Electrosteel Castings Limited (NSE: ELECTCAST) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
Unidentified Speaker
Vikash Verma — Investor Relations
Madhav Kejriwal — Whole-Time Director
Ashutosh Agarwal — Whole Time Director and Chief Financial Officer
Sunil Katial — Whole Time Director and CEO
Analysts:
Unidentified Participant
Rajat Sethia — Analyst
Akshay Deshpande — Analyst
Aashav Patel — Analyst
Abhishek Yogesh Shah — Analyst
Subhash — Analyst
Rajesh Agarwal — Analyst
Rajesh Bhandhari — Analyst
Saket Kapoor — Analyst
Muskan Rastogi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The Electrosteel Casting Ltd. Q Q4FY25 earnings conference call. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Barma from EY LLP. Thank you. And over to you sir.
Vikash Verma — Investor Relations
Thank you. Good evening everyone. On behalf of Electrosteeves Casting Ltd. I welcome you all to the company’s Q4 and FY25 earnings call to discuss the performance of the company. We have with us from the management team which is Zadha Kejriwal Agarwal, old time director, Mr. Madhav Kejriwal, old time director. Mr. Sunil Katyal, old time director and CEO Mr. Ashutosh Azarwal, old time Director and Chief financial officer. And Mr. Gaurav Somani, General Manager, Finance. Before we proceed with this call, I would like to draw your attention to the fact that today’s discussion may contain forward looking statements that are subject to various risks, uncertainties and other factors which will be beyond management control.
We kindly request that you bear in mind there may be uncertainties when interpreting such statement. We will now start the session with the opening remarks from the management team. Afterwards we will open the floor for interactive Q and A session. I will now hand over the conference over to Mr. Madhav Kejijiwal for his opening remarks. Thank you. And over to you, Mr. Madhav.
Madhav Kejriwal — Whole-Time Director
A very good evening to all. I’m pleased to highlight the company’s performance and the promising industry demand outlook going forward. I’d like to walk you through some of the major developments and challenges we faced this year. The first half of the financial year demonstrated growth over the previous half year while the second half witnessed some slowdown. This was primarily due to two key factors. Reduced spending by the central government on its flagship scheme. The Judge Even mission. The initial budget for FY2425 was 70,000 crores which was subsequently revised down to 22,000 crores. However, recognizing the critical importance of the scheme, the government has extended it through 2028 and allocated a significantly higher budget of 67,000 crores for FY2005.
26. In parallel, work has commenced on long pending river linking projects. A notable milestone was the inauguration of the Ken Betwa river linking project by PM Narendra Modi Ji on December 25, 2024, an important step forward in India’s water resource management strategy. This I will cover in detail after taking you through the performance of the company. We undertook two shutdowns of the blast furnace at our south units, one during Q2 and another towards the end of Q3 which extended into the early days of Q4. These maintenance activities, while essential, temporarily impacted production volumes in the later half of the year.
The company’s consolidated total income stood at INR7443 crores during FY25 reflecting a temporary dip due to two shutdowns as I mentioned and a slight slowdown in the market demand. The plant has regained stability since our phase wise expansion to take the capacity from 6.8 lakh tonnes to 1 million is in progress as per schedule and I’m delighted to share that our installed capacity has now been enhanced to 9 lakh tonnes by the year end. This added capacity is expected to yield higher volumes as we gradually ramp up production in the coming quarters positioning us for robust growth.
We have already incurred approximately 500 crores of the capex for this expansion up to FY25 out of the planned capex of approximately 700 crores. The DI sales volume for the quarter was approximately 1.71 lakh tonnes and 7.17 lakh tonnes in FY25 with exports contributing 15% of the total DI volumes. I would like to highlight the demand of DI pipes going forward. The government has prioritized revenue growth over expenditure expansion to achieve the reduced fiscal deficit targets so as to keep inflation down going forward. The Jaljeevan Mission has received a budget allocation of 67,000 crores per FY26 and has been extended to the year FY28.
This is a reflection of the government’s commitment to provide safe and adequate drinking water through household trap connections in rural areas respectively. Matching funds will be borne by the States. Disbursement of central funds is in process and will revive pipe demand in due course of the year. As of the latest reports, approximately 12.38 crore rural households have been provided with tap water connections with many schemes needing source sustainability and operation and maintenance fixes. In many cases. The projects are still partially complete and the water source sustainability is not fully established. The work left to be executed is more than 4 crore households and JGM as previously mentioned has already been extended up to December 2028.
