Hi-Tech Pipes Limited (NSE: HITECH) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Anish Bansal — Whole-Time Director
Arvind Bansal — Chief Financial Officer
Analysts:
Vikash Singh — Analyst
Muskan Rastogi — Analyst
Sneha Talreja — Analyst
Pallav Agarwal — Analyst
Radha Agarwalla — Analyst
Amit Vohra — Analyst
Vikash Singh — Analyst
Ronald Siyoni — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Hi-Tech Pipes Limited Q2 FY25 Earnings Conference Call, hosted by PhillipCapital India Private Limited. As a reminder, all participant line will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikash Singh from PhillipCapital India Private Limited. Thank you. And over to you, sir.
Vikash Singh — Analyst
Thank you, Shilpa. Good morning, everyone. I welcome you all on Q2 FY25 Hi-Tech Pipes Earnings Conference Call. From the management side, today, we have with us Mr. Anish Bansal, Whole-Time Director; Mr. Arvind Bansal, ED and Group CFO; and Mr. Arun Sharma, Company Secretary and Compliance Officer. Without taking any much time, I’ll hand it over to Mr. Anish Bansal for his opening remarks. Over to you, sir.
Anish Bansal — Whole-Time Director
Ladies and gentlemen, good morning, and thank you for joining us today for our Q2 and H1 FY25 investor conference call. I’m joined on this call with Mr. Arvind Bansal, ED and Group CFO; Mr. Arun Sharma, Company Secretary and Compliance Officer. I’m pleased to report a solid performance this quarter marked by significant achievements and strong financial growth, underscoring the resilience of Hi-Tech Pipes despite the industry’s dynamic landscape.
In Q2 FY25, the company recorded a robust 22.5% increase in total sales volume to 1.23 lakh tonnes compared to 1 lakh tonne in Q2 FY24. This growth was driven primarily by rising demand for our steel tubes, structural steel products, and value-added solutions. Despite a 5.3% decline in revenue from operations due to lower steel prices, we have achieved remarkable profitability in this quarter. Our profit-after-tax increased by 72% to INR18 crores and EBITDA rose by 57.6% to INR42.2 crores with a notable 28% increase in EBITDA per tonne. Thanks to our focus on value products and efficient cost management.
For the first half of FY25, revenue increased by 13% to INR1,572 crores, PAT surged by remarkable 95% to INR36 crores, while EBITDA saw a 77% increase reaching to INR85 crores. These results reflect our efforts in improving EBITDA per ton and operational efficiency. We also made strides in key financial metrics, reducing net working capital days from 63 days to 60 days and improving our debt-equity ratio from 0.7 times to 0.49 times, alongside a strong current ratio of 1.63 times and a notable improvement in ROCE from 11% to 15%.
A recent milestone was the successful closure of our QIP amounting to INR500 crores. This issuance was met with overwhelming interest from Marquee qualified institutional buyers showcasing strong confidence in High-Tech Pipe’s growth prospects. The proceeds from the QIP provide us with the capital to execute our strategic initiatives under Hi-Tech 2.0.
Now please let me provide a broad outline of our vision of Hi-Tech 2.0. The launch of Hi-Tech 2.0 marks a transformational phase of Hi-Tech Pipes. This initiative encompasses several strategic actions that will drive our growth and solidify our position as a leader in the global steel pipes and tubes industry in the next three years to four years.
Number one, doubling manufacturing capacity, we are set to double our manufacturing capacity from 1 million tons to 2 million tons. This expansion aligns with our commitment to meet growing demand in sectors like infrastructure, building and construction, renewable energy, among others. Becoming the second-largest manufacturer of ERW Steel Tubes and Pipes, by increasing capacity, we are on track to become the second-largest ERW Steel Tubes and Pipes manufacturer, further strengthening our critical applications worldwide.
Aiming for net debt-free status by FY25 end, we are focused on strengthening our balance sheet with a goal of becoming net-debt free by FY25, which will provide us with greater flexibility to reinvest in growth and enhance shareholder value. Fourth, strengthening brand presence in India and globally, we are expanding our market presence, aiming to establish High-Tech Pipes as a trusted brand worldwide through strategic marketing and customer engagement initiatives. Fifth, reducing incremental working capital, our commitment to reducing incremental working capital will streamline operations, enhancing our operational efficiency and supporting growth.
