Ratnamani Metals & Tubes Limited (RATNAMANI) Q2 FY22 Earnings Concall Transcript

Ratnamani Metals & Tubes Limited (NSE: RATNAMANI) Q2 FY22 Earnings Concall dated Nov. 11, 2022

Corporate Participants:

Manoj Sanghvi — Business Unit Head

Analysts:

Sahil Sanghvi — Monarch Networth Capital — Analyst

Ashutosh Tiwari — Equirus Securities — Analyst

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Manoj Bahety — Carnelian Asset Management — Analyst

Abhishek Ghosh — DSP Mutual Fund — Analyst

Sailesh Raja — B&K Securities — Analyst

Vikash Singh — Phillip Capital — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q2 FY’23 Earnings Conference Call of Ratnamani Metals and Tubes Limited, hosted by Monarch Networth Capital. [Operator Instructions]

I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you. And, over to you, sir.

Sahil Sanghvi — Monarch Networth Capital — Analyst

Yeah. Hello. Thank you Michelle. So good afternoon to everyone. On behalf of Monarch Networth Capital, we welcome you all for the Ratnamani 2Q FY ’23 earnings call. We are delighted to host the management of Ratnamani Metals today and from their side, we have Mr. Prakash Sanghvi, MD and Chairman, Mr. Manoj Sanghvi who is the Business Head, and also Mr. Vimal Katta, the Chief Financial Officer.

So without taking much time, I’ll hand over the call to Mr. Manoj Sanghvi for the opening remarks. Thank you and, over to you, sir.

Manoj Sanghvi — Business Unit Head

Yeah. Thank you, Sahil. Yeah. Good afternoon to all the participants. I welcome you all to this call and hope everyone is doing good. Our results for the second quarter of FY ’23 have already been uploaded on the exchanges and I believe everyone has got a chance to go through it.

As you all know, past few months prices of steel have been broadly stable, resulting in the resurgence of the stalled project. Further decline in the commodities may augur well for the infrastructure demand and more traction may be expected in both CS and SS pipe segment. The developed economies are still facing high inflation, resulting in high-interest rate outlook compared to our country which is still reflecting a strong macroeconomic scenario.

Various expansion projects across refineries and process industries are likely to help us maintain the capacity utilization and order flow. The traction for specialty pipes and tubes is visible owing to higher energy prices also.

Since you all are well updated on the various schemes in water pipes and oil and gas transmission lines and opportunities arising thereof, I would like to straight away touch upon the quarterly financial numbers and business update in brief and then we can take the questions.

So on the operating revenue, it has increased by 26% year-on-year and is marginally down by 8% on a sequential basis. Whereas on EBITDA, there is an increase to INR154.77 crores from INR120.50 crores. We are also confident to maintain the guidance of top-line of INR3,800 crores to INR4,000 crores in the given financial year, with an EBITDA estimate of 15% to 17%.

Our order book as on 1st October 2022 is INR2,946 crores, which as on 1st November is roughly INR3,200 crores. Our focus is to continue to be the leader in stainless steel specialty products and keep on expanding our existing line of business both vertically and horizontally. And the — and for the purpose, we have already announced the CapEx of around INR180 crores in stainless steel cold finishing facilities as highlighted in May ’22 call.

Also with a view of having carbon steel pipe manufacturing facility in the eastern part of the country, we had announced the CapEx of 100 — roughly INR150 crores. Both the projects are more or less progressing as projected, however, there might be some delay in the CapEx of carbon steel pipe manufacturing facility in the Eastern part of India which is considering the recent order what we received in Rajasthan and some equipments are being stead over there.

Now, with regard to the transaction to acquire majority stake in Ravi Technoforge Private Limited, a Rajkot based company, for which definitive agreements were executed on 5th October 2022. I would like to update you all that the acquisition for the first trench that is 53%, is completed. We have already provided details about the transaction structure on the exchanges.

