Ladies and gentlemen, we welcome you all to the Q4 and fiscal year 2024 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 belief, opinion, and expectation 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. I now hand the conference over to Mr. Dhruv Jain from Ambit Capital. Thank you, and over to you, sir.
Thank you. Good evening, everyone. On behalf of Ambit Capital, I welcome you all to the fourth quarter and the fiscal year 2024 earnings conference call of Venus Pipes and Tubes Limited. Today, we are pleased to have with us the management, represented by Mr. Arun Kothari, Managing Director, Mr. Dhruv Patel, Whole-time Director, and Mr. Kunal Bubna, Chief Financial Officer of the company. We will have the opening remarks from the management, followed by a question-and-answer session. Thank you, and over to you, Arun sir.
Good evening, and a warm welcome to everyone on the Q4 and 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 Strategic Growth Advisors, our Investor Relations Advisor. We have uploaded our Q4 and fiscal year 2024 investor presentation on the investor section in company's website, and I hope you had an opportunity to go through the same. We are delighted to announce our company's performance for year quarter and year-ended fiscal year 2024.
We continue to report robust growth across all parameters, with revenue growing by over 45% year-on-year, standing at INR 802 crore for fiscal year 2024. EBITDA margin stood at 18.2% for fiscal year 2024 compared to 12.5% for fiscal year 2023. This was on the back of our backward integration of seamless pipes, internal operation efficiency, and operating leverage playing out with increased capacity utilization.
Sales for the year witnessed a growth of 94.3% year-on-year. The robust performance is on account of multiple initiatives. Firstly, our revenue contribution from high-margin seamless pipes surged to 57% in fiscal year 2024 as compared to 45% in fiscal year 2023. This boost is attributed to backward integration of mother hollow pipes, giving us a competitive advantage over our peers. Secondly, our export contribution increased from INR 29.8 crore in fiscal year 2023- INR 98.7 crore in fiscal year 2024 on the back of deeper penetration across European markets as well as market presence across newer markets such as the U.S. and Middle East. I am happy to share that we have received first orders from the U.S. market during the quarter. This is a testament of our high quality and emerging brand name for Venus across territories.
Throwing some light on operations for the year gone by, we increased our capacity by 3.2x in the last financial year and simultaneously, we have also been able to ramp up the utilization given strong demand of this uptick in the country and need for higher quality products, resulting in increase in market share for the company. Secondly, on the export front, we have been able to grow a revenue of INR 100 crore in fiscal year 2024 on account of our backward integration, high product quality and penetration deeper into export geographies. We not only expanded our capacities, but also enhanced the quality of our products by investing in advanced testing technologies like ultrasonic testing and digital radiography systems. This resulted in an increased acceptance for our products across European markets and easy penetration.
In the U.S. and Middle East market, we continue to participate in fairs and exhibitions across the world and are confident of further increasing our export share. Additionally, we diversified our presence across multiple sectors such as oil and gas, paper industry, food processing, railways, and paint industry. With our ability to manufacture higher dia pipes and tubes, we were able to get across an order from leading oil and gas players in the world. I am also proud to announce that we recently received an order from a semiconductor manufacturing company in India, and we are confident of this uptick in orders from this sector given it's a boom backed by growing focus to make India a semiconductor hub in the world.
Following on our goal to become a competitive pipes and tubes solution provider in the world, we announced a CapEx of INR 175 crore over two phases. phase I, including setting up of capacity to manufacture value fitting solutions and titanium grade welded tubes, which is to be completed by March 2025. phase II includes the capacity expansion for setting up of fitting solution and welded or seamless pipes or tubes by December 2025. An important aspect of the product line expansion is the inclusion of titanium grade welded tubes alongside stainless steel variants. This strategic move enables us to cater to industries where hygiene and purity, such as food processing and pharmaceuticals, are of utmost importance. Traditionally, our offerings extend to sectors like nuclear and power, where the robustness and corrosion resistance of the titanium grade tubes are essential.