Sixth, focus on value-add products, we are placing a strong emphasis on value-added products catering to specialized industries like renewable energy and infrastructure, which not only diversifies our portfolio, but also captures higher margins. Lastly, exploring new markets, applications and geographies. By exploring new product markets and new regions, we aim to drive sustainable growth and expand our footprint across the nation.
I want to highlight the positive momentum created by the government’s capital expenditure on infrastructure, which is expected to drive demand for steel products and especially steel pipes and tubes. Hi-Tech is well-positioned to capitalize on this growing demand with an enhanced capacity and strong strategic roadmap in place.
Thank you. We can now have questions and answers.
Questions and Answers:
Operator
Thank you so much, sir. We will now begin the question-and-answer session. [Operator Instructions] We have first question from the line of Muskan Rastogi from B&K Securities. Please go ahead.
Muskan Rastogi
Hello.
Anish Bansal
Hi, good morning, Muskan.
Muskan Rastogi
Hi sir, I have a few questions. The inventory level has gone up in the first half as compared to FY24. Is it because you’ve stocked up some inventory on the account of lower steel prices?
Anish Bansal
So Muskan, this inventory increase in line with our new expanded capacities. We have installed our new facility in Gujarat in Sanand Unit 2. So with the incremental volumes — incremental sales volumes, so the inventory is also rising, but the incremental volume rise is lesser than the overall volumes.
Muskan Rastogi
Okay. Okay, sir. Sir, this thing — I wanted to know how much of the sales mix is coming from dealers and OEMs? And also can you please tell us how many manufacturing lines do we have currently?
Anish Bansal
So currently, 62% to 63% is coming from our trade and distribution network and balance 37%, 38% is coming from OEMs, projects and some big corporates like Reliance and Adani.
Muskan Rastogi
And how many manufacturing lines do we currently have?
Anish Bansal
So currently, we have six manufacturing patients and one new Greenfield unit is in pipeline. So by the end of this financial year, we’ll have seven manufacturing facilities across India.
Muskan Rastogi
All right. Okay, sir. And sir within hallway sections, we are planning to add higher dia pipes. So does this high dia pipe like 500 have better margins than 200 by 200 millimeter?
Anish Bansal
Yes, Muskan. So big sizes will definitely catch a higher EBITDA per ton. And currently, we are doing up to 250 by 250, but then there are strong plans of increasing this up to 500 by 500 very shortly.
Muskan Rastogi
Sir, how much better, sir, the margins would be?
Anish Bansal
So in higher sizes, which go like beyond 300 by 300, so there is a minimum EBITDA per tonne in the range of INR6,000 to INR7,000 per ton.
Muskan Rastogi
Okay, sir. And sir, one last question. The presentation that you have mentioned has 500-plus dealers and distributors. So further roughly how many fabricators are we connected within India?
Anish Bansal
So with the 500 dealers and distributors, there are approximately 20,000 fabricators that are attached with these dealers. And going forward, as we increase our production and as we increase our geographies, so this number will go up quite significantly.
Muskan Rastogi
Okay, sir. Thank you so much, sir.
Anish Bansal
Welcome.
Operator
Thank you. The next question is from the line of Neha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Hi, good morning, sir, and thanks a lot for the opportunity. Just a couple of questions from my end relates to EBITDA per ton. Now your PPT states that you’ve done EBITDA per ton of 3,429. And in the interview, if I’m not wrong, we heard it out that you have mentioned that there was an inventory loss of about 600 to 700 per ton. So just wanted to understand that despite inventory losses, have you actually seen improvement in your EBITDA per ton? If that’s the case, what are the reasons for same?
Anish Bansal
Yeah. Good morning, Sneha. So firstly, as you recall, in Q2, the company procured big orders from the renewable energy side. And we predicted the steel price volatility because of the China stress. And in that, in the month of July, so we gathered a lot of fixed-price orders. That helped us in mitigating this INR700 inventory loss. And additionally, we did not resort to additional discounts to our dealers and distributors. So that was the main reason that our EBITDA per ton did not go down significantly. Additionally, there were like a lot of imports being done by the industry, but then we resisted from the imports and we had a very limited steel price reduction risk.
Sneha Talreja
So ideally speaking, if I understand, in fact, imports came in at a slightly cheaper prices, so without resorting for that, your EBITDA per ton came higher. And also one of the reasons that you mentioned in your interview is that you’ve got some rebates from the producers out there of HRC. Just failing to understand that why is it so differentiated when the leader actually reports a much higher significant EBITDA loss and we get those rebates and so somewhere unable to align it.