In order to add a new growth driver, both domestically and globally with a blend of diversification, the company has forehead into this line and have decided to acquire majority stake at RTL. This will also help us to explore new segments, markets and products. We are well-positioned to leverage our managerial, technical and financial capabilities to scale its operations, making it more sustainable and further create long-term value for the shareholders.

To conclude, I would like — I would once again emphasize that our philosophy has always been to consider any decision on a long-term vision, keeping sustainability and value-creation in its core.

That’s all from our side. Now, I would like to invite questions, please.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have the first question is from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead.

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah. Hi, am I audible?

Manoj Sanghvi — Business Unit Head

Yes.

Operator

You’re audible. Please proceed.

Ashutosh Tiwari — Equirus Securities — Analyst

Yeah. So, congrats on decent numbers. Firstly on this stainless steel side, especially on export, how are — what kind of demand scenario we are seeing? Are we, let’s say, whatever you talked about two or three years back in terms of export opportunity with this new plant, is it happening on that same line that we probably are getting more orders from exports?

And also domestic market, is the import substitution happening now, so how should we look at the stainless steel plant utilization level going ahead over the next two or three years?

Manoj Sanghvi — Business Unit Head

So on your first part, on the export side, we are seeing traction. The order book also if you see, is at the highest level, both for stainless steel as well as carbon steel. The order inflow both domestically as well as for exports, the inflow is increasing at a gradual pace.

Ashutosh Tiwari — Equirus Securities — Analyst

So, I mean, in what timeframe we probably wish to utilize this 20,000 tons hot extrusion facility?

Manoj Sanghvi — Business Unit Head

So this year it is 20% to 30% utilization. And in three years, we will be able to utilize maximum capacities.

Ashutosh Tiwari — Equirus Securities — Analyst

Two-three years timeframe?

Manoj Sanghvi — Business Unit Head

Yes.

Ashutosh Tiwari — Equirus Securities — Analyst

And will it be a larger sum go down from export or domestic over a year? And we had initially talked about distributors also you are tapping so how is that volume increasing, if you can provide some color on that?

Manoj Sanghvi — Business Unit Head

It will be a mix of both export as well as domestic, and also end-users and project as well as distributors.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, Okay. And on domestic side, if you can highlight, like say, which projects are especially the ones where we probably are looking in more volumes in both carbon steel and stainless steel?

Manoj Sanghvi — Business Unit Head

So, for both carbon steel and stainless steel, a lot of oil and gas projects are there. Reliance also recently announced a petchem expansion in the Dahej for INR75,000 crores. So there we — of course, the design is going on right now. So we expect good amount of carbon steel process pipes, stainless steel pipes, then for all LNG expansion, a lot of stainless steel welded pipes will be required.

So — and for carbon steel, of course, oil and gas and other than oil and gas a lot of traction is seen on the water segment also for the Gujarat project.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, okay. The last that we had won was Rajasthan, right? Or the…

Manoj Sanghvi — Business Unit Head

Yeah. The last major order what we had, one single order which was for Rajasthan, so where we are moving one Spiral mill. So currently we are supplying close to 10% – 15% from our plant in Kutch. Balance all will be manufactured in Rajasthan and supplied from there.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, okay, okay. And Gujarat also there’s some — some [Indecipherable] there — there as of now, there is no finalization, is it?

Manoj Sanghvi — Business Unit Head

Yes. So there were three big projects, which is called Kavni Yojana [Phonetic]. So those — some quantities will be finalized within this month.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay. So I think we — a few quarters ago, you provided a pipeline that is how much we have bid for, can you provide that number how much we have bid for as of now, in say oil and gas and water and stainless steel segment also, bidding that you’ve done already?

Manoj Sanghvi — Business Unit Head

Stainless steel, the quotes are very, very small in nature. So it is very difficult for me to highlight one particular project and say INR100 crores [Foreign Speech]. But, yes, carbon steel like Kavni itself is 2.5 lakh tons. Then there is Gujarat Water Infrastructure Limited, they have few projects. So all put together, right now close to 300,000 tons, which is — which would in number terms, would be close to INR30,000 crores. For water, it is under consideration in Gujarat.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay. Okay.