I would like to give a few important updates for the quarter. We have operationalized the remaining 200 metric tons of the announced 400 metric tons of the seamless pipe capacity. With this, our current capacity for seamless pipes and tubes stands at 14,400 metric tons per annum. We are confident of ramping our capacity faster given our strong execution capabilities. An important development which I would like to highlight is we have increased the capacity of the manufacturing of the mother pipe from previously 9,600 metric ton per annum to approximately 14,400 metric tons per annum. We were able to do this with a few modifications in the piercing line with some additional costs, which gave us the higher efficiency and lower turnaround times.
With this, we now have a 100% backward integration for seamless pipe in terms of capacities. Our export for Q4 fiscal year 2024 as a percentage of revenues stood at 12% compared to 17% in Q3 fiscal year 2024. I would like to highlight that export was slightly influenced due to the disruption caused by the Red Sea crisis. Lastly, we have also operationalized the 1 megawatt solar power plant, marking a step towards our commitment to sustainability and environment consciousness. Before concluding my remarks, I extend my heartfelt gratitude to all our stakeholders who have played a pivotal role in shaping and elevating the Venus brand to where it stands today. As industries undergo expansion and modernization, the demand for durable and high-performance materials like stainless steel becomes increasingly vital, further boosting the need for our products.
Venus Pipes and Tubes is poised for strong growth as we actively work towards expanding our influence across various sectors and enhancing our offerings with value-added products. We enter fiscal year 2025 and we look at an optimistic future characterized by the ongoing expansion of our product range and client base. Our strategic focus will be to expand into untapped geographies and identifying new markets for growth opportunities such as U.S., Middle East and Africa. Simultaneously, we are dedicated to strengthening our presence in our current market, which is Europe, through increased penetration and market share. Our commitment remains unwavering in building a robust and diversified foundation that propels us towards sustained excellence. Now I will hand over the call to Mr. Kunal Bubna, Chief Financial Officer, to take you through the financial highlights.
Good afternoon, everyone, and 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 Q4 and fiscal year 2024. On revenue front, revenue from operation for Q4 fiscal year 2024 stood at INR 224.1 crore as compared to INR 176.3 crore during Q4 fiscal year 2023, achieving a growth of 27.1% on year-on-year basis. Revenue from operation for fiscal year 2024 stood at INR 802.2 crore as compared to INR 552.4 crore in fiscal year 2023, a growth of 45% year-on-year basis. Revenue classification for the year was 39% for welded, 57% for seamless pipe, and 4% for miscellaneous.
Growth in seamless segment was 57% on year-on-year basis, and the welded segment registered a growth of 24% for fiscal year 2024 on a year-on-year basis in terms of revenue. Volume from welded and seamless pipes grow by 49% and 97% respectively. Our exports stood at INR 98.7 crore for the year compared to INR 29.8 crore during the same period last year, a growth of 231% year-on-year basis. Going forward, we are confident of faster ramping up our capacity of welded pipe giving strong demand outlook from R&D segment. Gross profit for Q4 fiscal year 2024 grew by 116.5% on year-on-year basis and stood at INR 70.9 crore.
Gross profit for fiscal year 2024 stood at INR 226.9 crore as compared to INR 107.8 crore in fiscal year 2023, a growth of 110.5% on year-on-year basis. EBITDA margin for the quarter stood at rupees 20.1% compared to 12.2% for the same period last year. It is important to highlight that margin in percent term looks higher partially on account of decrease in commodity prices, which is passed through for us. When commodity prices drop, our percentage margin might appear higher and when they rise, margin may appear lower. However, it will be prudent to look at an absolute growth in EBITDA rather than in terms of margin.
Our EBITDA for the quarter stood at INR 45 crore as compared to INR 21.6 crore in Q4 fiscal year 2023, a growth of 109%. EBITDA for fiscal year 2024 stood at INR 146.3 crore as compared to INR 69.1 crore in fiscal year 2023, a growth of 112%. As mentioned previously, we have also delivered robust volume growth from our both seamless and welded pipe. Volume from welded pipes stood at 11,570 metric tons on a per annum basis for fiscal year 2024, an increase of 49% with corresponding revenue increase of 24% for the same period on account of decrease in commodity prices. Volume for seamless pipes saw an increase of 97% and revenue increased by 87% for fiscal year 2024.