I will move on to the progress and allocation under the AMROOD scheme. The Atal Mission for Rejuvenation and Urban Transformation, launched on October 1, 2021 is a five year initiative by the Government of India aimed at enhancing urban infrastructure, ensuring water security and promoting sustainable urban development across the country. The total indicative outlay was 2.99 lakh crores over five years out of which the central assistance is 76,760 crores. As of November 2024, 8998 projects worth 1,89,000 crores have been approved. Weeks Expect substantial expenditure on pipe procurement via AMRUT. 2. Some updates on the River Linking project which is managed by the National Water Development Agency under the Ministry of Jalshakti. This project envisages the interlinking of rivers to enhance irrigation, mitigate floods and ensure water availability across the nation. The main project that is taken up at present for implementation is the Ken Betwa Link Project. It has a 44,000 crore scheme to irrigate 10.6 lakh hectare in Bundelgand. A number of other projects are also in the pipeline National River Linking Project has the potential to generate considerable demand for both pipes and fittings in the future. Irrigation is another major demand driver for our pipes.
India’s irrigation sector has seen significant advancements. The government has prioritized irrigation development. There has been a shift to pipe irrigation to lower losses and ease land acquisition problems. There’s an estimated growth in the irrigation flood control at the state level of 23% year on year. Moving on to exports, the Middle east and Africa pipe markets are valued at $8.13 billion in 2023 and is projected to reach $11.56 billion by 2031, growing at a CAGR of 4.5%. This growth is driven by infrastructure development and urbanization in the region. Similarly, the Middle East’s iron and steel pipe market is expected to see steady demand growth over the next decade.
Demand is driven by the good growth prospects in many many Middle east countries, mainly Saudi Arabia. In Europe we are the second biggest supplier of ductile iron pipes and in the Middle east we are the largest exporter. The recent US tariffs on iron and steel product imports have introduced volatility in the global steel prices affecting the pipe industry. These tariffs can lead to increased costs impacting manufacturers margins and pricing strategies. However, the tariff on Indian DI exports to the US remains limited up to 10% which will be reviewed again in July. I would now like to hand over the floor to Mr.
Ashitva Shagarwal, full time Director and CFO for taking you through the financial highlights.
Ashutosh Agarwal — Whole Time Director and Chief Financial Officer
Thank you Madhavji Good afternoon to all the investors present in this call, I would like to brief you about the financial Results consolidated for Q4 2025. Total income stood at rupees 1,739 crores partially impacted by the plant shutdown as explained by Madhavi EBITA at rupees 198 crores EBITDA margin stood at 11.4% PAT reported 2 rupees 168 crores which includes 81 crores on account of one time adjustment of deferred tax. Here I would like to mention to the investors that in 2017 as per the accounting standard in the year there was a window given to us and we have revalued the land of the company and now in2024 the government of India has changed long term capital gain tax rate from 20% to 1212 and a half percent on account of that there is a reversal of deferred tax liability of 81 crores.
That is nothing to do with the cash flow of the company. This is just an accounting entry for general information fields highlighting our consolidated financial year 2025 company as a whole total income stood to 7443 crores, EBITDA stood to 1159 crores. EBITDA margin 15.6 crore 66% had stood to 710 crores which includes 81 crores as explained to you earlier. Now I am talking about standalone results of Q4 2025. Total income stood to 1601 crore impacted the planned shutdown as mentioned by me and Ms. Madhavi. EBITDA’s 2213 crores EBITDA margin 13.3% spread stood at 191 crores which again included 81 crores.
As explained by me in my earlier speech note for the year standalone results are total income was Rupees 6840 crores EBITDA 1116 crores EBITDA margin 16.3% PAT 712 crores which include 81 crores. As mentioned to you board recommended 1.4% of equity per share. It means 140% dividend. We are maintaining the dividend from last. Year. On an above the capex as mentioned by Madhav ji we had a plan of 500 crores and we have spent around 500 crores till March 2025 and balance 200 crores will be spent later on the Di5 capacity will be around 1 million ton in 2026-27. Now I am opening the floor for the question answers. Thank you very much.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Rajat Setia from I thought pms. Please go ahead.
Rajat Sethia
Just a couple of questions. The capacity that we have can the same plant or the same line make different sizes, different diameters pipes or do we need to have dedicated capacity for different sizes?
Madhav Kejriwal
So because of the machine mix that we have taken up as we’ve expanded our capacity, we do have a flexibility of 10 15% between different size mixes. So we can play with a capacity basis these requirements in the market.
Rajat Sethia
Okay, so you’re saying a particular line can make a pipe which can vary in diameter by 10 to 15% of its shipped production site?
Madhav Kejriwal
Yes. Please.
Rajat Sethia
Answer one question regarding the A lot of talks are there about the OPUC pipes. So how do you see the development of OPEC types affecting DI pipes and sizes?
