Ladies and gentlemen, we welcome you all to the Q1 fiscal year 2025 earnings conference call of Venus Pipes and Tubes Limited, hosted by Ambit Capital. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. Now, I hand over the conference to Mr. Dhruv Jain from Ambit Capital. Thank you, and over to you, sir.
Hello, everyone. Welcome to Venus Pipes and Tubes Limited's first quarter fiscal year 2025 earnings call. From the management team today we have with us Mr. Arun Kothari, Managing Director, Mr. Dhruv Patel, Whole-Time Director, and Mr. Kunal Bubna, Chief Financial Officer. Thank you, and over to you, sir, for your opening remarks.
Good evening and warm welcome to everyone on the Q1 fiscal year 2024 earnings call for Venus Pipes and Tubes Limited. I have been joined by Mr. Dhruv Patel, our Whole-Time Director, Mr. Kunal Bubna, Chief Financial Officer, and SGA, our investor relations advisor. We have uploaded our Q1 fiscal year 2025 investor presentation on stock exchanges and company's website, and I hope you had an opportunity to go through the same. To begin with, I would like to give some outlook on the global economy, particularly U.S., Europe, and India, followed by company's performance for the quarter. According to IMF, global growth is projected to be 3.2% in 2024 and 3.3% in 2025. The U.S. economy, the largest in the world and one of our key export markets, is expected to grow by 2.6% this year, up from 2% last year.
While the manufacturing sector in the U.S. faces challenges due to high interest rates and rising raw material costs. This presents a significant opportunity for Indian companies like Venus to make their mark in the U.S. market. Turning our attention to Europe, another major export destination for Venus. The European economy is showing very positive signs of recovery, particularly in the service sector. However, the manufacturing sector is still experiencing a slowdown, which will take longer to recover. Coming to domestic market, India is expected to be fastest growing major economy in the world with an impressive growth rate of 7%. This growth is fueled by improvement in private consumption, especially in rural areas and manufacturing upswing, driven by growth-focused policy measures. The Indian economy has solidified its post-COVID recovery thanks to the concerted efforts of our fiscal and monetary policy makers in ensuring economic and financial stability.
The government has played a pivotal role in stabilizing the Indian economy through timely reforms. The PLI scheme, for example, encouraged high-quality foreign investments by offering a market-linked incentive system for companies to comply with. The success of the Atmanirbhar Bharat initiative is evident, with the PMI manufacturing index continuously improving and reaching all-time high levels. Recently, the honorable Finance Minister announced a host of measures for MSMEs in the manufacturing sector in the latest budget.
These measures are set to boost the overall development of the manufacturing sector, creating a more conducive environment for growth and innovation. Moreover, with the government focused on capital expenditure and improving the ease of doing business, we expect the domestic capital expenditure cycle to be a multiyear high. This presents a significant opportunity for us to grow and expand our market share. Coming to our performance in Q1 fiscal year 2025. We embark on fiscal year 2025.
We are delighted to share that we have delivered an outstanding performance for the quarter, setting new records with revenue of the quarter standing at INR 240 crore, reflecting a robust growth of 34%. EBITDA of INR 48 crore, witnessing an impressive growth of 74%, with EBITDA margin at a stunning 20%. PAT of INR 28 crore, reflecting a growth of 58%, with PAT margins at an all-time high of 11.5%. This remarkable growth is testament to our commitment to delivering high-quality products and timely service to cater to the market demand. Current performance showcases our ability to manufacture quality products, appreciated and accepted by the industry and customer, domestically and globally. Our dedicated efforts in product development R&D with focused initiative on marketing, distribution, and brand building augurs as well to serve the demands of the domestic and global market.
These long-term strategic planning have positioned us well to continue this upward trajectory. I would like to highlight key points regarding our performance in the export market. Export revenue for the quarter stood at INR 61 crore, a substantial increase from INR 8 crore in Q1 fiscal year 2024, marking an 8x growth on year-on-year basis. Export now contribute 25% of our total revenue, up from 4% in the same period last year. Sequentially, export have surged by 120 basis points, demonstrating our global footprint. We are experiencing strong order inflow not only from Europe market but also from the U.S. and Middle East. Focusing on expanding international presence. We are seeing a significant traction in sectors such as oil and gas, pharma, engineering, power, and other indicating a broad-based demand for our products.