With increased contribution from value-added products in seamless pipe category, company was able to generate higher revenue with better margin. PAT for fiscal year 2024 is INR 85.9 crore versus INR 44.2 crore in fiscal year 2023, a growth of 94.3% on year-on-year basis. The margin for the fiscal year 2024 stood at 10.7% compared to 8% in fiscal year 2023. PAT for the quarter stood at INR 25 crore, compared to INR 13.4 crore in the same period last year. Talking about the cash flow from operation, we have witnessed strong OCF of INR 52 crore, providing us the ability to fund future expansion through internal aacruals relying less on external funding. This performance further strengthen our competitive edge with robust financial capability and product. We are set to become a comprehensive piping solution provided to our customers.
We will continue investing growth opportunity and strategically position ourselves for market leadership. With this, I would like to open the floor for question-and-answer round.
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 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kunal Kothari from Centrum Broking. Please go ahead.
Yeah. Thank you for the opportunity and many congratulations for great set of numbers. Sir, during the quarter, overall our revenue has increased. Firstly, the contribution from welded pipe segment has remained subdued. Secondly, if I see the percentage contribution from seamless, on sequential basis, it has remained flat at 55%. Thirdly, our export has also decreased from 17% share to near about 12% share overall. However, our margin have expanded. Sir, can you just explain what has led to the overall increase in the margin despite all such challenges?
Yeah, if you see the quarter Q4, basically on the side welded, it has not been flat on the side of quantity. It has increased by more than 10%. Seamless growth was there in quantity on the side of seamless, around 8%- 10%. Definitely what has happened, the price of the finished goods had decreased. On the side of welded it was roughly in the range of 5%- 8%, and similarly, a not major dip, but a big dip on the side of seamless by around 2% fourth quarter if I compare with the last quarter. Primarily, there has been growth in both welded and seamless. Also, if you see on an overall basis, if you compare fiscal year 2022, 2023 with 2023, 2024, 50% on the side of welded and around 95%- 100% on the seamless, there has been growth in the quantity perspective.
On the side of export, is very right because of Red Sea and all that has been affected. If you see last quarter, October to December, revenue from export was roughly in the range of 17%, but because of Red Sea and all, those had slightly depleted to 12%. What we see is going forward, the order book for export and also the order book coming from export from the side of welded also. We believe those higher growth of roughly in the range of 20% should be maintained for export going forward.
Sir, can you be more specific what has led to from 18.8%- 20.1%? I'm still unclear what has led to the margin expansion.
The margin expansion, if you see on a per ton basis, there had been margin expansion by something sort of, you can say 1%-2%, on an overall basis, the prices has also decreased on the side of welded and seamless. As I said with you, welded was down on the quarter-over-quarter, which is by 7%-8%. The percentage margin is showing slightly higher. Again, as I said you, both welded and seamless quantity had increased in this quarter as compared to the last quarter. Again, the margin from both welded and seamless on the per kg basis had also increased by 2% roughly sort of on both the cases. That has also led to increase in margin.
Okay, got it. My second question, in regard to welded pipes. From the overall capacity that we had in fiscal year 2024, in seamless we were able to utilize the most of it, same is not the case with the welded one. Are we facing any challenges in ramping up the welded segment as we have done in seamless pipe, and what is the strategy forward?
Definitely seamless we have been able to grow at a very faster pace as compared to welded. Primarily if you see, definitely going forward, there are a lot of approvals which we have received on the oil and gas sector. As we narrated in our speech, we have also started receiving export order for welded from U.S. and other country. We have also bid in few of the Middle East and other for welded. We believe, definitely going forward, the welded will increase from this oil and gas and export and other sectors.
Sir, lastly, if I can squeeze, we've done nearly 21,000 tons in fiscal year 2024. What guidance that you would like to put on for fiscal year 2025, 2026 on the volume front?
Target is around more than 30%.
Okay. Thank you so much, sir. Yeah.
Thank you. The next question is from the line of Sneha Talreja from Nuvama Institutional Equities. Please go ahead.
Hi, good evening, sir, and thank you for the opportunity. Just two questions from my end. Firstly, what is share of your direct customers this time? I couldn't see that in the presentation, in case you can highlight that, and secondly, the reason for your net increase in interest costs.
Increase in?
Interest cost.
