healthy financial risk profile despite pursuing sizable capital expenditure plans. Out of the INR 10,025 crores of CapEx announced since IPO, we have already cumulatively incurred the amount of INR 6,584 crores, which is entirely from the internal accrual up to the financial year 2025.
Capitalized out of this ₹6,584 crores, we have capitalized till date ₹4,908 crores worth of assets. We have completed the 66% of the announced CapEx. The remaining ₹3,904 crores shall be expended over a period of the next two financial years, with the majority of carbon steel-related CapEx being completed in the current financial year, that is 2025-26. The CapEx relating to aluminum and stainless steel is to be completed in the financial year 2026-27. We spent ₹2,130 crores on CapEx this year, and for the next year, CapEx spend is expected on a similar line. Aided by the internal cash generation and sufficient liquid surplus, which will ensure we take only limited debt in the event of any fund flow mismatch. I would like to assure you that the bank limit utilization at the consolidated level is expected to remain moderate going forward too.
Also, the annual cash accrual should suffice for the capital expenditure requirement and debt repayment. Based on the implementation of projects underway, we are bound to see an uptick on our EBITDA, which shall positively and directly increase our return on equity and return on capital employed. As you all are aware that for many years, we have been following a prudent capital allocation policy, by which 70% of the cash generated is returned back into the business, 20% is retained as a liquidity surplus, and 10% is returned to our esteemed shareholder as a dividend. On the back of good operating and financial performance, with a strong net cash flow from the operating activity of the company in its board meeting, we declared a final dividend per share of INR 2.25 per share, subject to the shareholder approval in the ensuing annual general meeting.
We shall have a dividend outgo of around INR 125 crores for the financial year 2024-25, including the dividend of INR 2.25 per share, which was declared earlier in the form of interim dividend. Now, I conclude my portion of updates and throw the floor open for questions and suggestions. Thank you. Thank you to everyone.
Thank you, everyone. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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. Ladies and gentlemen, it seems like the management's line has got disconnected. Please wait till I connect. We have the management's line with us. The first question is from the line of Amit Dixit from ICICI Securities. Please proceed.
Yeah. Hi. Thank you for the opportunity and congratulations for a good set of numbers in a very challenging backdrop. Two questions from my side. Now, if I look at your CAPEX execution, it has been excellent. In the next two years, possibly this leg of CAPEX would get over. So just wanted to understand what is the next that we can look at. Because two years, possibly things will get over, but I believe, I mean, you might be thinking of the next leg of growth for the company. So just wanted to understand the key areas for the same. And in slide number 21-22, where you have so nicely highlighted the expected sales volume, just wanted to understand if today's prices are taken in context, then what kind of revenue EBITDA we can look at by FY27. This is my first question.
Sir, are you talking to Mr. Brij Bhushan Agarwal?
Yes.
Okay. Just hold on, sir.
Yes, Amit.
Yes, sir. I will just repeat the question. Possibly, I mean, I was not able to connect.
Yeah. I lost you. Yeah. Yeah.
Yeah. So the question is that the CAPEX plan that was outlined, I mean, 66% we have already achieved. Over the next two years, we will achieve the residual CAPEX. So just wanted to understand what is the next leg of growth that you are looking at, what all sectors or subsectors that you are targeting. And also, in slide 21 and 22, you have laid out very nicely the expected sales volume by FY27. If we take today's prices in context, then what kind of revenue EBITDA we can look at at the company level in FY27?
investment what Shyam Metalics is focusing on is on the aluminum sector. We are going backward integration in the aluminum, putting up a foil stock plant. We are increasing the foil capacity two and a half times. We are also going forward in foil capacity, putting up the aluminum fins and value-added product, which is going to strengthen the aluminum business, which we see that in FY27, the aluminum business should have a very decent revenue and a good margin business we will be able to cultivate as we are going backward, reducing the price and cost of our existing business, also increasing and enhancing the capacity of our existing business, adding more value-added like aluminum fins, which is a very interesting product, which is, as on date, 100% import.