With a robust order book, we anticipate sustaining the growth momentum, solidifying our position as a preferred supplier in these regions. Another key highlight for the quarter has been the remarkable recovery in our welded pipe segment. Revenue from welded pipe grew by an impressive 55% for the quarter, reaching INR 94 crore in Q1 fiscal year 2025, compared to INR 61 crore in Q1 fiscal year 2024. Revenue from seamless pipes stood at INR 136 crore in Q1 fiscal year 2025, up from INR 112 crore in the same period last year, reflecting a steady growth in this segment. Segment-wise revenue distribution stood at 57% from seamless pipes, 39% from welded pipes, and 4% from others. Our capacity utilization remains robust for both seamless and welded pipes with a strong order book and a clear vision for the future.
We are optimistic about our continued growth and success. Looking ahead, our long-term strategy revolves around diversifying our end-user industry to mitigate sector-specific risk and ensure sustainable growth, adding value-added products to our portfolio, aiming to become the one-stop provider for the stainless steel pipes and tubes, catering to a wide range of customer needs, continuing to stay abreast of new industry trends and technologies to delivering best-in-class products to our customers, enhancing their satisfaction and loyalty. With robust financial capability and foray into value-added products, we are set to become one-stop comprehensive piping solution provider to our customers. We will continue to invest in growth opportunities and strategically position ourselves for the market leadership. As we continue to expand our reach and capabilities, we are confident that Venus Pipes and Tubes will reach new heights, setting benchmarks in the industry, and achieving greater recognition and trust globally.
Together, we look forward to a bright and prosperous future. I hand over the call to Mr. Kunal Bubna, Chief Financial Officer, who will brief about the financial highlights of the company.
Good afternoon, everyone. A very warm welcome to our earnings conference call. We take absolute pride in announcing that your company has reported highest-ever quarterly and yearly revenue, EBITDA, and PAT for Q1 fiscal year 2025. Our revenue from operations for Q1 fiscal year 2025 stood at INR 240.1 crore as compared to INR 179.6 crore during Q1 fiscal year 2024, achieving a growth of 34% year-on-year. Revenue by obligation for the year was 39% from welded, 57% from seamless pipes, and 4% from other. Growth in seamless segment was 22% on year-on-year basis, and the welded segment registered a growth of 55% for Q1 fiscal year 2025 on a year-on-year basis in terms of revenue.
Our export sales stood at INR 60.9 crore for the year, compared to INR 7.7 crore during the same period last year, a growth of 691% year-on-year basis. On the EBITDA front, our EBITDA for the quarter stood at INR 47.9 crore as compared to INR 27.6 crore in Q1 fiscal year 2024, a growth of 73.6%. EBITDA margin for the quarter stood at 20% compared to 15.4% for the same period last year. On the PAT front, PAT for Q1 fiscal year 2025 is INR 27.5 crore compared to INR 17.4 crore in Q1 fiscal year 2024, a growth of 58% on a year-on-year basis. Margin stood at 11.5% compared to 9.7% in Q1 fiscal year 2024.
Our CapEx study remains on track with first phase set for completion in March 2025 only. Lastly, I would like to highlight that INR 17.85 crore were received from the holder of convertible warrant in accordance with the terms of preferential allotment. In conclusion, we are excited about the future and committed to maintain our growth momentum. With a clear strategy and a strong foundation, Venus Pipes and Tubes is poised to achieve a new milestone and deliver exceptional value to our customers and shareholders. We look forward to continued success in taking the Venus brand to unprecedented heights. With this, I would like to open the floor for question-and-answer.
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 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. The first question is from the line of Chirag from ValueQuest Investment Advisors. Please go ahead.
Congratulations on good set of numbers. Sir, couple of questions from my side. First, if you look at the performance this quarter, domestic demand was quite weak. year-on-year growth was just 4%. If you can highlight what led to this subdued performance in domestic market.
The strategy was more toward export. We got a good order wherein we were able to deliver in Europe, USA. The U.S. market was very nominal earlier on. It was very negligible. That is also a zone where we have supply of our product. Basically, it was sort of a strategy where we tried to happen more to an export.