Basically, the traders and stockists was roughly 27%. 12% was roughly export and balance was direct sale for the entire financial year fiscal year 2023, 2024. There has been few limit utilization. We also used few discounting limits to do that. Those are the reason for increase in interest cost.
What would be the share of the stockist traders in terms of your Q4 numbers?
Around 26%, 27%, in the range approximately.
Understood. Thanks a lot, Kunal. All the very best to you.
Thank you.
Thank you. The next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Good evening, sir. Hello.
Yeah, please.
Yeah. Sir, I just want to understand that given basically our current mix of welded versus seamless and the exit rate of roughly about 20% margin. Shall we assume that the ballpark EBITDA per ton which we exited is closer to INR 80,000-INR 85,000 per ton, and since welded percentage is increasing, it might not increase from here, or it will remain in this territory for the fiscal year 2025?
If you see on a blended basis, it is not INR 80 generally. It will be in the range of, you can say, INR 64-INR 66 sort of number per kg. If you see the contribution from seamless in the quantity term was roughly in the range of 48%- 52% on the side of welded. We believe going forward, there would be slight depletion from the percentage perspective from 6%-7%, wherein seamless will be 41%- 42% and welded would be leftover portion. There would be slight improvement in the margin also going forward on the side of seamless and on the side of welded. You can hope see these margins will further improve going forward also.
At least on tonnage basis, we are saying that net-net we would have some increment even the mix is skewing towards welded side.
Absolutely.
Understood, sir. Sir, my second question pertains to basically, if I look at currently, we have been growing at a significant volume pace from quite some time. Next year also, you are giving a guidance of 30%. Just wanted to understand that from where these demands are coming in and in this 30% growth target, what is our export percentage which we are seeking to manage that?
There are varied number of sector like engineering, you can say oil and gas. Apart from that, on the side of export, as I said, we have also received an order from U.S. We are seeing those market also as a good from the revenue perspective. We are trying to cater to Middle East and other part of the geography in the world map. We believe the export should be at least 20% of our total revenue for the coming year, and definitely the endeavor will be to increase it further. As I said, many of the approvals we have been receiving from the large corporate in the last quarter for welded and other products on the side of oil and gas and engineering. As we said, we have also received order for pipe from one of the EPC contractor who's in EPC contractor for semiconductor.
We believe these all sector will help us to grow in the coming forward years.
Operator-
Understood.
Has been initiated. If you'd like to cancel this request, please press star zero again.
Thank you, sir. That's all from my side.
Thank you. Ladies and gentlemen, you may press Star and One to ask questions. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead.
Hi, thanks for the opportunity and congratulations on great set of numbers. I have a multiple set of questions. First one is on the seamless export opportunity, particularly for Europe market. Could you give little bit of details, for example, how big the opportunity can potentially be? Who are the players or the key countries which are supplying right now in Europe? As you have mentioned in a previous call, I think China is not a big supplier. European players don't prefer Chinese material. How can Venus take some share out of that opportunity?
Basically, there are many of the Europe countries like Italy, Germany, Spain. These are the many of the cities wherein we sell our product in Europe. If you see last year, the predominantly export was in Europe only. In case of Chinese, there is a hefty anti-dumping than seamless is imported in Europe from China, which is more than 40%. It becomes very hard for them to compete with Indian. That's why Indian goods got an advantage. Further in Europe and all, the energy and labor costs are high, which again made them quite costly as compared to India. That is the reason wherein we can penetrate there. There is a good amount of demand what we are seeing because the consumption of seamless pipe as compared to India is very high in Europe. Primarily they are more quality conscious.
They take more safety precautions and they try to use more seamless as compared to welded ones we have seen with many of them. That drives the market there. We believe China is one of the close competition, but we may face, but because of the safety and dumping, those reduce significantly. Apart from that, Ukraine and other countries also supply there. Again, I think keeping up our prices and all, India becomes quite competitive.
Other players who are currently supplying in the European market, the local players, et cetera, as you mentioned, energy costs going up. Are some of these players shutting down their capacities and hence is the opportunity increasing for Indian players? I'm just trying to understand how will the incremental opportunity delta come from, because Chinese players are anyways not supplying in major quantities.