We are seeing a lot of air conditioning industries are coming up, a lot of cooling towers, air cooling towers, a lot of businesses are getting developed. In the time to come, I see a very robust demand because it's a laminated foil, very high tech, and today, nobody in the country is doing that. Now, our second major investment is coming up in the stainless steel. As you know, we have commissioned the stainless steel plant from the NCLT, a sick plant, and now, in the last one and a half, two years, we have learned the operations. This year, we expect that we should be able to do a revenue of close to INR 1,300-1,400 crores this year. In this stainless steel, now from the long product, we are getting into a flat product.
We are setting up a complete steel melting shop where we'll be using our existing iron, our captive power, our specialty alloy, other general ferro alloys, and only nickel is a product which we might have to buy from the market, or we will be focusing more than 60% on the 200 and 400 steel, which is almost nickel-free. There's not much nickel requirement, but it is a nickel-free product. In stainless steel, we are putting up a flat product mill. We are putting up complete downstream where we can cater to the tube market, to the high segment precision steel in the stainless steel sector, which is used for the decorative steel in the railways, in a lot of other businesses in the defense. A lot of requirements are there. So we should be able to cater to that market.
So this product is also very, very interesting, and it is a downstream and upstream both integration of our existing plant, and it is coming up in the brownfield existing location. And we don't see any challenge in setting up this plant. The third, of course, what we are doing right now is we are increasing the capacity of our color-coated plant. It is very interesting that we just commissioned the plant in the last quarter of the last year. And last month, we achieved almost 90% capacity utilization. Our product is well accepted in the market. And now, we are gearing up for high value-added product in the existing product and also doubling the capacity of the existing HR color-coated Galvalume business, what we have commissioned last year.
Apart from that, we are adding more DRI facilities, which is already shared in our earlier projection with the captive power plant because we'll be requiring a lot of power to run our existing aluminum plants and other plants. So we'll be generating the power from the waste heat and also will be able to cater to our existing downstream facilities of aluminum as well as the stainless steel facility. So this is what is the major CapEx we have outlined in the present businesses, which is pending, and we expect that in the next one and a half, two years, we'll be able to complete that CapEx. Thank you.
To answer the second portion, Amitji, basically, if you look at the revenue expectation post 2027, based on current realization, is about anything between INR 22,000-23,000 crores. And EBITDA, we are presently this year at about INR 1,866 crores. So it should be anything between INR 2,800-3,200 crores.
Wonderful. The second question is for Deepakji. This year, we saw an inventory build-up. I mean, inventory days have gone up. And you mentioned in your prepared remarks that this is due to the new verticals coming up. So just wanted to understand whether this is the normal inventory that we should work with around 100 days, or there is a chance for working capital unlocking, inventory unlocking, rather, as we go ahead.
The inventory days will be in terms of the new upcoming project. The inventory day will be hovering in between 90-100 days.
Okay, sir. Got it. Got it. Thank you and all the best.
Thank you.
Before I take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Shaleen Kumar from UBS. Please proceed.
Yeah. Hello. Hello?
Yes. Yes, sir.
Yes, sir. Congratulations to the management. I think it's a pretty good set of numbers in the current environment, so Bhushanji, I missed a little bit of your initial remark. And I also, what I heard, that April has been pretty solid and strong specifically for your blast furnace, etc. But what I want to ask over here is that while your performance has been very strong for the quarter, is it fair to assume that it has built over the months because some of your capacities have come in the past few months? So is March maybe stronger than February, maybe stronger than January, or was it pretty homogeneous?
I'd say it is totally cumulative only because the market was also end of Q4 always. We see the markets are always on the better side. The demand was also very good. The realization also improved, no doubt. Also, there were a lot of changes and improvement in the efficiency side from the cost side. And also, the new value-added products, we are regularly innovating like in pig iron. Also, we are making some great foundry materials and high value-added pig iron. So a lot of things have cumulatively contributed.
Thank you. Sir, basically, the reason I'm trying to ask is it will help me understand how the one Q is going to be, like how strong the March or April is. Any color on that in terms of numbers?