Okay. How you see remaining part of the year for domestic? How should we look at domestic versus export portfolio?
Yeah. If you see the first quarter, export has been around 25%. We believe it should be more than 35% for the entire year going forward on the side of export.
You're saying 35%?
25%. More than 25%.
Okay. Second one on overall utilization in seamless as well as welded. For the quarter, what was the utilization?
On the side of seamless, it was predominantly high, more than 90%. On the side of welded, it was around 60%-65%.
Okay. Just lastly, on EBITDA per metric ton in welded, seamless, and exports, if you can give some color.
Generally, the blended EBITDA for the last year was more than INR 65 per kg. It has increased in this quarter also by more than 2% as compared to the last fiscal year 2023, 2024.
Sorry, what is the number for the quarter?
Last year I said it was more than INR 65 per kg, the blended EBITDA, and it has improved by more than 2% for this quarter.
Okay. Thank you, Kunal.
Thank you. The next question is from the line of Dhananjai Bagrodia from ASK Investment Managers . Please go ahead.
Sir, congratulations on a fantastic set of numbers. Just wanted to understand now regarding your export business. As a company, is it all other companies would also have similar growth? Have we done something special in terms of customer acquisition, and how sustainable is this growth going ahead?
We have been always telling Europe would be the first territory where we will be increasing our exports. Of course, that U.S. and Middle East. Similarly, what we have said in earlier calls, we've been telling to you all, that has actually followed us. Last year, Europe has been covered to a good extent. Now, with our approvals and all, we have been able to penetrate in U.S. and also in Middle East. I think that was pure a strategy since we started this mill and all. I think it's very sustainable from our perspective, keeping with a lot of geographies. We are also targeting few other geography going forward. I believe the percentage what we are narrating or what we are achieving should be maintainable going forward also.
Okay. Just to have a broad base now in terms of margins, this 20% what we have reached this time, this would be something which we could see consistently going ahead, or did we have any one-off gains?
Percentage-wise, it may differ because we depend on selling prices, but we have been saying the blended EBITDA, which was more than INR 64- INR 65 per kg last year, will improve for this year, I believe in the range of 3%-5% going ahead.
Just roughly, in terms of revenue growth, how much would any breakup between volume and realization?
The realization had been slightly depleted in this quarter as compared to last fiscal year 2023, fiscal year 2024.
Okay, fine. Perfect. Thank you so much, sir. Congratulations again.
Thank you. The next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Hi, sir. Am I audible?
Yes, you are audible.
Yeah, congratulations on a good set of number in a difficult quarters. Sir, just wanted to understand in terms of the segments, domestic, the demand this quarter was weaker, have its post-elections started to pick up? It is still the same? If you could give us, the segments from where the demands are coming.
Yeah, there had been demand coming from domestic also. See, chemical, we have been seeing demand coming from chemical industry, which was very low in the last few months, you can say. We are seeing demand from there. Oil and gas, the demands are there. Power industry, the demands are there. From the engineering sectors, the demands are there. It's a mixed bag of industry wherein those demands are coming.
Understood. It's picking up, right, post-election?
Yes.
Secondly, sir, though you gave a 35% kind of the export guidance, quarter on quarter pickup in the export was pretty ample. At least 25% of the run rate would be maintained from here onwards and would be improved later on, export we will continue to see huge fluctuations. How should we take it?
Sir, keeping all the factor, we believe this 25% sort of target should be maintainable going forward also.
Understood. Sir, one more thing. In our total 34% of the revenue growth, if I want you to split between value and volume, can you give us that number?
We are not giving a separate volume figure and value figure has already been given.
Understood, sir. Just one last thing. If you look at the last year, my SS seamless revenue percentage was almost 57%, which has been maintained this quarter as well. This year and next year, how do you see the revenue percentage of SS versus welded, and any impact on the margins, if you could give us?
Basically, if you see on the quantity basis for the last full year, seamless was around 47%-48%. Definitely a big depletion on the side of seamless, which may decrease by 4%-5% and as a consecutive increase in the welded will happen. If you see again, there would be margin increase on the both side of seamless and welded. I believe on a totality basis, there should not be no decrease in the margins then going forward.