There is a natural demand in Europe wherein they import from other parts of the world. There are manufacturers, you rightly said. There are Tubacex, there are Mannesmann, there are Alleima, there are Centravis. Few are located in Ukraine, few in Sweden, few in Germany, few in Spain. Primarily, these are the few of the major manufacturers there. What has happened, what we have seen, many new capacity has not come in the last, you can say last three to five years. Because of that, there is a natural demand, there is a requirement of SS pipe which our own country cannot meet on that. That's why we have seen those demands are met by Indians.
Got it. Second question on welded pipes. Two parts to that. One, I think there was an ADD investigation initiated for imports from Thailand and Vietnam. Just want your perspective on if the ADD is implemented, can it be a big import substitution opportunity? Second, on export front also on welded side do you see it as a meaningful opportunity similar to seamless?
There is a good demand in export in U.S. and Middle East, we are definitely seeing that also as a good volume of export from welded coming from there going forward. As we said, we have also received the order for export. We believe definitely U.S., Middle East, and other geographies will on the side of welded will be contributed going forward, yes. Those studies what we referred to for ADD and all, definitely we can't give much comment currently unless it come up in actuality.
Got it. Lastly, I just want to understand the impact of steel prices on the final prices for you. In your pricing mechanism, do you sort of on a fixed rupee EBITDA per kg or like a percentage EBITDA margin is fixed while negotiating with your customers? How would-
EBITDA per kg. It's an EBITDA per kg. Fixed EBITDA per kg.
Got it. Just one more question if I can squeeze in. The incremental CapEx that you're putting up especially on the welded tube. Could you give us the MT volume that you are putting up on the high value added tube?
On the side of welded wherein we are putting a higher grade of titanium and few categories where which can be used for food processing and pharmaceutical. Those capacity would be roughly in the range of 300 metric ton per month basis in the first phase.
300 metric ton per year?
Per month in the first phase.
Understood. That's all from my side. I'll get back in the queue. Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask questions. The next question is from the line of Suman Kumar from Antique Stock Broking Limited. Please go ahead.
Thank you for the opportunity. I hope I'm audible. I had a couple of questions. The first question is, what would be the current order book that we have? Because as I am to understand that most of our products are essentially made to order basis. Can we just have a little bit of light on the current order book and what would be the typical execution cycle be?
It's around INR 240 crore and execution of roughly 100 days you can say.
Okay. Thank you.
100 days and-
The other question that I have is that fiscal year 2025 and fiscal year 2026 mostly would essentially see the significant chunk of the CapEx would be primarily the INR 1.8 billion, essentially phase I and phase II as mentioned in the presentation. Could we just have a split, like what would be the plausible CapEx that fiscal year 2025 would witness and what would be flowing down to fiscal year 2026? Just the breakup of that INR 1.8 billion.
Basically, if you see out of that, INR 115 crore will be in the first phase and balance would be in the second phase.
Yes. fiscal year 2025 would see almost the entirety of INR 115 crore.
Apart from that there can be two more CapEx. Those will be not significant in size. It would be maintenance sort of CapEx, which can be in the range of INR 15 crore-INR 20 crore.
On an annual basis?
On an annual basis.
Okay. INR 15 crore-INR 20 crore of annual CapEx. What would be the maximum capacity utilization that we can actually theoretically target? Is it similar to other pipe manufacturing companies, or what would be the maximum capacity utilization that we can ramp up to?
In case of seamless, we have been achieving around 85%-95%. That can be maintained. In case of welded, the target is around 80% sort of number.
Okay. I have just one more question. Considering the steady demand, do we see any kind of new business opportunity that would open up, especially in titanium? As I am to understand that, titanium has quite a few end users. Just it was mentioned that hygienic steel tubes would be essentially for food processing. What would be the plausible end users of the titanium tubes?
It will be nuclear power sort of requirement.
Okay. Thank you. That would be my questions. Thank you. Thank you so much, sir.
Thank you. The next question is from the line of Richa Choudhary from Electrum PMS. Please go ahead.
Hello. Congratulations on great execution. I just wanted to understand, what are the volume mix that you are expecting going ahead?
Can you repeat? I was unable to hear.
Ms. Richa, can you please repeat your question? Due to no response from the current participant, we will move on.
I think she asked the volume mix for going forward. It's primarily seamless will be in the range of 40%-43% and balance would be welded.