Manoj Sanghvi — Business Unit Head

And then we have a few projects in Rajasthan and Punjab also. So now that we have a mill over there in Rajasthan, we might have some advantage for the projects in Rajasthan also.

Ashutosh Tiwari — Equirus Securities — Analyst

So where we have located this mill?

Manoj Sanghvi — Business Unit Head

This mill will be near Jodphur.

Ashutosh Tiwari — Equirus Securities — Analyst

Jodhpur, okay. But Punjab, can we get it? Like, Punjab, you’ve talked about.

Manoj Sanghvi — Business Unit Head

So there is one project which is coming in Ludhiana.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

So which is — if you see proximity from Kutch to Ludhiana, of course, Jodhpur or Phalodi where this plant will be, is much nearer. So our chances of getting better realization as well as the order increases.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay. And on the oil and gas side, what kind of projects we have, let’s say, what we have bid for pipeline in terms of tons?

Manoj Sanghvi — Business Unit Head

Right now, some few projects of IOCL are there. No major big project is there, but there are various, small, small projects. CGD requirement is there. IOCL has got two projects, one down south and one in the East, which is under bidding. Then there is one line of BPCL which is there under bidding. So all put together, close to between 75,000 tons to 100,000 tons in oil and gas.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, okay. Just on the water side, although historically water has been low order segment, but because now we are talking about big projects coming up, is it possible that the margins in water can improve or we shouldn’t assume the same?

Manoj Sanghvi — Business Unit Head

Yes. In Kutch, maybe it remains difficult a little bit but with the advantage of geographical location, yes, margins can increase.

Ashutosh Tiwari — Equirus Securities — Analyst

And lastly on this Ravi Technoforge’s side, can you provide some color that how we probably are looking at growth over the next two to four year period? And what kind of margin improvement or cost-cutting opportunities exists over there?

Manoj Sanghvi — Business Unit Head

So right now at Ravi, the sales revenue for last year was close to INR280 crores with an EBITDA margin close to 14%. So we plan in the next two to three years to have revenue of INR500 crores to INR600 crores and improving EBITDA margin by 200 basis points, approximately 2%, close to 16%.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

And with the strength of Ratnamai and with the infusion done by Ratnamani, it seems to be possible.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, okay. And what would be the mix of export and domestic for them as of now?

Manoj Sanghvi — Business Unit Head

30% is export and 70% is domestic. But if you see, the final bearing which is manufactured, maybe it is total — export is 60%.

Ashutosh Tiwari — Equirus Securities — Analyst

Okay, okay, got it. Okay, that’s all from my side. Thank you.

Manoj Sanghvi — Business Unit Head

Thank you.

Operator

Thank you. [Operator Instructions]. We have the next question from the line of Hirenumar Thakur Lal Desai from — an individual investor. Please go ahead.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Congratulations on a good set of numbers, sir. The question is the oil prices are remaining firm. So can we assume that all the investments that are being planned in refining and everywhere where our products go are continuing? That’s the first question.

Manoj Sanghvi — Business Unit Head

Yeah. Thank you. So, yes, with oil price remaining at this level, of course, there — we have seen that new projects are being announced, not only that but the old projects which were stalled, revival is seen again. Now question is whether it takes six months or 12 months for them to complete the feed and then float the first deal.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Okay. Sir, the second question is related to export opportunities. So as we — most of us are aware, the energy prices rising in Europe, et cetera, and some kind of restrictions in China. Are we getting some improvement in terms of export opportunities? And if yes, are we sort of ready to use them in terms of capacity?

Manoj Sanghvi — Business Unit Head

Yes. So, we are seeing the benefits of that. In the last call also, I had mentioned that some orders which were being manufactured in Russia or Ukraine, are being diverted to other countries. Similar one order for carbon steel we had received. Similar for stainless steel also, a lot of orders for other geographies we have started receiving.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Okay. So, I mean, what kind of a difference that can make, I mean, in terms of our growth opportunity?