Understood. Just on a little bit clarity purpose. Currently, in a seamless versus welded band, what is the margin difference of our product range which we are selling between these two products which we are selling on a blended basis, ballpark?
Between these two products, it differ a lot. You can say more than 40%.
Okay. Average blend we are talking about, right?
I am telling comparison with seamless and welded. Seamless is higher by 40%-50% as compared to welded.
Okay. That's all from my side, sir. Thank you, and all the best.
Thank you. The next question is from the line of Kunal Kothari from Centrum Broking. Please go ahead.
Yeah, thanks for the opportunity and congratulations for great set of numbers. My first question is in regard to the exports. Can you provide us the split between geographically, like how much we have done in Europe, U.S., and other countries as well?
Yeah, primarily, more than 65% was toward Europe and sort of INR 20 crore-INR 25 crore on the side of U.S. Primarily, Europe and U.S. was the predominant and few towards Middle East and others.
Actually, I wanted to understand in a way like last quarter we were near to INR 25 crore-INR 30 crore, and this quarter we did around INR 60 crore. The incremental export sales we did is largely from which area, which country?
It was marginally to USA.
Okay. Secondly, about during the last quarter, it was guided that we are going to see a good ramp-up in the welded segment and hence the overall sales mix will tilt higher towards the welded side, like 55% welded and 45% would be the seamless side. Again, during the quarter one it was similar to the last quarter with seamless contributing the maximum 55%. Going forward from quarter two onwards, how one should see the overall sales mix?
Yeah, definitely, going forward, you rightly said, there would be a tilt towards welded. Those percentage, if I say on the quantity basis, to give you, last year, 47%-48% was towards seamless and balance was towards welded. I believe this will change to more than 50% sort of number, 54%-55% towards welded and balance towards seamless.
Okay. Lastly, does the higher contribution from the welded segment as you're guiding, is it because that our sales in the oil and gas sector is going to improve and that will help in the higher sales? Secondly, on margin front as well, with the existing welded pipes that we are selling in the market, will the margin profile will also change with the changing mix in overall customer mix as well?
Definitely oil and gas, catering to U.S. and Middle East will help us in improving the contribution from welded going forward. From the margin perspective, definitely when you say sales is higher ranges of pipes and tubes, which is generally few people manufacture, you get a slightly higher delta as compared to the routine sizes. Definitely those improvement you will also see going forward on the side of welded.
Despite higher share of welded, will margin sustenance of 20% is safe to assume or like it can have i mpact on the business.
Percentage will be very tough because there can be increase in selling price or decrease which changes those percentage. As I said, you keep on a blended basis, my last year fiscal year 2020-2024, we achieved more than INR 64 per kg EBITDA on a blended basis. For this year, I believe, it will be 3%-5% incremental should be there. There are few reasons behind it. First would be in higher sizes welded being more deployed in this year. Again, seamless contribution, there are capacity increase for seamless in the last quarter of the March 2024, which will entirely be deployed in this current year. Again, increase in exports, there the margin is slightly higher. That will also help.
Okay, got it. Last, if I can squeeze in, any guidance that you would like to provide in export in terms of the volume for the fiscal year 2025 or the overall value term that you would like to achieve in this financial year?
From the value term, it's better to look this export. We believe it should be at least above 25%.
Okay.
Balance from mix shift.
You can provide, sir?
I think % would be good for export.
Okay, great. All the best, sir. Thank you so much.
Thank you. The next question is from the line of Sneha from Nuvama Wealth Management. Please go ahead.
Hi, good afternoon, sir. This is Sneha here from Nuvama Wealth Management . Just couple of questions. By the way, congratulations on great set of numbers. Specifically coming on to exports, where you've done very well. You had guided for 25% sort of a number, 20%-25% share from exports, which you've already achieved for this year. What can we estimate for next year? Where can this go up? I remember you speaking about 30%, 35%. Can it be much, much higher given that new customer acceptance has started coming in and you already are seeing good demand across the globe?