Ladies and gentlemen, you may press star and one to ask questions. The next question is from the line of Harsh Mulchandani from KRIIS PMS . Please go ahead.
Congratulations team on great set of numbers. Wanted to understand a couple of things. One, good to see that you are supplying your pipes for new segments like semiconductors, et cetera, like you mentioned in the opening remarks. Are we working on anything for the hydrogen segment as well, for transport of hydrogen or anything is in pipeline related to hydrogen segment?
Yes, Mr. Harsh Mulchandani. In hydrogen sector, definitely the usage of the SS pipe will be very big or we are also focusing all the new industry. Say, for example, we are already in one of the semiconductor plant, which is very new in India. We had already received a very big order from one of the semiconductor company, which is setting up their plant in Gujarat. We have the focus on this hydrogen sector also. We are already in the process of the approvals of some of the company. Say, for example, we are already approved in Reliance and Adani and all the major groups. We are hopefully once this sector will start to work, we'll able to get the order from this sector.
Wonderful. Second question I had was, how is the demand from newer geographies like U.S.? Obviously, we've cracked one order. How is the situation in Middle East, Saudi Arabia? Are we confident that there also you'll be able to replicate the success, what we've done for Europe and other successful geographies?
Yeah, we are pretty confident from the perspective we can offer number of SKUs for both welded and seamless. Keeping as you have a number of bucket to supply, I think that and the quality of material what we supply. I think that will definitely help us to penetrate in Middle East and other part of the world geographies.
Perfect. Thank you so much and best of luck.
Thank you. The next question is from the line of Amol Rao from Kitara Capital. Please go ahead.
Good evening team. Just wanted to inquire about the warrants. That money is expected in April or has it already come in into the company?
The 25% contribution had already been received in the month of April.
In the month of April. It will come in next year's cash flows basically. All right.
Yes.
All right. Thank you, Kunalji. Thank you so much. We wish you all the best.
Thank you. The next question is from the line of Mihir Damani from Ambit Asset Management. Please go ahead.
My first question is, you ended the year roughly at around INR 65, INR 66 EBITDA per kg. As I see next year, a bulk of the growth will be on the welded side. Do you see the INR 65, INR 66 EBITDA per kg something which can be achievable in fiscal year 2025, or do you see some pressure on this number?
No, as I said, definitely there will be reduction on the side of seamless from 48% to 5%-7%, something sort of that. We have to see from seamless we are expecting a bit of further increase on the side of EBITDA, keeping number of geographies now we are catering, number of qualification what we have been receiving. On the side of seamless there will be a big improvement in the contribution going forward. Further apart on the side of welded you see when you supply higher sizes of welded pipe, you get a slightly more margin as compared to the routine sizes what you supply. Keeping all the perspective definitely, the endeavor is always to maintain that and I think it should grow also.
Okay, great. One more question. What would be your end users split for fiscal year 2024, basically revenue per end user application?
End use?
Yeah, like engineering, thermal power, if you would like to share that, chemicals.
Predominantly, I can give the engineering parent and few of the sector we are catering to in good percentage, but as a by-product it's a bit competitive, so we'll not restrict to it.
Okay, no worries. Thank you and all the best.
Thank you. The next question is from the line of Sagarika Chetty from Anand Rathi Institutional Equities . Please go ahead.
Hi, am I audible?
Yes, ma'am. Can you please mute your handset?
Yeah. Actually, it's the site issue. Okay. My first question is, I couldn't really hear or I couldn't really understand, you said on the side of higher interest, what was the reason for that? There was one particular answer that asked that previously on higher interest. If you can shed light on that.
Yeah, basically, the limits had been used. Apart from that, we also use few discounting limits for sales on the side of purchase. That has also got factored in the interest. Apart from that, few of the loans had also been approved for the coming year, wherein some processing costs do have to be incurred. Those will get factored in the interest and in our cost.
Okay. Secondly, on the EBITDA per kg. You said that there'll be, correct me if I'm wrong, there'll be a reduction in the seamless in terms of EBITDA per kg guidance. Is that-
No, I'm saying, there would be increase in the EBITDA pattern on the side of seamless will improve, not reduction.
On the welded side?