Manoj Sanghvi — Business Unit Head

Difficult to say, but yes, of course, it — our margins can improve because right now we — this is a new market — additional market which has opened up, right? So because of constraints from supply — supply from Ukraine or Russia to Europe, so this — so we have more opportunities now. Where in Europe, earlier some customers who were buying from these markets have in turn came to us and once they experience the quality, the product, and the services and we have had repeated customers once — so once they place an order with us, we feel that, again, if those markets start, still some percentage of customers will remain with us.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Okay. That’s good to know. And any effect in terms of China restrictions, meaning, in fair, in China.

Manoj Sanghvi — Business Unit Head

No. As such, we have no major raw material or anything coming from China. So there is no major impact to us.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

And not much of a threat in terms of imports from China, right?

Manoj Sanghvi — Business Unit Head

No. Not much of a threat also and in between stainless steel anti-dumping is already recommended. So as soon as the Finance Ministry approves, the further threat will be curtailed.

Hirenkumar Thakur Lal Desai — Individual Investor — Analyst

Okay, thank you, sir. That answers my question.

Manoj Sanghvi — Business Unit Head

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Manoj Bahety from Carnelian Asset Management. Please go ahead.

Manoj Bahety — Carnelian Asset Management — Analyst

Hi, good afternoon, sir.

Manoj Sanghvi — Business Unit Head

Yeah, good afternoon.

Manoj Bahety — Carnelian Asset Management — Analyst

Sir, two, three questions from my side. One is, as you just mentioned that right now your hot extrusion is operating at around 20% to 30% capacity utilization and in your overall product mix also, I believe that the SS proportion is small and as we move ahead it can be inched up. So just wanted to understand that as we — as the capacity utilization of hot extrusion moves up and as the composition of assets will keep on going up, so, can we expect a steady increase in EBITDA margins going forward? And if you can help us that what — that range would be — in fact, if you can also explain that what is the difference between margins on pure SS and hot extrusion vis-a-vis others? So, that will be helpful, sir.

Manoj Sanghvi — Business Unit Head

That product-to-product margin is very difficult to analyze because within stainless steel also you would have some project — products where margins are low and some products which go to defense or other aerospace sectors where margins will be very, very higher.

Manoj Bahety — Carnelian Asset Management — Analyst

Sure.

Manoj Sanghvi — Business Unit Head

So on the margins, it is very difficult. On a broader picture, yes, the revenues for stainless steel will go up. We have — with the existing capacity, we have potential to go INR1,500 crores, INR1,600 crores — up to, INR1,500 crores-INR1,600 crores. And eventually, next two years when there is optimum utilization of capacities for extrusion, we will reach there. But at the same time, because we will have distribution market, we will have projects, the blended margin will remain around that 15% to 17% EBITDA levels.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay, okay.

Manoj Sanghvi — Business Unit Head

Yeah.

Manoj Bahety — Carnelian Asset Management — Analyst

And, sir, where are we right now, as you mentioned that the SS will ultimately move to INR1,500 crores-INR1,600 crores over next two years, where are we right now?

Manoj Sanghvi — Business Unit Head

Where are we…

Manoj Bahety — Carnelian Asset Management — Analyst

SS, in terms of SS, we saw this INR1,500 crores -INR,600 crores, what is the current number, sir?

Manoj Sanghvi — Business Unit Head

This year, of our revenue [Technical Issues] 30% to 35% will be SS.

Manoj Bahety — Carnelian Asset Management — Analyst

30% to 35% will be SS. So broadly around INR1,100 crore-INR1,200 crore is SS, right?

Manoj Sanghvi — Business Unit Head

Yes.