Definitely. The intent is that we have been telling will be open to everyone if you get a better rate. The intent is to spread across the entire map and entire country and cherry-pick the order which are best available. If you get a better margin business in India, you tilt towards that. If you get a better margin towards export, you tilt towards that. What we are seeing is there are a lot of demand in the other part of the world, like we are now trying towards Middle East and U.S., where we believe there should be a good quantum of order to be received going forward. Africa is a geography where we are also, sooner or later, we will be entering. There are mixed bag of geography that in the year will be a bit more than 30%, more than 25%.
Again, as I said, it will be sort of cherry-pick where you get a higher margin or better order, you tilt towards that.
At this point of time, exports definitely yield you better margin, right?
Yes.
Understood. Secondly, just wanted to understand your order book position. Where does it stand at?
It's roughly around INR 270 crore.
Understood. Sure. Thanks. I'll get back in the queue. Congratulations and all the best to you.
Thank you. The next question is from the line of Radha from Batlivala & Karani Securities . Please go ahead.
Hi, sir. Thank you for the opportunity, and congratulations on good results. Sir, my first question was, what is the volume growth for this quarter versus 1Q fiscal year 2024 in both seamless and welded?
Can you repeat, please?
Sir, I wanted to know the volume growth in seamless and welded on a year-on-year basis.
If it were on a year-on-year basis, if you see, it was quite substantially, it was more than 50% sort of number on year-on-year basis.
Sir, which one? For seamless or for welded?
Both, on year-on-year basis.
Okay. Sir, secondly, I believe this is the first quarter where we have executed our U.S. order. With respect to that, could you give us a sense on what is the opportunity size in terms of both seamless and welded in the U.S. market?
If you say about the U.S., just U.S. market is very big. Almost from India, U.S. is importing from all over world. Other than India, from Korea and other places. Lately, U.S. market is very big, or U.S. consumption in the SS pipe is also very big. We will believe that more than 20,000 tons U.S. will be importing on a year basis for the particular welded pipe. They will be importing from all over world, or almost equal to that quantity, they are importing from the seamless segment also. Almost 40,000 metric ton, you can say U.S. is importing from all over the world. India, China, Korea, and Japan, from all these countries.
As well as from Europe also.
How big would these imports be versus their domestic production?
U.S. market is mainly focused on the welded pipe segment. In seamless, there is not much producer is available in the U.S. market. For at least seamless pipe, they are more dependent from the India, Korea, Japan, and China. There is not much mill in U.S. market in seamless pipe segment.
Sir, could we say that they are importing 50% of their requirements from all over the world?
No. Less than that. In welded pipe segment, there are a number of producers in the U.S. No, we can't say 50% they are importing. We can say almost 30%, we can say, near about.
Okay. They are importing more in seamless and less in welded.
Both. More in seamless and welded also. Welded consumption also high, they are importing almost 50% we can say. In the almost 40,000 metric tons, they are importing seamless is the critical product and very costly product, they are importing almost 20,000 metric tons seamless and 20,000 metric tons almost welded. Their welded consumption is more in U.S. market. They are producing also, or they are procuring from the other part of the world.
Okay. Sir, what would be the scenario in Middle East?
Middle East is also a very good market. Right now, there are a number of projects opened up over there in the oil and gas sector. Middle East is slightly different kind of business. For the supply of the pipes, there is two category of the market in Middle East. One is the oil and gas sector, other is the remaining sector, industry usage, chemical, pharma, then water desalination plant, all these places. Especially in oil and gas sector, they require the approval of the concerned plant. In Middle East, almost 10- 12 oil and gas company. Once you get the approval, then there is very good demand in oil and gas sector in Middle East. Right now we have the Middle East approval from two, three companies in oil and gas sector. We are searching for the other oil and gas company approvals also.
Once we receive all the approvals of the oil and gas company, there is a very good demand in Middle East in oil and gas sector. Right now we are getting Middle East demand for the oil and gas sector for where we have the approval, already have the approval in hand, company, or other than the oil and gas, we are supplying for the water distancing plant requirement and chemical plant requirement in Middle East.
Sir, have we got approval from Saudi Aramco? Or you mentioned about-
No. It is still under process.
Okay, sir.
Just to clarify that the total year-over-year quantity increase was 50%, wherein seamless was more than 30% and welded was around 70%.
Sorry, sir. I could not understand, sir. Once again, please.