Definitely on the side of welded also, there would be improvement because as you see there would be more higher sizes being deployed in the coming year, that will increase our contribution.
Okay. The overall EBITDA per kg, the endeavor is to maintain it at that level.
Absolutely.
I see.
Absolutely. It should also increase maybe.
Okay. Got it. Yes. Thank you so much. Thank you, and all the best.
Thank you. The next question is from the line of Nikhil Agarwal from VT Capital. Please go ahead. Mr. Nikhil, can you please unmute your line and say? Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Darshan Jhaveri from Crown Capital. Please go ahead.
Hello, good evening, sir. Thank you so much. Most of my questions have been answered. Just one question, majorly a broad-based question. For the next two, three years, with the new capacities and everything coming in, what kind of a growth CAGR that we would be looking at on a broader term? That's my first question, sir.
Basically, as we said, definitely we believe for coming fiscal year 2025 and fiscal year 2026, you can see a growth of around 30% in coming two years.
Okay. Perfect. Sir, just wanted to ask, with the elections coming up or maybe the global economy, do we see any slowdown in our order or demand outlook?
We have been telling that's why we are working on a number of geographies in the country, in the world map, and also we are working with number of sectors. The intent is very loud and clear to supply to a wide number of sectors, to be on pan-India basis and supplying also to the various parts of the world map. I think those few sectoral rotations keep on happening. We are keeping ourselves abreast by supplying and increasing our sector and presence in other parts of the world also.
Okay, perfect. Sir there's one small bookkeeping question. I couldn't catch the blended realization we said that was how much, sir? Blended EBITDA per kg.
Around sort of INR 65 sort of number per kg.
Okay. Thank you so much, sir. All the best, sir. Thank you.
Thank you. The next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Thank you for the repeat opportunity. Just I wanted to understand one thing, sir. Since we are pushing on the export side, how much better margin in terms of business points we get in the export order?
It has gone from 2%-4%.
Understood, sir. Sir, just lastly, you said that you got your first order from U.S. It's more of a you supply to a company as a B2B or basically to some trader which you have started supplying?
In USA?
Yes.
It's to the distributor only, not to the end industry.
Understood, sir. Lastly, sir, domestically, oil and gas portion is still not a very big portion in our overall portfolio. When do we expect sizable quantity of orders coming from them, given that we are in the process of taking orders, taking approvals from most of these guys?
Coming fiscal year only, we believe there should be a good portion coming from oil and gas.
Understood, sir. That's all from my side then, thank you.
Thanks.
Thank you. The next question is from the line of Suman Kumar from Antique Stock Broking Limited. Please go ahead.
Thank you for the opportunity again. I believe it was mentioned that we recently commissioned the 1 MW solar power plant.
Would that lead to any sizable or any incremental savings or is it just to transition into a greener source of power?
The objective is both green source also and also reduction in the operating cost. It's not a big issue side, but again, we believe the power and fuel costs what we incurred on the side of electricity, we should reduce by another 8%- 10% because of that.
Okay. Yes, that was my question. Thank you.
Thank you. The next question is from the line of Dhruv Jain from Ambit Capital. Please go ahead.
Hi, sir. I had a question on the industry split. If you could just spell out what's in your broad industry split for fiscal year 2024 and how do you expect that to change over the next one year? If you could just spell out if there is a difference in terms of margins, if at all there is a difference in terms of margins in different industries.
See, engineering, paint, chemical, there are a few industries which form a good number of total portion. See, the margin does not differentiate between industries. It's generally not in our case. Going forward, definitely those sector will change. Oil and gas, which does not form much of our capacity currently. I think the oil and gas would be a sector which will be increasing going forward.
Okay. Sir, just a book-keeping question. If you could just spell out the EBITDA per kg for both seamless and welded and the other parts. Thank you so much.
It's in the range of INR 85 and INR 40 this sort of number for welded. Around that.
Thank you.
Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead.