Manoj Bahety — Carnelian Asset Management — Analyst

Which will move up to INR1,500 crore-INR16,00 crore. So a big delta will come with the capacity utilization of hot extrusion which will ultimately be — means to some extent mitigated by increase in the project-based revenue. That’s what you are mentioning, right, sir?

Manoj Sanghvi — Business Unit Head

No. I couldn’t understand your question.

Manoj Bahety — Carnelian Asset Management — Analyst

So you mentioned that whatever margin expansion which will happen because of the scale of hot extrusion and because of the increased proportion of SS, that will be to some extent neutralized by a higher proportion of project revenue which will be lower margin. Is my understanding correct?

Manoj Sanghvi — Business Unit Head

No, No.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

So we have two major capacity utilization which will happen in the next two years. One is stainless steel extrusion, another is LSAW line pipes or project pipes.

Manoj Bahety — Carnelian Asset Management — Analyst

Right, right, right.

Manoj Sanghvi — Business Unit Head

Yeah. So stainless steel, of course, — within stainless steel also, because to utilize the capacity — optimum capacity of extrusion, you will have to supply to projects directly to the end user where margins will be reasonably good. But you have to alternatively also supply to distribution network where margins might not be as good as we supply to the end user.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

Okay? And then we have LSAW line pipes and project pipes. So there also line pipe margins are a little different than what it is in the project pipe. So blended both put together, we can achieve 15% to 17%.

Manoj Bahety — Carnelian Asset Management — Analyst

Thanks, sir. And my second question is, is there a scope of extending hot extrusion to some other product segments also? Like, right now we are doing only for pipes and all. So is it possible to use this capacity for some other products also?

Manoj Sanghvi — Business Unit Head

No. It can be used for pipes only, but yes, pipes then — by adding certain equipment, we can explore another market/ So that is — that — the study is going on right now.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay, okay. And sir, last…

Manoj Sanghvi — Business Unit Head

Like, exploration market, we’ve seen that these pipes go, but there is further in — and equipments we need to add.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay. Okay, but mainly it will be into pipes only or other products also, like exploration again it will be pipes only, right?

Manoj Sanghvi — Business Unit Head

It is all pipes.

Manoj Bahety — Carnelian Asset Management — Analyst

It will be only pipes, right?

Manoj Sanghvi — Business Unit Head

Yeah.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay, okay. And, sir, I have one another question which is mainly on the CapEx part. So, I think the current capacity we will be able to utilize in next one year. So if you can talk about like future expansion, capital allocation, organic, inorganic, so, looking at the opportunities we are seeing across various segments, so some perspective on that will be helpful, sir.

Manoj Sanghvi — Business Unit Head

As already informed in my opening remarks, two major expansion is already planned. One is for stainless steel cold finishing another is for spiral welded pipe plant along with coating in the Eastern part of India. So, these two together is roughly INR300 crores to INR350 crores. And then, of course, we have in organic, we have invested in Ravi, already INR50 crores have been pumped into the company. So that will also be utilized for expansion over there.

Manoj Bahety — Carnelian Asset Management — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

Yeah.

Manoj Bahety — Carnelian Asset Management — Analyst

But, sir looking at the kind of cash flows which we are making, don’t you think that this INR300 crores, INR350 crores, INR50 crores is too small, right, looking at the — means, now the quantum of free cash flows which we are generating?

Manoj Sanghvi — Business Unit Head

So we are working on various things — various organic opportunities, various Greenfield projects, backward, forward. So as and when the time is right, we will let you know.

Manoj Bahety — Carnelian Asset Management — Analyst

Sure sir, thank you so much for taking my question, and wish you all the best.

Manoj Sanghvi — Business Unit Head

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Yeah. Hi, sir. Thank you so much for the opportunity. Sir, just first question is, this INR300 crores, INR350 crores of two projects that you have spoken about, that’s the spiral pipe and the cold finished on the SS part of it, what can be the asset turns over there? Hello.

Operator

Sir, could you hear the question? Hello?. Sir, let me check line of the management. Give me a moment, please.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Sure.