Madhav Kejriwal
Sir, I can answer this question in two parts. One from the short to midterm and then from the long term perspective for the short to midterm. Most of the projects that I have spoken about which are under Jaljeevan etc. For them, their detailed project reports etc have already been made and the chances of any upcoming recent demand being converted to OPVC is negligible. From the medium to long term perspective. Sir, if you look at the percolation of OPVC in markets where they are being used like America and South America, North America and South America, yet there is decent amount of demand for smaller DIA pipes in those markets coming to Europe, we are finding that OPVC is practically not there.
The other aspect also is that because of many characteristics of a plastic pipe versus a metal pipe, the use cases are not overlapping in its entirety. There is an overlap, but it’s not that you can use a metal pipe wherever a plastic pipe is used and you cannot use a plastic pipe in a lot of use cases where only a metal pipe can be used. So I don’t find OPVC to be a real threat. This sort of or other concern had also come up when HDP was introduced in the domestic market. But we find that smaller if demand for ductile iron pipe.
So that in itself Gives an answer of whether OPVC really would become a threat going forward as it was felt HDP would.
Rajat Sethia
So you are saying it is kind of a replacement but it’s not really affecting the larger application and use cases on the.
Madhav Kejriwal
Yes, please. There might be a small percentage of the demand that can get converted at a local level. But that’s not going to have a material impact on the demand of ductile ion pipes.
Rajat Sethia
Is it going to present as an alternative.
Madhav Kejriwal
Sir? If any or if any replacement then it would probably be up to diameter 150 or 200. Not. Not Bey. There is. They do operate till D400 but above D200 there’s practically no chance of replacement.
Rajat Sethia
And and no power or total capacity for the sales. What is the sales mix for us? Let’s say up to 200. More than that.
Madhav Kejriwal
Sir. Our demand scenario is that we will have approximately 40, 50% up to Daiya 400 and another 50 to 60% up to Dar 1200. So it’s a 40, 60 sort of mix you can say going forward.
Rajat Sethia
And for our increased capacity also the mix will remain involved.
Madhav Kejriwal
I’m sorry, your voice is a little.
Rajat Sethia
Sorry. Is it any better now?
Madhav Kejriwal
Yes, much better. Please.
Rajat Sethia
Okay. I was saying for the increased capacity, when our capacity goes to 1 million tonnes, the mix will remain in the same range, right?
Madhav Kejriwal
Yes, please. Our mix is to make between 40 to 50% up to 450. Approximately 50% above 400. So it’s in line with the market demand.
Rajat Sethia
Okay. All right. Thank you so much.
Madhav Kejriwal
Thank you.
operator
Thank you. The next question comes from the line of Akshay Deshpande from Ashika Institutional Equity. Please go ahead.
Akshay Deshpande
Hello. Hi sir. Am I audible?
Madhav Kejriwal
Yes, please. Very good evening.
Akshay Deshpande
Hi sir. I just wanted to to know have you received any cash from JJ and projects in the previous few months?
Madhav Kejriwal
Have you received any cash from the
Akshay Deshpande
JJM projects? Any bids? No.
Madhav Kejriwal
There that there has been an ongoing movement in jgm. It’s not that because the center has temporarily halted the capex that the projects have stopped. As you must be aware that the state takes care of 50% of the expenditure. So the states which have reasonable resources like Odessa MP over there, we are seeing movement. It’s not at the same time as it was say six months back, but not that there’s a complete switch off on the JGM front.
Akshay Deshpande
Understood. Sir, would you be able to quantify it?
Madhav Kejriwal
That will be little difficult for me to exactly quantify what has been the statewise expenditure over the last six months. I would not have that
Akshay Deshpande
Okay, I understood something.
Madhav Kejriwal
I. Get back to you if you like.
Akshay Deshpande
Understood sir. So my second question. How was the price volatility in the previous three months for coking coal and inodes.
Sunil Katial
On the coking coal in the last three months the prices have been actually varying to the tune of say $20 or so. So more or less we can say that the coking coals have been more or less steady for the last three months. As far as iron ore is concerned. Iron ore there is a small upward trend, not really much to the tune of say 2 to 300 rupees per tonne or so. So broadly speaking I mean both of these are remaining steady.
Sunil Katial
Understood sir.
operator
Thank you. The next question comes from the line of Ashev Patel from Molecule Ventures. Please go ahead.
Aashav Patel
Thank you for the opportunity. So my first question is that we have been hearing on the JGM outlay from the center side is expected to be significantly cut down from 2.8 lakh crores to 1.5 lakh crores. Almost a cut down of 1.25 lakh crores which would largely has to be borne by then states which we also know is quite difficult to get funds out of the state governments. So what’s your view on this ongoing shrinkage of the JJM allocation?