Anish Bansal
So yeah. So firstly, imports. So at the time of ordering the imports, the prices were cheaper, but then when the imports actually landed in the country, they were higher by INR2,000 to INR3,000 per ton. So, there was a big inventory hit, import in that — when the imports landed in the country. So this was one big impact. So when the — when we were ordering the imports, they were lucrative, but then finally, when the material landed at the ports, it was quite expensive. Secondly, yes, there has been support from the steel mills. They have seen the market conditions and they have given support to many players.
Sneha Talreja
Understood. Understood. Lastly, if I may ask what is the percentage of your revenues that you’re getting from the solar projects absolutely?
Anish Bansal
So currently it is 10% and I think going forward, we’ll take this up surely with our new capacities.
Sneha Talreja
Understood. One last one, if I can squeeze in what would be your regional mix? Can we share the numbers of North, West, South losses?
Anish Bansal
So, Sneha, can you repeat that?
Sneha Talreja
Can you please share your regional revenue mix with us?
Anish Bansal
So it is around 40% is coming from the North.
Sneha Talreja
Okay.
Anish Bansal
And 35% from the West and Central India.
Sneha Talreja
Okay.
Anish Bansal
And 25% is coming from the South and North.
Sneha Talreja
Understood. Thanks a lot, sir, and all the very best. If more questions, I’ll come back in the queue.
Anish Bansal
Thank you, Sneha.
Operator
Thank you very much. [Operator Instructions] We have next question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Pallav Agarwal
Yes, sir. Good morning. Sir, just question on your volume guidance because first-half volumes have been very good. So what sort of volume and EBITDA guidance do we have for FY25?
Anish Bansal
Yeah. Good morning, Pallav. So basically, in the first half, we have done approximately 2.5 lakh tons of sales volume, 2.45 to be precise. And we are sticking to our guidance of 500,000 tons, 0.5 million tons for this financial year. And with the new capacities that are coming at the end of this quarter or end of this financial year, so we’ll have a jump in FY26. So, with the current capacity in hand of 0.75 million tons, we are — we’ll be doing 500,000 tons of sales volume for this financial year comfortably.
Pallav Agarwal
Okay. And what about the — our EBITDA per tonne has been gradually improving. So with the higher value-added proportion target — being targeted, so I think first-half our average EBITDA per ton is probably around INR3,000 — close to INR3,500 per tonne. So what sort of trajectory can we look at going ahead?
Anish Bansal
You know that our focus is towards value-added products and we have developed various new products in the renewable energy side in railways, in telecom sector. And that process is going on continuously. And our internal target is to take this share from 36%, 37% currently to 50% in next 1.5 years to 2 years. And the new capacities that are coming up are focused towards value-add products. And I think this EBITDA per ton will be growing significantly. There’ll be a gradual improvement every year and in next 1.5 years to 2 years, it will be reaching a good — there’ll be a good growth in that direction.
Pallav Agarwal
So just on this acquisition, if you could just explain acquisition in terms of what was actual cash consideration paid for this and what is broadly the rationale?
Anish Bansal
Sorry, can you repeat that?
Pallav Agarwal
Yes, I just wanted to know on the acquisition for [Technical Issue] I think Hi-Tech, the mentioned in the press release. So just want to understand, sir, what was the actual cash consideration? So it is just you paid-up share capital or there was some premium paid for acquiring Hi-Tech Global Steels Private Limited?
Anish Bansal
Yeah. So this company, we have acquired this company, it’s a 100% subsidiary and the new projects, new plants that is for the new plants that will be taken care. Yes, so there is no premium — there is no premium, it’s on paid-up to capital only.
Pallav Agarwal
So this INR1 lakh?
Anish Bansal
Yeah, yeah, yeah.
Pallav Agarwal
Okay. Okay. Thanks very much.
Operator
Thank you very much. We have next question from the line of Radha from B&K Securities. You may proceed, please.
Radha Agarwalla
Yes, hi. Thank you so much. Sir, in this quarter, if I see the purchase of stock in trade number, so last quarter that was INR99 crores in this quarter, it is INR7 crores. So please help me understand what is the purchase of stock in trade. Is this the trading in HR coil that we are doing every quarter?