It is. The market is not bad, I would say. And I expect that there will be a volume growth. The revenue growth will be also there in this Q1. And I'm pretty optimistic like everything is looking very positive.
We can expect Q1 QoQ growth, right, in 1Q?
Yes.
Yeah.
We can expect. Yeah.
As utilization goes up for all your new capacities, right?
Perfect. Perfect. Perfect. Correct.
Yeah. So that, yeah, for sure. Sir, broader, I think this is a question from Deepakji. Deepakji, can you put in numbers like what kind of CAPEX we are looking for FY26 and key areas?
Yeah. The remaining CAPEX of around INR 3,000 crores, out of these INR 3,000 crores, the INR 2,000 crores of CAPEX will be incurred during the financial year 2025-2026, which comprising of captive power, solar, and this combined finished steel, INR 413 crores, stainless steel, INR 784 crores, aluminum, INR 126 crores, which all conclude there is a CAPEX of INR 2,010 crores.
Got it. Got it. All right. One more question on the CapEx, and now I'm going back to the Bhushanji. I think Amit tried asking you the same thing. See, sir, these are some of the CapEx funds which we know, right? But theoretically, I'm not asking you to guide us, but theoretically, where else and what else you can do? Because there is enough cash, and now you've almost done a large part of our CapEx, which we announced a few years back. So what other things we can think about? So I'm just putting it like theoretically, not necessarily telling you to comment, but what are the areas which we can evaluate? Let me put it this way.
Are you there?
Hello?
Yeah. Now, I'm asking sir if he's there.
Yeah.
Yeah. So I'll take it on behalf of sir till he joins. So basically, Shyamji, we have been contemplating a few things. Obviously.
Can you please repeat the question, Shyam? Yeah.
Sure. Bhushanji, basically, I'm trying to get more from you. I think Amit tried, right, to get more from you. So let's say theoretically, right, theoretically, no guidance, but theoretically, what are the other investment areas beyond what we have already announced, right, which you can explore, whether in aluminum or in steel or whatever, right, like wire or HRC or anything what you can talk about, right, or existing products? Theoretically, what all you can explore?
In the stainless steel long product, we have recently commissioned the wire division and the bright bar division.
All right.
These wires are all very high precision wires, which has an incredible export market and has a very unique utilization, and very few limited companies are there in the country, so we just commissioned the plant now, Bright Bar and wire, and we expect that it will take close to three months to six months to stabilize because it has a lot of high-end buyers, which has their rules and regulations of approvals and all, so this is one thing what we are doing in the long product of stainless steel. In aluminum, as we said, that we have already been approved in the battery foil business.
We expect that once we see any battery plant commissioned, so we will be as on date. We are only the choice in the country who has been approved and is well established to supply the battery foil in the EV battery space. Apart from that, if you see down the line, all our new investment, what we did was we cultivated hardly a couple of years before. It is majorly focusing on the high-value businesses in the terms of delta. Also, if you see the ROCE of these businesses are very high because if you think of setting up a 500,000-ton stainless steel plant, any 500,000-ton stainless steel plant would have cost close to around INR 6,000 crores because stainless steel is a very unique product.
But since we had all the establishment of power plants, steel making, specialty alloy, land, everything, so at a very minimalistic cost, we are doing 500,000 tons. So it's close to around INR 1,500 crores. So all this business has a very high ROCE, and also, it is very well integrated with our backward and forward because if you have your own raw material, then your inventory cost, your working capital cost, everything is very well taken care of. Then apart from that, we are adding a lot of energy, power plants. As you know, we have a coal washery, and we generate a lot of rejects. So since we are adding the DRI capacity, we need to add our power plant to consume that middlings and rejects, which is a byproduct of our washery division.
So all these things all along cumulatively is increasing and enhancing the bottom line and also getting integrated in the numbers of the total consolidation. Thank you.
All right, sir.
In addition to this, I would also like to share you that since we have a capital allocation policy and we are generating cash of more than INR 2,000 crores year-on-year basis and 70%-80% further, it will be reinvested in the business. As you said, after two years, what we will done, we will definitely announce various projects. Our CAPEX team is already working on it, and whatever we will invest, the ROE and ROCE would be more than 20% will be there, so we are working on it, and we will definitely shortly announce maybe next quarter or in the next quarter.