Madhav Kejriwal
Sir, as I had mentioned and I’ve been mentioning for many investor calls the initial outlay for Jaljeevan was 8 lakh crores. That was during 2019 post that there has been a shift in prices of materials and even manpower. So to finish the project they will require the estimated 9.10 lakh crores. There’s no two ways about it. Your apprehension is well placed when it comes to certain states where there where they are running into financial troubles. But there are specific states where there will continue to remain central support. Such as Bihar and Andhra Pradesh and Madhya Pradesh.
And also there are certain states which are reasonably well to do from their cash flow perspective such as Odisha. So your concern is limited to specific states. Sir, for me I think Karnataka probably is one state where there might be some work which will take longer than what it should to finish. But again most states which are struggling financially unfortunately are double engine sir. So they have the support from the center. So in some garb or the other I’m very certain that the government would like to finish the work to its to completion. Have it completed.
Aashav Patel
Got it. And so as per the JJM progress which is mentioned on the website, their website they are claiming to have 80% of the penetration but ground level scuttlebug from our side suggests that the actual penetration is much lower, closer to a 60% level. So what is your view on the same? Have we penetrated 80% of the targeted JJM?
Madhav Kejriwal
So what I was saying, I find that that has now come out in public. But this is a reality that I am noticing on the ground because of our network. We are well aware of the ground realities. We have probably the strongest sales and marketing network in the country for Ductala and pipes and that helps us get a better understanding of what’s happening on the ground. And that’s the reason why the past few quarters I’ve been mentioning that the real work on the ground is far lower than what it is stating. Yes, the tap connections are there and yes we’ve made commendable progress.
There’s no two ways about it. But we are a very big country with a huge landmass and a huge population. So it takes time. I mean I draw parallels to countries like the USA and China since they have similar faced similar population growths recently and you’ll find that even today they have a substantial demand.
Aashav Patel
Okay. We would be largely be able to achieve the resume target or it could even then further fall off even after 28.
Madhav Kejriwal
So sir, if, if the situation happens so that the burden of the 1 and a half lakh crores goes on to the states then in my opinion this might get pushed to maybe FY30 for those specific states which are going to be struggling financially. Apart from that, I think by 28, 90, 95% of the work should have been done. There’s a population growth that is also constantly happening. So you know that’s why I say 1995% to reach 100% will take some times for our country.
Aashav Patel
Makes sense. And sir, we have also been hearing in terms of fund flow slowdown specifically across and that is something which is across the B2G companies but specifically to the JLG1 missions and water infrastructure. It has been the most impacted industry. So what is your view on that? Are you seeing challenge in terms of working capital over last year? Couple of quarters. And do you see it easing out anytime soon?
Madhav Kejriwal
Sir, there has been a marginal increase in the debtor cycle for the company. But we adhere to a very strict policy when it comes to our supply chain, outward supply chain actually wherein we don’t look forward to, we don’t allow for open credits beyond a certain number of days and beyond specific customers. So because of that we’ve not seen a major impact. And if anything going forward things are to only Improve. I think from the cash flow perspective, although not much impacted, I think we are at rock bottom.
Aashav Patel
Okay, but you have visibly seen the slowdown over the last couple of quarters.
Madhav Kejriwal
Very marginal. Sir, as I was mentioning, there are also other demand drivers today in the market. So it’s not that there’s ever a time that suddenly because Jaljeevan has slowed down or stopped, there is a zero cash income inflow cycle, you know.
Aashav Patel
Absolutely agree. And the last question on my side, as per Coal India website, almost 70% of the pending compensation regarding the suspended coal mine have already been settled. What is the update on our expected compensation? Are you seeing any positive development there, Sir?
Madhav Kejriwal
There are definitely some positive developments. So far I’ve been mentioning that I don’t want to comment on timelines because I’ve been proved wrong. But I’m with recent developments, I’m hopeful that this financial year we should see this matter settled towards to a very large degree.
Aashav Patel
Makes sense. Okay sir, thank you and all the very best.
Madhav Kejriwal
Thank you.
operator
Thank you. Ladies and gentlemen. If you wish to ask a question, please press star and 1. The next question comes from the line of Abhishek Yogesh Shah from Valcor Capital Advisors. Please go ahead.
Abhishek Yogesh Shah
Thank you for the opportunity. So I just wanted looking at the numbers, I mean we’ve seen a sharp fall in, you know, your margins and realizations also. So just wanted to get some understanding on how are you seeing your realization shape up say in the coming quarter and also on, you know, what sort of bottom line could be be looking at. Because EBITDA per ton last year we were looking at upwards of say 16, 17, 18 rupees per kg. We’ve seen a fall. So I’m just trying to understand where do you see it for the year as well.