Arvind Bansal
So these are the tools and pipes that we had outsourced from the market when the capacity was less. But now with our new capacities in hand, we not need to do that. So I think that is overbid.
Radha Agarwalla
Sir, your annual report mentions that it is completely HR coil. So that’s why I was wondering [Speech Overlap]
Arvind Bansal
So there is some rejections or some-odd sizes that come in, so it is pertaining to that only.
Radha Agarwalla
Okay. Sir, if I remove this purchase of stock and trade and see the gross profit ex of this purchase of stock and trade, which you said that this quarter you have not done. So the gross profit per ton, I mean, your realizations are down 20% on a Q-o-Q basis and your raw-material cost ex of stocking trade purchase is down 10%. So ideally what I understand is the inventory loss could have been much higher for this quarter, but I’m unable to understand the numbers, please help me with this.
Arvind Bansal
So basically, the inventory loss that came in, of course, like the steel purchase got down. So we had inventory loss. But then the overall blended of course, this scenario was very evident in the month of July because when the international steel prices were going down. So in that situation, we purposely and strategically, we took a lot of fixed-price orders, especially from the renewable energy side. You must have seen our announcement earlier, the company secured its the biggest-ever order from the solar site and that helped us in sailing through this period. And we knew whatever prices, fixed-price orders will have in the month of July. So it will help us in sailing through this period.
Radha Agarwalla
Yes, sir, considering a — all the solar, so on a blended basis only, so that includes the solar type numbers. So blended basis realizations, I can see that it has fallen by INR13 per kg on a Q-o-Q basis. And like you mentioned that this quarter, there was no stock in trade. So if we remove the stock in trade, so I can see the gross profit per metric ton has fallen by INR7 per kg. So that should include a higher inventory loss?
Arvind Bansal
Actually, we need to calculate this gross profit considering this raw material cost, change in inventory and stock — and purchase of stock in trade. So if we consider all this and if you compare on quarter-to-quarter basis or year-on-year basis, our actual inventory loss is in the range of INR600 to INR700 only. And that has been mitigated by various structures, which has been mentioned by Anish Bansalji. I think you are not considering the change in inventory in your calculation, it might be, so.
Radha Agarwalla
Yes, yes, sir. Ex of — I am just excluding this purchase of stock in trade, which as per annual report was mentioned that it is HR coil trading that has been done. So if you remove this on the basis of the products where we are doing the value addition, ex of the traded material. So there, I can see a higher drop in gross profit per ton. So just wanted to understand these numbers, sir.
Arvind Bansal
Yeah, actually this trading as Anish Bansalji has mentioned, this is only a temporary phenomenon on account of the known availability of capacity at that time. Now we have already added the capacity, now is available. Now we are not focusing on the trading volume. We are just focusing on the manufacturing volume to increase our capacity utilization. To explain you the number, we can correct with you separately also.
Radha Agarwalla
All right. Sir, second — secondly, from the industry perspective, so today the market size in India is 9 million to 10 million and Hi-Tech is having a product portfolio of all four products that is MS Pipes, Hollow Section, GI as well as GP Pipes to cater to this market. So please help me understand, how is the market divided in terms of these products, like roughly what percentage of total markets would be MS versus Hollow versus GI and GP?
Anish Bansal
Out of this total capacity of 8 million to 9 million ton, around 50% to 60% market is for the Hollow Sections. And around 20% market is for the GP Pipes, around 20% market is for the Galvanized Pipes and the rest is for, say, your Cold Rolled Pipes, HR Pipes, and all that.
Radha Agarwalla
All right, sir. Sir, you mentioned to the previous participant, you gave your sales mix region-wise. So from the industry perspective, if you can give that how is the industry divided between Northeast, West, and South India? And going forward, where are the supply gaps that you can see and where do you want to focus more?
Anish Bansal
Yeah, currently, our sense is 80% of the demand is coming from the North-West and the Southern market and 20% is coming from the Eastern side. And going forward, we see a strong potential in the North, West, and South states. So we’ll be growing organically in this through our Brownfield route.
Radha Agarwalla
All right, sir. The third question is that again to a previous participant, you mentioned that in terms of pipe dia, if we increase the pipe dia beyond 200 mm to 300 mm, so there is an EBITDA per ton of 6,000 to 7,000. So wanted to know the same number for below 300 to 300?