Got it. Deepakji, can I take this opportunity to ask a little bit more on your stainless steel wire? Just a few basic questions over there in terms of end market, the capacity, what kind of EBITDA per ton can we expect in that, and how big is the opportunity?
See, Shyamji, we just have installed a very mid-size capacity because wire business and all, they take little time to develop.
Sure, sir.
But overall, I can tell you, comprising of wire and bright bar, our total installed capacity is close to 40,000 tons per year presently. And on an average, I can say that once we establish our product and we are through with all the challenges because we have put up the world-class facility, so there's no doubt. And since it is a forward and backward integration of our existing stainless steel long product division, which we have acquired through the NCLT in Indore, so we expect that close to INR 7,000-INR 12,000 per ton is going to be an average EBITDA. There are certain products where we might fetch more than INR 30,000 a ton. But what conservatively I'm sharing with you is we can say that the average will be 10-12 thousand tons.
Got it, sir. And sir, end market, end customer, end usage, any sense on that?
Huge. There's a lot of export market there. There are a lot of defense companies which require wires. There are a lot of in railways, a lot of requirement of wires are there on the machine side and also on the decorative sides, which are very well spread. Wire is a very big segment in today's time.
So just last bit, sir, on this then, is there an entry barrier in terms of the product qualification? What do you think that that's not a big challenge?
No, no. It is a challenge. It is a challenge. Any of these, we are not talking of a commodity wire. In today's plant, we are making welding electrode wire. Nobody in the country is doing this. So we are the company who has developed the welding electrode wire. For all the welding electrodes, we make a special quality of wire, which used to be an import from outside. So all these wires, they have a very special application. I will not be able to share all the details because I'm not directly day-to-day involved on the product side, but briefly, I'm telling you. So it will not be right or appropriate from my end. But I can tell you these are all the high-niche wires. Decorative are a very big segment of this stainless steel wire.
Then the defense, all the in the construction, also in the specialized construction, also the stainless steel special quality wires are very much important. So in the machinery side, on the heat exchanger side, there are wires, filters. If you have seen the filters, so there are a lot of requirements are there on the automobile side also. Some components are there where these requirements are there. So it's a huge wire is like it's like an ocean. When we see all categories of wires are there. But specialty wire has a very different market.
Right, sir. No, no. Exactly. Exactly. That's what I was trying to ask you. No, sir, I think it's very, very exciting, sir. I'll go back to the queue. Thank you so much. Really appreciate your answers.
Thank you. Before I take the next question, I would like to remind participants that you may press star and voice to ask a question. The next question is from the line of Rajesh Majumdar from B&K Securities .
Yeah. Good evening all. And congratulations, Bhushanji, on becoming the chairman of the company. So I had a couple of questions. One is the fact that the DI pipe plant. I think there is a timeline of about one to one and a half years or two years before the plant kind of stabilizes, as per my understanding from the other persons who put up this plant. So will we see a period of losses for the DI pipe plant? And is that incorporated in our estimates? That was the first question.
DI plant, yes. It takes around nowadays. It doesn't take one year to one and a half years because DI has become like a commodity. It is not more a very niche product, if you ask me. And all the past procedural challenges in this industry is more or less sorted out. Since we have shifted this DI plant from our existing Jamuria to Ramsarup, which is near to the port, and cost-wise, it is more economical. And the downstream, because we have taken a Ramsarup plant where we had a blast furnace, and we want to create some product mix where we can set up a downstream product and all. So I don't see there is much challenges. But yeah, it do takes time in setting up a plant of a DI. It takes close to one and a half to two years. Six-month establishment time is good enough.
And right now, all the rules and regulations what was created by the old procedures is no more in the system. So it is not a very difficult thing to sell in the market. Thank you.
Thank you, sir. And my other question was, on the SS Melt Shop, you mentioned that you'll be focusing on the 200 and 200. So this will be a blast furnace, right? This will not be a scrap base. This will be a fully primary unit. Is that correct?