Madhav Kejriwal
So I would prefer answering margin related questions in percentages because I think that’s a better matrix. You know, our product is 60 to 70% iron and coal cost dependent. So the absolute value per unit is moving because of that. So it’s better to talk on percentages. In my opinion as this particular financial year we’ve hit a better margin of approximately 16%. I’ve been mentioning that 15 to 18 is the range that we are looking at in the mid to long term. In good years we see ourselves operating sometimes even above that historically ductile. And pipes as an independent operating business has never gone below 15%.
Moving forward for this particular quarter, things have started moving now in the center because of the revamped estimates. There’s a lot of Paperwork and administrative approvals that are going to take maybe another two, three months to come into place. Since it’s a big mechanism, it takes some time to move. But things are moving forward. As you must be seeing articles coming out every week or so about what the update is on Jaljeevan spending. So things are moving forward at the central level and very soon the money will start coming in. I think starting quarter two, there will be an upcycle again.
So I’m very hopeful that we will be able to stay on the upper side of this, much of this bandwidth for the medium term.
Abhishek Yogesh Shah
How are you seeing capacity additions? We are adding substantial capacity which is due to come soon. At industry level also, we’ve seen significant capacity addition. So maybe if you can maybe throw some numbers on that and give us. Some idea, how do you see the. Demand and supply shaping up for the. Next year or two?
Madhav Kejriwal
Sir, the demand scenario at the moment with the river linking projects, the irrigation business and the reinstated budget of Jaljeevan, I think demand will, which was earlier beyond supply by 25%, will remain to be ahead of supply by approximately 10 12% for the next two years. Coming to 28 29, I think that’s when the demand and supply cycle will meet.
Abhishek Yogesh Shah
That’s all done. Thank you so much.
Madhav Kejriwal
Thank you.
operator
Thank you. The next question comes from the line of Subhash from Value Investments. Please go ahead.
Subhash
Hello. Am I audible?
Madhav Kejriwal
Yes, please.
Subhash
Okay. I just had a question on your revenue. I understand that you, from the last two quarters you had some maintenance in your manufacturing units, right? I think maybe one or two quarters ago you even said that the maintenance was almost complete, but the output was not as per the expectations. But I see in your investor presentation that you have mentioned that. I mean, the production will be stabilized going forward. So is the revenue down because of that or is it because of the, you know, it’s not spending much money, as you mentioned about the mission, Is it because of that you’re.
You’re seeing less income?
Madhav Kejriwal
Sir, I would say the bigger part of the reduction in revenue is owing to the maintenance shutdowns that we had. Definitely the slowdown in expenditure has played a part in the reduced revenue for the second half of the year. First half remains strong. So one of the reasons why also the decision for taking a shutdown was taken, although we had taken one in Q2, was that because of this, the slowed demand situation, we are very certain of the fact that going forward the demand will pick up. So it was an opportune time for us to Take the shutdown right now rather than having to do it at the time when the markets are high.
Subhash
Got it. Thank you. And also, how do you account the revenue? Is it as soon as you apply the materials from your manufacturing units to the sellers or I mean, do you record the revenues after you receive actual cash?
Ashutosh Agarwal
The moment material reaching to the customer side, we are recognizing in the income.
Subhash
Okay. Okay. So for this quarter you are around ebitda margin of 11.4%. And I understand it’s because of the maintenance, but going forward, as you said it would be around 15 to 18% right there.
Madhav Kejriwal
I’m very hopeful that for the. For the medium term up till 27, 28, we will be on the upper end of this band.
Subhash
That’s great. Okay, thank you. And do you have any update about the latest land acquisition that you did around Odisha which you announced maybe three quarters ago?
Madhav Kejriwal
Yes, please. We are in. We are very closely in touch with the government to get our approvals and other auxiliary requirements in place. I think there was a bit of a slowdown due to the government change in Odisha as well. It was taking a little longer. They took a couple of quarters to really get everything back in order. But plans are still on and I am very. I think I’m very excited to bring about some good news very soon for the investors.
Subhash
Yeah, that’s great to hear because the next question I had about was in your presentation you have mentioned that by 26 and FY26N you will have 10 million tons of production capacity. So I mean this is without considering the latest land acquisition. Right. So this could go up.
Madhav Kejriwal
In lakh tons. Sorry. Yeah. So. So 1 million in our existing facilities. Approximately 1 million will be our capacity in the existing facilities that I am still. We are still in progress for that, sir. Because that has. That. That has no nexus with the expansion in Odisha.
Subhash
This is. Yeah. This plan does not include the Odessa land acquisition plans. Like whatever you have it for future. Right? For that line.