The increase in year-over-year quantity is 50%, as I said. On the side of seamless it was more than 30%, and on the side of welded it was around 70%.
Okay. Volume growth on a year-over-year basis.
Yes.
For seamless 30%, welded 70%.
Seamless more than 30% and welded around 70%.
Okay, sir. Thanks. I understood. What is the scenario on the anti-dumping duties, if any, that the Middle East market has on any of the countries, specifically China or any other country?
No, in Middle East there is no anti-dumping duty. Middle East open for as well as China and India also.
Okay. Their domestic demand would be insufficient, so hence they are importing much more from other countries. Is that?
Yes, they are not much producer about this seamless pipe as well as the welded pipes. Their demand is also very huge because their main sector, all the big oil and gas company of the world are located in the Middle East area. There are a lot of projects in the chemical sector and other sector is also ongoing in the Middle East. There is a lot of potential to market our product in Middle East. We are also having much focus on Middle East also. Our team is undergoing, processing all the approval process and other things and marketing. We have recruited more than two to three persons in Middle East to market our products.
Sir, Middle East, we are hearing from everyone that the demand is very good, even you are mentioning that. Do we have any plans to set up a facility there somewhere down the line, or do you think it would be better to export to the Middle East market?
Right now we don't have any plan to set up a facility over there since our product is, volume-wise it's very less. Its price was very huge. That's why we are near to the Kandla and Mundra port, where the transit time to Middle East is not more than 10 days. We want to set a facility at the single location right now. If any good opportunity comes, we may think, but right now we don't have any plan.
Okay, sir. Thanks and all the best.
Thank you. The next question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital. Please go ahead.
Good evening, sir, and congratulations for walking the talk and delivering excellent numbers. My question is, right now in the export, what would be the mix of welded and seamless?
Seamless is around 80% and balance is welded.
80% is seamless and balance is welded.
Yes
In the export?
Yes.
Okay. Got it. Actually, all the other questions of mine are answered. Thank you very much and all the best.
Thank you.
Thank you. The next question is from the line of Harsh Mehta from KRIIS PMS. Please go ahead.
Congratulations on great set of numbers. I wanted to understand a couple of things. One is, what has led to effectively us penetrating into the new geographies like U.S., et cetera. There are other companies also which are exporting into U.S. What is the differentiating factor for our welded pipes to be accepted in U.S. market?
Basically, we as a company have all the sizes. We can manufacture up to 56 inch dia. Number of SKUs can be offered significantly in number of quantum as compared to any other in the country. Definitely there are few more suppliers who supplies to U.S. in the U.S. from India. Again, we also have seamless in our armory. It is a mixed bag of products we are having. We are also having backward integration. It's entire gamut of majority of the products which we can serve to the end customer in U.S. I think the testing parameters, the quality of both of them all qualify and make them upright for sale in the U.S. market. That has all helped us to penetrate there.
Got it. Okay, fair. Another question I had was, we are close to 90% utilization for seamless. Do we plan to add more capacities now in seamless? We are seeing more opportunities also coming in from Middle East with the new approvals and potential for domestic market also looks good.
Currently, first phase of capacity expansion had been already announced, keeping titanium and high grade of welded tubes and fitting plant. Currently, these expansions are there. Second phase has already been announced where a portion of seamless will come. Further, if something comes up, we'll definitely let you know, but not currently as such.
Okay, fine. Any plans for any inorganic acquisition in any of the geographies outside to further consolidate position or any other acquisition in India?
Yeah, both inside and outside there's a team. As a company, we keep on working on that. Definitely things which come at a better rate, which suits to our strategy and all, the company will be quite happy to do the same.
Okay, perfect. Thank you so much. Best of luck.
Thank you. The next question is from the line of Sanib Dea from Unicorn Assets. Please go ahead.
Hi, sir. Congratulations on great numbers. First question is on the margin expansion. If we see quarter-on-quarter, or if we see year-on-year, we see that the cost of raw material consumed is much lesser as compared to the revenue from operations. What led to this kind of margin expansion, as you were already saying that the prices of the final products have reduced as per.