Hi. I have a question on the longevity of growth, the 30% kind of guidance that you gave for fiscal year 2025 and fiscal year 2026. Once you exhaust your current capacity for seamless and welded, you will be one of the sizable players in both the segments, right? For seamless, I guess if the market is roughly 100,000 metric tons per annum, with 14,400 metric tons per annum, you will have roughly 14%, 16% kind of market share. Similarly, welded 8%-10% kind of capacity share, if I'm not wrong. My question was, how long can you sustain the 30% or high twenties kind of growth rate beyond fiscal year 2026? What other avenues, et cetera, will you be looking at to continue to grow at high rates?
We've been telling that there are a number of smaller players also who supply and who also form part of this total supply in the Indian market. Who are not structured as we are. I think that gives us an upper hand to penetrate deep in the market. As we have been saying that there have been sectors like oil and gas where our contribution was very negligible. Those are very big as a sector. Also we have been seeing new sector also coming like we said, semiconductor, railways, sewage line, impacting water, wherein desalination plants and all. These are the new sector also coming and growing. That will help us to grow even beyond fiscal year 2026. Apart from that, again, if you look in fiscal year 2023, our export percentage was less than 5% sort of number, and this year only 12%.
I think those geographies are there even nowhere in U.S. and Middle East earlier or never before. I think those geographies are wide open to us. We believe going forward those sectors, those zones of the world will definitely help us in growth.
Sir, over a three to five-year horizon, right? Medium to long-term horizon, can export become a very sizable part of our revenue, say, 40%-50% kind of contribution from export?
We can assume at least we have targeted to is the export of the almost minimum 30%, more than 30% in the coming years. In fiscal year 2025, we are roughly expecting we're able to reach between 20%-25%. In fiscal year 2026, we are targeting between 30%-35%. In addition to this also, we had already did the very good expansion in last year in the pipe sector. Apart from the pipe sector, we had also identified a new sector along with the pipe, which is a fitting, which is almost similar item, just like a pipe would use is the almost in similar line of industry.
Apart from this also, we are always open for any industry which is in the steel sector in the coming year. If we find any good opportunity, we can go for the steel sector because all promoters are from a different background, or we all understand about the steel sector. Since one of the promoter is having more than 20 year experience in steel sector.
One of the promoter is from engineering background. He also understand the steel sector very much. Our eyes are open. If any opportunity we find, we may diversify the business slightly in the coming year after the fiscal year 2026.
Thank you so much, sir, for this answer. It is very clear and really helpful. Thanks.
Thank you. The next question is from the line of Kunal Kothari from Centrum Broking.
Yeah. Thank you once again.
Please go ahead.
Thanks once again. Overall demand industry in India, how you see the growth has come in in fiscal year 2024 compared to fiscal year 2023? How much growth rate do you see in the demand for next couple of years? Secondly, on the supply side, from the entry dumping duty came in for the seamless pipe. What we have witnessed in the industry is that many small scale players, like traders and stockists, have also started to put some small capacities, like 2,000, 5,000 ton as well. Going forward, how you see that compared to the demand growth that one can expect and can supply surpass the demand and which can create imbalance in the market, higher supply and lower demand in India? How you see the dynamic changing in future?
Basically, we have been saying that sector had been improving. That will definitely help us even with the giving a specific percentage because there are a number of sectors which are also getting increased. Those percentage will not get a valid clarity over here when we give a specific percentage. As we said, there are a number of sectors being added like sewage lines, railway, semiconductor, desalination plants and all. I think those percentage will be high, those increase would be there. Definitely, there can be a small trader, small manufacturer, as we said, he may be putting up. The requirement for seamless pipe is there in good tandem in country and also in abroad. We are also distinguishing ourself each quarter by building up SKUs. We are adding up high grades of pipe.
We are adding up higher sizes. To these, we are also adding smaller sizes. We would be distinguished from others who are smaller in size. We will be few in the country who can supply the entire bucket as compared to the smaller ones who might be increasing their capacity. I think we will be definitely able to cope up with all of them to a good extent.
Okay, got it. Secondly, sir, as we announce our further CapEx, do we get any state subsidy or any benefit from PLI on our CapEx plan?
No PLI is not there.
Any state subsidy, sir?
State facility is there in the form of state GST.
Okay. Thank you, sir. That's it from my side. All the best. Yeah.
Thank you. Due to time constraint, that would be the last question. I now hand the conference over to the management for closing comments.
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, the investor relations advisor for your company. Thank you once again.
On behalf of Ambit Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.