Madhav Kejriwal
Yes, please.
Subhash
Oh, that’s good. Okay. Yeah, I think that’s all. Thank you.
Madhav Kejriwal
Thank you.
operator
Thank you. The next question comes from the line of Rajesh Agarwal from Manior. Please go ahead.
Rajesh Agarwal
Sir, this quarter we have taken a maintenance shutdown. So can you quantify the production loss or any one of the shutdown?
Madhav Kejriwal
Sir, owing to the maintenance shutdown, we have had a reduction in the output by approximately 50,000 tons. Okay. For the one that was there in quarter three, quarter four.
Rajesh Agarwal
Okay. And any other expenses? Also for the. Any other expenses. Expenses for the shutdown on this one, maintaining the plant or whatever one time.
Ashutosh Agarwal
Expenses we have incurred around 13 crores for that.
Rajesh Agarwal
Okay. Okay. So second you said tariff, tariff. The 10% tariff will affect our export.
Madhav Kejriwal
No, not really, sir. Okay, I don’t see. I don’t see that. Just to give some further clarity on this please. Our total export to the US tantamounts to around 1 1/2 to 2% of our export exports. So we are not very dependent on it to begin with. And to add to that a 10% tariff will not make our competitiveness in the US market any lesser. So I don’t see it impacting the 1.5 to 2% either.
Rajesh Agarwal
So other countries won’t have an advantage to us either in Saudi and all Middle east also.
Madhav Kejriwal
No. No sir. So that apart from Electro Steel, there’s no other company who exports into the US market.
Rajesh Agarwal
Understood? Understood. Sir. Why the working capital days have gone up? If you see the previous working capital days have gone up.
Ashutosh Agarwal
What is reduced? It was 1800 crores earlier working capital date. Now it is 1400 crores.
Rajesh Agarwal
Not the number of days.
Ashutosh Agarwal
Number of days. Yes, number of days it is.
Madhav Kejriwal
So that is in two parts. As mentioned earlier, we’ve seen a slight slowdown in the customer payment cycle. We had pushed some of our material to our subsidiaries across the globe. Because we were expecting sales pickup which we will see in due course reflecting in our in our figures. So there’s some extension in the overall going forward.
Rajesh Agarwal
It will improve. The day has been improved.
Madhav Kejriwal
Absolutely.
Rajesh Agarwal
And sir, now I heard state government is trying to do a water project in HAM model. So for tying up the funds with the investors. So that will that affect our business? Will the business go up?
Madhav Kejriwal
I am. I’m hopeful that it will sir, on this regard. Because earlier whenever HAM has been tried it’s not been very successful. So I cannot be very confident about it. But the mindset of the investors towards public private partnerships has considerably changed over the last five, six years. So I am positive about it. Yes.
Rajesh Agarwal
So after April the allocation of JM has increased. So you’re seeing a moment in the tender movement inquiry.
Madhav Kejriwal
You mean jjm
Madhav Kejriwal
sir, there has been a lot of positive movement at the central level when it comes to approval of funding etc which has seen a bit of a stalemate for six months. I think impact on the ground will start coming in from quarter two.
Rajesh Agarwal
Okay. And so you said the project cost is 45000 crore. So that can that result into a huge DI pipe order. So what percentage can be DI5’s contribution.
Madhav Kejriwal
In that so that is going to be a mixed bag of canal manufacture, canal dam and pipe irrigation and we will see demand come up mainly in DI and HDP so I would say approximately 15 odd percent.
Rajesh Agarwal
15 odd?
Madhav Kejriwal
Yes.
Rajesh Agarwal
Please start by when the demand for.
Madhav Kejriwal
DI perhaps sir, I think second half of this financial year we should start seeing some demand from Kenbeth come into the air types and so the last.
Rajesh Agarwal
Question on this Indus Water treaty whatever has been active in advance the government starts activity of their building a dam and other water infrastructure that can also result into orders with TI pipes Absolutely sir.
Madhav Kejriwal
It’s not something we want to highlight much right now because it’s very nascent but this is something that we have at the back of because I I.
Rajesh Agarwal
Feeling in the moment that will be very fast. That is what my guess.
Madhav Kejriwal
I’m very certain of it sir but as there is nothing concrete.
Rajesh Agarwal
Understood, I understood but. But the DI will be required not there.
Madhav Kejriwal
Absolutely.
Rajesh Agarwal
And so the last question what will be the capex for 2523?
operator
If you can please join back the queue.
Rajesh Agarwal
Last question only one question CAPEX only I’m asking the CAPEX for 2526 and maintenance cap.
Madhav Kejriwal
2526 the CAPEX will be somewhere around 200 crores.