Primary unit, yeah. Correct.
We will not be using scrap at all. We'll be using sponge iron.
Yeah, yeah. We will be using the scrap in case we want to have a nickel because there are certain scrap. If you buy a virgin nickel, it is more expensive. So every stainless steel manufacturer globally, they source scrap to reduce the price of the nickel because there are certain scrap where you get nickel at 60% of the normal value. So it depends. But we don't have much pressure on nickel because our major focus would be close to 200 or 400 series. And I expect that at certain stage, you have a requirement of a nickel that should also be available in our portal because we can't allow our customer to go to another window for any other material which has a very low requirement.
What about ferrochrome, sir? Will we have a ferrochrome plant as well, or will we be sourcing ferrochrome from outside?
No, no, no. We are already making ferrochrome, manganese, low carbon, specialty, all 80%, 89% of all the specialty products. We are the largest supplier to all these stainless steel companies globally.
We'll all be coming along. Yeah, for this plant.
Perfect.
Sir, if I could, I got a strategic question. On your capital allocation policy, you have a very low space for dividends. So are we fairly confident that we'll be reaching the 20% ROCE for a company because we hardly see much dividend payout from this company? That was the last question. Thank you.
That is Mr. Deepak Agarwal's question. Deepak, you can.
Yeah.
No, definitely. So we are already, if you look at last post-listing since 2021, we have doled out a dividend of around 11% as per our policy, and so we are always on the CAPEX right now, so if you look at a large CAPEX happened in terms of blast furnace, which was like a spend of more than INR 1,200-1,300 crores spread over two to three years, so that is why the ROE was lower. I think going forward, things will be back to normal as far as overall company ROE is concerned.
Thank you.
Thank you. The next question is from the line of Anupam Gupta from IIFL Capital. Please proceed.
Yeah. Hi, sir. One of the earlier questions you had answered in terms of the expected EBITDA when you reach the full volumes in FY 27 of close to INR 3,200 crores. But if you actually look at your volumes and the mix as well, the finished steel capacity is doubling. Your stainless steel is coming up entirely in FY 27. And aluminum also is doubling. Only the carbon steel intermediate products is where you have 20% growth overall. Ideally, does the 3,200 crore number is a very conservative number, but ideally, you should be closer to that 4,000 crores given that you're already at a run rate of 2,000 crores EBITDA on an annual basis.
Yeah, you are right.
Anupam, let me answer. Anupam, Pankaj said 2,800-3,200. We would love to talk conservative. If you see in the last three years in Shyam Metalics, our deliverable is 120%. When we did an IPO, the revenue of the company just three and a half years before was INR 6,000 crores. And next year, we are talking of INR 18,000 crores. Our EBITDA at that time was close to INR 600 crores. This year, we are talking more than close to INR 1,800-2,000 crores. We would love to be conservative because you never know what kind of changes happen in the geopolitical situation, and we want to be pretty sure that our deliverables and our commitment should not disappoint our investors.
So we will give our best shot and let us keep this in the trade, in the business, like how the market reacts, how the pricing goes up, how the raw material things happen. So that in the time to come, we should be able to deliver more and more what we commit. Sure, sir. That's helpful. Just one question related to that since you mentioned that you want to be conservative here. Apart from macro, any specific thing which you worry about in terms of, let's say, so far, the execution has been very great in terms of how the CAPEX has been implemented. But any other risk which you worry about to achieve this sort of growth which you have indicated?
I have only worried about my investors. They should be happy. That's all. I'm only concerned that whatever we promise, we should be able to deliver more, and investors should be more and more happy.
Sure, sir.
I'm actually not bothered at all. I think we are pretty mature. And if you see last so many years, so many quarters, we have seen with the best of the metal company, vis-à-vis the Shyam Metalics, year on year, quarter- on- quarter, we had tried our best to deliver more and more better. So I think now our investors should have a profound confidence on their company, like on our deliverables, on our CAPEX plan, on our dividend policies, and all. What we stated three and a half years before, we are trying to maintain as per our commitment and what we foray we had forecast for three years.