No, basically, see the RM consumption with the backward integration and all, the RM consumption should reduce, that has helped us. Similarly, there had been increase in other costs, which form part of it, like salary, the store, the contractor costs, fuel and costs. It's basically as a backward integration. Now we are manufacturing all the sizes in-house, other than job work what we were doing earlier. Those things have changed those structure of cost, where RM consumption and depleted a bit and the other costs have increased.
Okay. Sir, what's the outlook on the price for the finished goods that we sell? How are we looking for the current year and for the next year?
This price which was there in this quarter, we believe should not be much decreased from here.
Okay. Similarly, on the raw material costs and other-
Absolutely.
Finished goods.
Yes.
We are not-
There will be some increase. Other costs may increase a bit, but definitely that RM consumption will decrease to a bit to that extent.
Okay. Assuming that the current quarter's margins would be sustaining for the entire year. Also from the export side, margins are heavier on the export side. Are we assuming that the ratio for the export and domestic for the current quarter stays for the entire year? Or is it like the domestic will catch up in the later half?
The way the orders are flowing from export and other geography of the world, it seems we would be trying to maintain this mandate for the entire year, on the side of exports.
Okay. Your share on the direct consumer versus the other routes, if you can share that.
Sort of 25% was towards traders.
Okay. Almost remaining would be the direct to consumer.
Yeah, direct. Basically, 25% was export, 25% sort of near to that for trader, and around 50% you can say for direct sales. Out of this 100% breakup, I have narrated.
Okay, sir. Lastly, what are the inventories that we are holding at the end of the current quarter?
What we've been earlier also, sort of 100 days. 90 days-100 days.
Sorry.
90 days-100 days.
90 days-100 days. In terms of costs, can we say in number, in euros?
In days, it would be far better to look.
Okay. No, thank you so much. If you can lastly just share the industries you are catering in the U.S. Middle East, you talked about oil and gas.
No, we are supplying to stockists, distributors to U.S., not direct to the end consumer. We are not supplying in the U.S.
Okay, we are supplying to the stockists.
Yeah, distributor and stockist.
Any import duty? They are saying that Trump could be the next president. If U.S. imposes some import duty, do we see any threat to that?
Seems not. There has been certain changes from Chinese only. What we have heard, U.S. has increased some part of the duty which was regulated on Chinese goods. Let's see what whoever is the new government in U.S. does.
Do we experience currently any import duties of any such, sir?
No, there are duty in U.S. and all on Indian goods. On Chinese it is very hefty anti-dumping are there. Indian goods become quite competitive as compared to Chinese goods on the side of welded in U.S.
Okay. Could you share some numbers on what kind of duties China attracts versus the U.S.?
It's more than, you can say 30%- 40% additional duty included on Chinese goods in U.S. on the side of welded.
Okay. If we experience 10% duties, the Chinese is experiencing 30%- 40% duties. 30% or 40%?
I'm telling since they are having more than 30%-40% higher duty. Total duty incident on them, as compared to Indian goods.
Thank you so much.
Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead.
Hi, sir. Just one question. Is it possible for you to split this 61 CR of exports via geography? I mean, how much was exported in Europe, Middle East, and U.S.?
As I said, the geographies was around more than 65%-70% around to Europe. 25% sort of export towards the U.S.A. and balance all towards Middle East and other parts of the country. Got it. Understood. Thanks a lot.
Thank you. The next question is from the line of Pallav Agrawal from Antique Stock Broking. Please go ahead.
Good evening, sir. I had a question, first on the CapEx outlay. Out of the INR 180 crore, what is the likely spend in fiscal year 2025 and 2026?
The CapEx, which is predominantly a total of INR 175 crore, and INR 115 crore is the first phase. Which should be majorly spent in this financial year 2024, 2025 and leftover should be spent in the coming fiscal year 2025, fiscal year 2026.
Broadly, I think the financing was partly through the conversion of warrants. Do we see any significant increase in our net debt levels or should it peak out in fiscal year 2025?
Yeah. There would be a debt increase because a portion of it would be taken in the form of term loan for this expansion. Again, see, the debt level are not high. If you see on the total basis, the debt equity is a quite fine ratio we are watching. Even there would be some increment, but again, those ratios would be maintainable.