Rajesh Agarwal
Okay. And maintenance capex
Ashutosh Agarwal
additional. Okay. Maintenance will be how much capex will.
Ashutosh Agarwal
Be maintenance capex al together will be 35 crores 160 crores will be some new cap.
Rajesh Agarwal
Understood. Thanks a lot sir. Thank you.
Madhav Kejriwal
Thank you.
operator
Thank you Ladies and gentlemen if you wish to ask a question please press star and 1. The next question comes from the line of Ankit Puri an investor. Please go ahead.
Unidentified Participant
Hi, good evening Mr. Madhav I wanted to check up. Can you please comment on the reason for the increase in the inventory levels and how do you see it panning out going ahead? Also if you can provide insights into the current and future capacity utilization.
Madhav Kejriwal
So sir, the increase in inventory level is owing to a slight slowdown in the market demand in regard to the capacity utilizations I am expecting that over the next two to three years for the industry the capacity utilization should be somewhere between 85 to 90%. We will probably be operating at a slightly higher level than that.
Unidentified Participant
All right. And what has been for this particular quarter and for FY25?
Madhav Kejriwal
So for this particular quarter our capacity utilization has been probably 60% or so but that is owing to the shutdown subsequently I think going Forward from quarter one to quarter two to quarter three we should see a ramp up of 10 to 15% each quarter as we are coming out of the maintenance shutdown and ramping up. And also support from the markets for demand.
Unidentified Participant
All right. Lastly, what updates can you provide on the credit products through the Sinaldo acquisition panning out?
Madhav Kejriwal
So one very good movement that we’ve seen that we’ve managed to do due to the acquisition position is to enter the Vietnam market. Although we started with very small orders, but because we improved our presence in the area, we have now started discussing reasonable size orders with the local contractors and business houses. So that’s one big benefit. We are also being able to procure a small quantity of products via Singapore from countries around like Vietnam and China etc. For products in the basket which we are adding like coupling adapters, etc. For our subsidiaries in the western hemisphere.
This is just a beginning, sir. With time we will see this grow substantially.
Unidentified Participant
All right, that’s very heartening to hear. Thank you so much for the updates.
Madhav Kejriwal
Thank you.
operator
Thank you. The next question comes from the line of Rajesh Bhandari from Lakota Engineers. Please go ahead.
Rajesh Bhandhari
Good afternoon, sir.
Madhav Kejriwal
Very good afternoon, sir.
Rajesh Bhandhari
Yeah. How much amount are we expecting?
Madhav Kejriwal
There is no exact indicative amount. Reasonable chunk of our claim. Jaga problems, subsidies, marketing, important new frontier.
Rajesh Bhandhari
So naturally we can have a good chunk of order.
Madhav Kejriwal
We had started establishing presence over there, sir. As I was mentioning past May Joe shut down. That was just to further enhance what we could not achieve from the first shutdown. And because the market was so we thought that it’s a good time to exercise this option.
operator
I’m sorry to interrupt you only.
Rajesh Bhandhari
Last question. Last question. Okay. And we expect it to be better in the future.
Madhav Kejriwal
Yes, please.
Rajesh Bhandhari
Thank you, sir. Thank you very much.
Madhav Kejriwal
Thank you.
operator
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question queue. The next question comes from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor
Yeah. MMHR team and thank you for the opportunity. Mother the only residual questions and some clarification. K said you you mentioned that this would be the financial year where we would be expecting some conclusion on the coal compensation part. So if you could just elaborate, sir. What factors have have.
Madhav Kejriwal
Activity level or interaction level? There were few steps I think that were not cleared out by the government for JW to start operating. They’re saying as and when JSW is also getting those mine those clearances and those steps are clearing out. I think both the parties and even the mining in the ministry wants to now see the Conclusion happen so that the asset can be revived. So that is my reason for showing some positivity on that front.
Saket Kapoor
JSW has already paid to the ministry for the for vesting orders which they have received.
Madhav Kejriwal
Amount. They will reimburse us.
Saket Kapoor
Closer. Closer to 50,000 ton. Because had these two shutdowns not been planned, our damages we would have the sales would have been higher by 50,000 tons. This is what the understanding is, sir.
Madhav Kejriwal
If both the shutdowns are considered then probably we would have seen a slightly even higher than 50,000 ton production number. 60, 65,000 tons on gun.
Madhav Kejriwal
So it’s definitely been add for this year.
Saket Kapoor
I’m only concluding. I’m only concluding. My only concluding. The reply from mother sir, that kindly allow me to complete.
Madhav Kejriwal
Yes, sir.