Sure, sir. That's helpful. Thanks a lot.
Thank you. The next question is from the line of Rudraksh Raheja from ithoughtpms . Before that, I would like to remind participants that you may press star and one to ask a question. Please proceed.
Yeah. Thanks for the opportunity, sir. My question pertains to the DI pipes industry. 12-15 states have started accepting OPVC pipes. So how do you think that affects DI pipes industry?
Can you please repeat your question?
Yeah. I'll repeat it. I wanted to ask about how OPVC pipes introduction affect the DI pipes industry since we are expanding into that product.
Very correct. It is affecting. And in the time to come, it will have a great competition with the DI pipe below 300 size. So if you see today, a complete DI plant, if you think of establishing a complete DI plant with a center plant, blast furnace, infrastructure, and all, it is not going to cost you less than INR 2,000 crores. But in our case, a small capacity of DI plant is just a kind of ancillary to our existing brownfield project what we acquired through the NCLT. So if we are able to, like DI pipe has been able to gain the EBITDA of close to INR 18-20 thousand rupees a ton in the last one year. And presently, I think it is struggling between INR 7-8 thousand to INR 10 thousand rupees a ton. I'm telling you a ballpark figure.
I'm not 100% sure, but yes, 95%. If we invest on 300,000 tons capacity, close to INR 350-400 crores, and if I'm able to gain the EBITDA of, say, 5,000 crores, INR 5,000 a ton, we make close to INR 150 crores EBITDA every year. So if you see the ROC, ROI on my additional investment on DI, which helps us to de-risk our business, which helps us to space ourselves in the product, and which is a very small investment for such a conglomerate like Shyam Metalics in the terms of the future opportunity, also in the terms of utilization of our existing hot metal. So this is one of the ideas what I have. But you are very correct. This is a challenge, and this is going to be a strong challenge in the time to come.
But OPVC has always been in the international market for donkey's years. If you go to any of the Western countries, but there are certain areas where still the DI is the major pipe which is being procured and utilized, so we would like to restrict ourselves with the minimalistic and conservative CAPEX in the first go so that this period we should be able to regain, and in the worst of the time, if we discount ourselves on the 50% of our ambition, then also our ROCE and ROI is very interesting, so this is the reason why we are absolutely optimistic on this business.
Got it, sir. Regarding this, sir, which sizes do you think that are getting most affected in this segment, or how much percentage of?
Below 350. This is close to around 40%-50%.
So just to clarify, you are saying 40%-50% of the industry is being affected?
Affected nahi hai. But 40 to 50, but still there are sizes of 80 to 350 where people are using DI. They have not rejected it. Like if I'm putting up a steel plant, I need a water supply, I will definitely like to put up a DI pipe, not the OPVC pipe. So it depends on the usage, the area, the concern of the utilization, and all. So it all has unique properties. You can't 100% replace it, but yes, in certain places, it can be replaced. When it is an open space, you can't put up a plastic pipe. OPVC is just a plastic pipe. But in the open place, DI is very well installed, and it is as good as the hard surface. There are certain areas where you can replace, but yes, it is a challenge. I completely agree with you.
Got it, sir. Got it. Thanks for the clarification.
Thank you. The next question is from the line of Deekshant B from DB Wealth. Please proceed.
Hi. Congratulations, sir. So I want to understand from a larger-term perspective. Of course, we are a growth company, and we have always portrayed a good growth scenario and also deliver on a good growth scenario while being conservative. But our margins are still at 12%, and we have an outlook to be doing CAPEX, which is going to be enhanced. But what do you think FY 2027, what kind of margins can we be expecting from our business on a steady state, not any cycle gains that we get, but on a steady state, what kind of margin improvements can we expect?
See, margin is a very, very speculative statement as on date. But we have to understand that in the toughest scenario, the company has delivered a decent margin. And now, whatever the future growth is there, it is coming up with the high-value-added businesses. So margin is definitely going to enhance. Apart from that, if you see all the future businesses, investment is also helping us to drive down in the cost side by adding the backward integration or the forward integration so that the realistic value in that business is also increasing. So it is going to increase, but at this point of time, I will not be able to state whether it will be 20% or 15% or blah, blah, blah. But yes, definitely, the trend is going on the upward side. That much I can tell you.