Operator

Ladies and gentlemen, the line of the management has been connected back. Sir, kindly proceed. Mr. Ghosh, can you please repeat your question?

Manoj Sanghvi — Business Unit Head

Yeah, repeat the question.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Yeah. Sir, I’ll just repeat my question. So for these two projects that you all are doing in terms of the spiral plant in the East and the cold finish facility for the SS part of it for which you said INR300 crores to INR350 crores will be the CapEx, what should be the broad asset turn that should — one should assume from these two projects whenever they stabilize and get to optimal utilization?

Manoj Sanghvi — Business Unit Head

1.5 times to 2 times.

Abhishek Ghosh — DSP Mutual Fund — Analyst

1.5 times to 2 times. And you believe what will be the broad timelines for these projects to get commissioned?

Manoj Sanghvi — Business Unit Head

Stainless steel, by end of the next financial year.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

And carbon steel, we will update you in another three to six months the timeline, because that might get a little delayed considering what is happening in Rajasthan, right?

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. And the margin profile will be similar to what you make or what you are usually doing for the current business, 5% to 17%. Would that be the right assumption?

Manoj Sanghvi — Business Unit Head

Both put together, yes. But if you see carbon steel alone, maybe less because it is only spiral welded pipes, right, so.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Correct, Correct. Okay, okay. And, sir just one more thing. You’ve guided for about INR3,800 crores to INR4,000 crores of revenue in FY ’23, that is already factoring in the sharp decline in steel prices that we’ve seen, is it?

Manoj Sanghvi — Business Unit Head

Yes, that is after factoring in the decline in the steel.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. And from there on, is it fair to assume that on a volume front because one doesn’t know how the commodity prices behave, but 10% volume growth given the ramp-up of SS facility and line pipe facility that you have put up, 10% to 15% of volume growth, is it a fair assumption to make from on the FY ’23 levels?

Manoj Sanghvi — Business Unit Head

Yes. Our target is always close to 15% — 15% to 20%, but with the base increasing, now 10% to 15%, yes, we can consider it.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, okay. Sir, the other thing is — sorry, your export as a proportion, if I just probably look at the order, it broadly hovers around anything in the region of 15% to 20%. But what is happening around the globe in terms of — given the higher energy prices and realignment of pipeline CapEx, do you think this export which is 15% to 20% of the overall order backlog can see a meaningful shift, or is it likely to remain in this range only? Any thoughts, sir?

Manoj Sanghvi — Business Unit Head

It would remain close to 20%, 25% at max.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. So you are seeing traction both in exports and domestic?

Manoj Sanghvi — Business Unit Head

See, that one major project for carbon steel if you receive, then you can see a major shift. But then, a majority of our exports is for stainless steel. And at times for a few projects, we get carbon steel.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, okay. Sir, but your export margins, are they meaningfully different from that — that you get in domestic, because of the rupee depreciation and other things? Do you enjoy better margins there?

Manoj Sanghvi — Business Unit Head

No, no. The margins are similar only. And as per the policy hedge or a natural hedge whichever is there is already there. So we are not playing on the currency risk or gain.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, so margins are similar. It’s just that it gives you more of operating leverage and more diversification from the domestic market.

Manoj Sanghvi — Business Unit Head

Yes.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, Okay, okay. And, sir, I had a question on cash flow, but I think you’ve already referred to that. So thank you so much, and wish you all the best. Thank you so much.

Manoj Sanghvi — Business Unit Head

Thanks.

Operator

Thank you. We have the next question from the line of Sahil Sanghvi from Monarch capital, sorry Monarch — Networth Capital. Please go ahead.

Sahil Sanghvi — Monarch Networth Capital — Analyst

Yeah. So, sir what would be the CapEx to be spent this year and the next year, if you can guide me on that?

Manoj Sanghvi — Business Unit Head

Close to INR100 crores and INR120 crores this year. [Technical Issues]

Operator

I’m sorry to interrupt. Sir, can you please repeat that, because we couldn’t hear you properly?