Saket Kapoor
But what I was mentioning that this. That is on top of 7 lakh 17 thousand. Definitely we will be adding this 60,000 tons. 60,000 tons for this. Financially this should be the base base minimum that we should be doing. Because now the capacity is also move up to 9 lakh.
Madhav Kejriwal
So sir, Naula installed capacity here. Since it takes a little time to ramp up, we are expecting to hit something between 830 to 850 this financial year.
Saket Kapoor
I joined the queue for two more financial questions.
Madhav Kejriwal
Thank you.
operator
Thank you. The next question comes from the line of Muskan Rastogi from BNK Securities. Please go ahead.
Muskan Rastogi
Hi sir. Thank you for the opportunity. Sir, for the last few quarters the company has been guiding that there has been no weakness in the realizations. However, the realizations are still on a downward trend. We also interacted with LNT team and we got a feedback that the realization of BIS at 58 to 50 rupees per kilogram range and demand is also subdued. So can you please give color on this. And also what would be your volume guidance for FY26 and 27?
Madhav Kejriwal
Well, ma’ am, as I was mentioning previously in this call, the absolute realization numbers is a result of both demand and the movement of the iron ore and coal pricing. Part of the reason for the softening on the realization is also that the input material costs have come down. Going forward, the movement of the realization is going to be a consequence of the demand moving up which will create an upward pressure. And we are hoping that the pricing for the raw materials remain stable. Seeing that possibly no major geopolitical issue arises. There might be some upward movement in the iron ore if and when the government starts picking up on many of its infrastructure projects beyond Jarjeevan as well.
So this will I think lead to the average realization going up. Currently the realization is between 58 to 60 rupees. But that is for new orders. We are carrying over orders from the past results. So the. The effective realization is always a. Always a blend of old and new orders.
Muskan Rastogi
What would be your volume guidance for next two years?
Madhav Kejriwal
Volume guidance please.
Muskan Rastogi
Yeah. Volume guidance for bi. The next two years.
Madhav Kejriwal
Ma’ am, I think for the next financial year we will be somewhere between 8.3 to 8.5 lakh tons. And in the subsequent year we should be crossing 9 lakh tons. Please.
Muskan Rastogi
Another question. In a normal spread, normalized spread scenario if you do rupees 9 to 10 EBITDA per kg then post tax ROC for the core business comes to around 10%. Just want to understand what is the reason behind going for such large capex in same business in Orissa. If the return ratios are just 10%.
Madhav Kejriwal
9 to 10 rupees would be a conservative figure. I think that the return on capital for the core business would be a little higher than that. We also have to keep in consideration that Electrosteel as a company as historically also exported pipes. And we are also looking at a expansion in our fittings business which is a higher capital return business. So we are very certain of hitting around 12 to 13% at a very. I would say realistic, slightly conservative level.
Muskan Rastogi
So because this quarter it was eight rupees per kilogram. Hence I was asking this.
Madhav Kejriwal
Well ma’ am, one has to appreciate that the last six months has possibly been rock bottom for the DI industry. So we cannot plan basis that as when last year around quarter three, quarter four we were hitting 20% plus EBITDA numbers even at that point. We had also mentioned that 20% + is an unsustainable number. We are hopeful to. We are very certain of maintaining a range of 16, 17, 18%. So those are the figures that we have to look at. We cannot get swayed by short term up and down swings.
Muskan Rastogi
Okay sir, sure. Thank you.
operator
Thank you. The next question comes from the line of Rajat Setia from. I thought pms. Please go ahead. Rajat, if you can please unmute your line and ask your question.
Rajat Sethia
Hi. Yeah, thanks. Thanks for the opportunity. Once again sir, what is the maximum achievable capacity utilization possible at the plan in the company level?
Madhav Kejriwal
Sir, I think between 90 to 95%.
Rajat Sethia
And you mentioned that we will soon be hitting those numbers like in the next one year, right?
Madhav Kejriwal
Yes, please. Okay.
Rajat Sethia
And we like we adding capacity. So that’s how we expect our growth to come from. And. And we expect to maintain these higher levels of real time for the next two, three years?
Madhav Kejriwal
Yes, please.
Rajat Sethia
And so what is the frequency of shutdowns generally? How many years do we need a shutdown?
Madhav Kejriwal
So, sir, we have a annual shutdown which averages around 10 to 15 days in each unit. Barring that, we have shorter one or two day shutdowns of the alternate month. Okay, why don’t you mention the total shutdown days for a unit of. Yeah, but normally, I mean, the running days in a year are in the range between 346 to 350.
operator
Thank you. We take the next question from the line of Ashev Patel from Molecule Ventures, pms. Please go ahead.
Aashav Patel
Thank you for the opportunity for a follow up question. So my question is if we end up receiving the.