No, sir, I completely understand that. And it would be unfair for me to ask you something where it's so speculative. But what I'm trying to understand here is that let's assume that the businesses that we are going in, they are live today. And in current market situation, what kind of margin we would have expected?
It's not theek hi chal raha hai, na? We have been always conservative with our projections. So I'm not till I'm getting a good ROI and the ROCE, I'm happy. So margin, I told you, it's very volatile. So it depends on the demand, supply, geopolitical situation. And in today's time, since the last two, three years, nothing is going uniform across the planet. So in spite of that, in spite of so much challenges, if you see quarter after quarter, if you compare your company with the best of the metal companies, I'm not saying we are the best, but we are among the best. So.
No, certainly, sir. Certainly.
Thank you.
Sir, a follow-up question here is, do you think that the sort of dumping, if happens, of course, our government has been able to help us a lot, but if there is any sort of dumping that does happen, do you think that affects us and our particular product ranges?
Majorly not because if you see in our business product module, very less percentage of import threat is there. But overall, the psychological scenario does matter. Dumping was happening before, but we have never seen the numbers or the graph or the margins have come down. So this is a true example and explanatory to your question. But yes, anything on the positive side drive up. Anything which is on the negative side also does affect. But in our business model where we are too much based on the Indian demands and the product what we had been doing is majorly the product which is consumed in the country and which doesn't have majorly an import if you see on the total portfolio. So it does affect, but very marginally. Thank you.
Got it, sir. Sir, my last question here is on depreciation. Now, of course, we judge ourselves by EBITDA, ROC, ROI, and these sort of numbers. But is it only when the cycle turns and we get those windfall profits that we can expect our net profits to be in the higher range? Or do you see a point of time where the depreciation growth tapers down and our operating profits are such high that the depreciation no longer really matters? Do you think that's happening anytime soon?
In our balance sheet, if you see the interest payout is marginal or it's hardly. Yeah. So depreciation is just a statutory accounting norm. So if you should see the net cash, which is more important. Most of the company in our terrain has a lot of debt baggage and a lot of corporate debts and blah, blah, blah. So it really doesn't bother us. We are more concerned on the net cash, which we make on the EBITDA side and the after-tax what is majorly is the net cash what is available.
Got it, sir. Got it. Thank you so much, sir. This is very helpful. Congratulations again.
Thank you. I have another meeting. How many questions we have now?
This was the last. I think we are closing.
Wonderful. Thank you. Anything else?
Hello.
Yeah.
There is only one question in the question queue.
Okay. Please.
Shall I move with that question, or shall I?
Hanji, Hanji, please, please. We don't want to. Yeah.
Okay. The next question is from the line of Shaleen Kumar from UBS. Please proceed.
Cash is important. So is it possible to share the maintenance CAPEX for this quarter or rather from next time onward so that we can think about cash profit? Because optically, profit is looking lower, right? So we can at least know what's the cash profit. We can add back the depreciation and minus the maintenance CAPEX. So it's not now, but.
So Shalin, this year, if you see, the CapEx was around INR 2,148 crores, right? Of which the CapEx that we had announced for that, the CapEx was around INR 1,944 crores. So we incurred about INR 200 crores out of maintenance CapEx this year, leading to improvements in our existing plants and all.
How much was the depreciation, sir? Can I ask you? I mean, accounting depreciation.
What did you ask? How?
How much was the accounting depreciation, depreciation on P&L?
Depreciation was around INR 700 crores, right?
Okay. So basically, you're saying that Ex of maintenance CAPEX, roughly 500 crores, we can add to come at the cash profit.
Correct. Correct.
That's the way to see it, right?
Thank you, sir.
Thank you, sir.
Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Sumeet Khaitan from MUFG Intime for closing comments.
Considering all the queries today, we are from MUFG Intime, investor relations advisors to Shyam Metalics and Energy Limited. For any queries, please feel free to reach out to us. Thank you.