Manoj Sanghvi — Business Unit Head

Yeah. Close to INR125 crores this year.

Sahil Sanghvi — Monarch Networth Capital — Analyst

This year. And next year will be similar, or?

Manoj Sanghvi — Business Unit Head

Yeah, INR150 crores to INR175 crores next year.

Sahil Sanghvi — Monarch Networth Capital — Analyst

And the acquisitions for Ravi, the spending for that will be separate, right, over and above this?

Manoj Sanghvi — Business Unit Head

Yeah, that will be over and above this.

Sahil Sanghvi — Monarch Networth Capital — Analyst

Okay, okay. Got it. Thank you, sir. That’s all.

Manoj Sanghvi — Business Unit Head

Thanks.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Sailesh Raja from B&K Securities. Please go ahead.

Sailesh Raja — B&K Securities — Analyst

[Technical Issues] Particular pipes, so usually the water-based — water-based helical [Speech Overlap]

Operator

Mr. Sailesh Raja, sorry to interrupt. Can you please repeat the question?

Sailesh Raja — B&K Securities — Analyst

Yeah, can you hear me?

Manoj Sanghvi — Business Unit Head

Yes, we can.

Operator

Yes, we can hear you now.

Sailesh Raja — B&K Securities — Analyst

No, after three years, we started taking more water-based helical SAW pipes orders, so of the total order book value of INR3,200 crores, so currently what is the contribution coming from water-based projects?

And also, how’s the margin in this particular project? Usually, the water-based helical SAW margins are lower, actually, because it will be a bad pipe and it will be sub 10% margin. Are you still confident of meeting — maintaining that blended EBITDA of 17%, sir, overall for the company?

Manoj Sanghvi — Business Unit Head

Right now, our water order book would be close to INR900 crores odd. And this is spread over until the end of the next financial year. So, of course, the margins are little — not maybe close to 17%, but yes, on a blended level, we will still be able to make 15% to 17%.

Sailesh Raja — B&K Securities — Analyst

Okay. So, how is the working capital cycle is here?

Manoj Sanghvi — Business Unit Head

Working capital cycle is longer here because the contractor — what do you say, the contractor — the payment terms is 180 days from the date of billing.

Sailesh Raja — B&K Securities — Analyst

Okay, okay. Sir, my second question, in Ravi Technoforge, any further CapEx we need to deploy there to achieve that INR500 crores, INR600 crores turnover?

Manoj Sanghvi — Business Unit Head

No, for achieving INR500 crores, no further CapEx is required, but beyond that, yes, we will have to — have additional CapEx.

Sailesh Raja — B&K Securities — Analyst

Okay. Do we supply to all the MNC companies, sir, like SKF, Schaeffler, Timken?

Manoj Sanghvi — Business Unit Head

Yes, SKF, Schaeffler, Timken, NBC, NRB, Nachi.

Sailesh Raja — B&K Securities — Analyst

Okay.

Manoj Sanghvi — Business Unit Head

And we are in talks with IXAR [Phonetic]. So yes, all major, all top benefit — bearing manufacturers are the customers.

Sailesh Raja — B&K Securities — Analyst

Okay. Now how much of revenue comes from these MNCs?

Manoj Sanghvi — Business Unit Head

Like 75% comes from three or four top bearing manufacturers.

Sailesh Raja — B&K Securities — Analyst

Okay. So any plans to add more products, sir, in this company?

Manoj Sanghvi — Business Unit Head

Yes, work is in progress. We will update once it is shaped up.

Sailesh Raja — B&K Securities — Analyst

Yeah. Okay, sir. Thank you, sir.

Manoj Sanghvi — Business Unit Head

Yes.

Operator

Thank you. We have the next question from the line of Vikash Singh from Phillip Capital. Please go ahead.

Vikash Singh — Phillip Capital — Analyst

Good afternoon, sir.

Manoj Sanghvi — Business Unit Head

Good afternoon.