Okay. The other income has a shot-up frequency. Is it due to the preferential initial warrant money coming in? Is that why the treasury income is higher this quarter or this will sustain going ahead?
It was basically a few towards FD income from banks. There are a few towards export incentives, a few towards foreign exchange gain, but not very predominant. Last year it was INR 3.20 crore on an annual basis. Predominantly, see, this sort of number, maybe a slight deflation and all.
Okay. Yeah. Thank you, sir.
Thank you. The next question is from the line of Pradeep Rawat from Yogya Capital. Please go ahead.
Good evening, and thank you for the opportunity. I'm new to the company and I have some basic questions. Sir, I wanted to understand that our margins have improved from 7% to currently 20%, 7% in 2019- 2020. What has been the driver in driving such kind of margin growth?
There are many factors which have changed in the company over last two to three years. Earlier we were manufacturing 1,000 metric ton. Basically tantamount to 12,000 metric tons per annum basis. The capacity is 38,400 metric tons. Earlier, for seamless pipes we were not having backward integration. We were procuring mother hollow, importing mother hollow from China and other countries. We have backward integrated ourselves wherein we are manufacturing this mother hollow pipe in-house. That has substantially added to our margin. Again, the traded and stockists percent used to be very high in earlier years. Those percentages have reduced to a significant. The export percentage has increased wherein the slightly higher margins are there. We are also manufacturing smaller sizes of tubes where also the margin accrues. We are also selling higher sizes of welded pipes wherein the margins are high.
There are number of reasons which had helped us to improve our margin over a period. Number of approvals had been received over a period. These are the few factors which had helped us to improve this margin.
Yeah. Sir, would our domestic competitor be enjoying similar margins to you or are we doing something different from them?
No. See, few of the companies which are significantly higher in size as compared to us, they are earning a higher margin. I believe we don't have those breakups, but what we heard from them here and there, they have a significantly slightly higher margin as compared to what we have. They have some few other products which we don't currently have.
Hello. Further, I would like to add in this regard. See all the margin percentages depend on the volume utilization, capacity utilization and order book at each and every part. Since Venus has the presence in all the major products of the SS pipe, especially in seamless welded and backward integration facility. With all these facility and utilization of this capacity utilization of all this facility play a major part to get this margin. Again, the order book also and aggression in the market. All these factors work for the margin.
Yeah. Understood. My other question is regarding our freight cost. During the last quarter, I assume that our freight cost has been increased. Would it be fair to assume once the freight cost declines, our export would improve?
There had been increase in ocean freight and all. See, those impacts are there, but many of the factors are considered in the pricing while quoting for those orders.
Yeah. Okay, understood. Thank you. That's all from my side.
Thank you. The next question is from the line of Radha from Batlivala & Karani Securities . Please go ahead.
Hi, sir. Thanks again. I wanted to understand on the Middle East part because you mentioned that there is no anti-dumping duty by Middle East anywhere. When we are exporting to Middle East, what is our landed price of goods in Middle East competitive when compared to China?
Especially what is in this Middle East. Middle East they require all the things I told you for oil and gas sector especially. They require the approval. Worldwide if you see in the approval of the major oil and gas company, there is a limited company in our sector is approved in their sector. Without approval, they can't procure the pipe. Even Chinese manufacturers are very less in the Middle East oil and gas approvals. A special part is your plant capability and your approval and your process capability and quality of the supply. All these factors work in the Middle East. Just for the Chinese, whichever company gets the approval in oil and gas from China, that is also at par. In China, the SS pipe industry or any other industry divided in two parts.
One is the unorganized player in China, or one is the organized or bigger player in the China. If you compare the pricing of the China, very big player or organized player, just like Indian player of ours and our other competitor, if you see, price is almost at par compared to the Chinese very good player and India very good player. Mostly we face sometime competition, but almost there is no price difference between the very good Chinese player or Indian player, just like us.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for the day. I now hand the conference over to the management for closing remarks.
Thanks, everyone. I take this opportunity to thank everyone for joining the call. We will keep updating the investor community on regular basis for incremental updates on your company. I hope we have been able to address all your queries. For any further information, kindly contact SGA, our investor relation advisor for your company. Thank you once again. Good evening, everyone.
On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.