Vikash Singh — Phillip Capital — Analyst

Sir, I just wanted to understand our bid book at this point of time. And if you could give us some color on our order book has been increasing much faster than peers. So going forward, what contributed to it and how do you see this to move going forward?

Manoj Sanghvi — Business Unit Head

Sorry, I — can you repeat your question, please?

Vikash Singh — Phillip Capital — Analyst

So firstly, I wanted to understand your bid book at this point of time. And second question was that our order book addition has been faster than some of the peers. So just wanted to understand is this because everybody got the same, CS segment, I’m talking about, same kind of product, so what contributed to it? Are we taking a little bit of a margin hit in order to execute more volumes, or things are different, if you could give us some insight into it?

Manoj Sanghvi — Business Unit Head

No. Margin hit, we are not taking. We are trying to improve. There are some [Technical Issues]

Operator

Sir, sorry to interrupt. Sir, on the management line your voice is breaking. Can you please repeat the last line, what you’re trying to say?

Manoj Sanghvi — Business Unit Head

Yes. What I — what I’d meant to say is, there is no margin hit that is being taken, but we are trying to play on our strengths. Like, we had one mill which could go to Odisha, right? But then we had opportunity in Rajasthan and thereby the freight which would have been cost for anybody else has been converted partially into our margin.

Operator

Mr. Singh, any further questions?

Vikash Singh — Phillip Capital — Analyst

I have actually lost the last part of the conversation. And the bid book is still pending, that what kind of the bid book we are holding right now in the carbon steel segment?

Manoj Sanghvi — Business Unit Head

Oh, bid book. So bid book, I already clarified in the first question itself, that close to INR3,000 crores under bidding in water segment, INR1,000 crores, INR1,500 in oil and gas segment domestic. And there are some international projects which are also under bidding.

Vikash Singh — Phillip Capital — Analyst

Understood, sir. Sir, one more thing regarding one of the international competitors Tubacex, which has posted one of the best results since the inception. So just wanted to understand is it — basically is it a company-specific phenomenon or globally the demand has been now picking up pretty fast and we would also eventually get benefit from it?

Manoj Sanghvi — Business Unit Head

[Technical Issues]

Operator

Sir, your voice is breaking.

Manoj Sanghvi — Business Unit Head

Can you hear me?

Operator

Yes, we can hear you now.

Manoj Sanghvi — Business Unit Head

So, for stainless steel, yes, we are seeing increased demand which is also reflected in the order book. So if you see the order book, it’s also at the highest level close to INR3,200 crores. And for the last five, six months, it has been over INR3,000 crores in spite of a lot of dispatches happening. So yes, the order inflow has increased.

Vikash Singh — Phillip Capital — Analyst

Thank you, sir. That’s the answer of my question.

Operator

Thank you. [Operator Instructions] As that was the last question for today, I would now like to hand the conference over to Mr. Sahil Sanghvi for closing comments.

Sahil Sanghvi — Monarch Networth Capital — Analyst

Yeah. Thank you. Thank you, all. We would like to thank the management for patiently answering all the questions and also all the participants for joining the call. Manoj sir, would you like to give any closing comments?

Manoj Sanghvi — Business Unit Head

Yeah. Yeah. I would like to thank all the participants for attending the earnings call and having the patience of hearing me out. So, [Technical Issues]

Operator

Sir, I’m sorry to interrupt. Sir, your voice is breaking. Can you please repeat the last line which you said?

Manoj Sanghvi — Business Unit Head

[Technical Issues] everyone for attending it and I wanted to request the organizer that if we can have this call every six months, there is more value-add which the investors will find. Otherwise, it is like repeating. Because a lot of things don’t change in three months more or less. So it’s better and more updates can be — that’s what the management feels, but it can still be discussed. And any questions from the investors can always be entertained by email also. Thank you.

Sahil Sanghvi — Monarch Networth Capital — Analyst

Thank you.

Operator

[Operator Closing Remarks]