Anish Bansal
So that is ranging from like product-to-product size-to-size. So you can take a ballpark between INR3,000 to INR5,000 per ton depending on a specific size.
Radha Agarwalla
That gives a huge delta between if we increase the pipe dia. So sir, when do we plan to launch this 300 mm to 300 mm or 500 mm to 500 mm?
Anish Bansal
So we are working there. So a year and a half, we should be there.
Radha Agarwalla
All right. Last question to a previous participant, if I heard correctly, you mentioned something about the telecom sector demand. Sir, please could you elaborate this point?
Anish Bansal
So as you know, there’s a lot of 5G deployment that is going on in the country, and after Vodafone-Idea, they are becoming active now. So their capex was missing from last two years to three years, but now they are also in capex mode and a lot of new tower deployment is going to happen in the next 1.5 years. So our focus is there and I think this sector will be a big demand driver for the sector.
Operator
Thank you so much. I suppose the line from Ms. Radha has been disconnected. We will proceed with the next question from the line of Amit Vohra from Ginar Consultants. Please go ahead.
Amit Vohra
Good afternoon, gentlemen. Thanks for the opportunity. Just wanted to understand how are we spreading our brand spends over the next two years? What are we doing and working on this?
Anish Bansal
Yeah, good morning. Good morning, Amit. So yes, we are strongly focusing on brand creation for High-Tech Pipes and a lot of work is in progress in the same direction. And very shortly, I think we’ll have good news for the markets for our Tubes and Pipes segment. The company will come out with a big branding and marketing initiative.
Amit Vohra
Any ballpark number on what is the amount that you’re going to spend over the next couple of years on that?
Anish Bansal
So it is still work in progress. I think in couple of months, we’ll have a clear indication of what our total advertisement and branding spend will be.
Amit Vohra
All right. One last question. Do we change any of our guidance — sorry, I have missed that in case you have mentioned this. After the Q2 numbers and the first-half numbers, are we revising our guidance?
Anish Bansal
So currently, we are maintaining our guidance. I think we should become — we should reach there comfortably without — because if we have done like we have seen through H1 despite of the challenges from the election, monsoon and the China stress, but H2 looks certainly promising.
Amit Vohra
Thank you. Thank you and all the very best.
Anish Bansal
Thank you, Thank you.
Operator
Thank you very much. [Operator Instructions] We have a question from the line of Vikash Singh from PhillipCapital. Please go ahead.
Vikash Singh
Hi, sir. I have a few questions regarding the overall market size. Basically, if you look at the — along with you and the top 4, 5 players are adding closer to 5 million tons of the capacity in the next three years. So how we should look at the demand side and which are the pockets do you expect it to outperform in the segments?
Anish Bansal
So sir, currently, the market size is 10 million tons and we see this market growing by like 15% per annum and with the new applications like solar and in the building and construction, there are new kind of Tubes and Pipes requirements that has come. So all-in-all, I think this segment, this market will be growing by at least 15% over a year.
Vikash Singh
So that should take care of the additional capacity?
Anish Bansal
Absolutely, absolutely. So we are adding capacity from a perspective of six year to seven year vision and once it is done, we are thoroughly confident of utilizing the same.
Vikash Singh
Understood, sir. Sir, India is basically adding a huge HRC capacities and considering that pipe segment as a whole of the steel demand being 10%, they are the kind of a low link. So as we expect or from the company side to already get some rebates on the MOU or we are signing MOUs which are on a more favorable terms — in terms of working capital. If you could give us some insights into it?
Anish Bansal
Yes, sir, HRC is — definitely the capacity of HRC is rising now. And like going forward, the availability is higher, I think, if the availability of HRC is higher, then the consumption can also be higher. And if consumption is higher, then definitely we’ll have room for new applications and new substitutions. So we are fairly confident that with new supplies, so new product innovation will be taking place, where we can certainly have the edge.
Vikash Singh
In terms of procurement, you said that you’re already getting some rebates, can we expect with the supply increasing rebates to go up further or. We have already achieved our desired result.
Anish Bansal
So basically like Steel Authority of India being the leader in this space right now. So they are working. They — all these mills, they do not want to encourage imports and they have aligned their prices with the global market. So imports, they want to discourage the imports and to discourage imports, they are balancing their price levels. So they take a call depending on the market situation, Q2 was a bit abnormal. So they are proactive and they are taking decisions accordingly.
Vikash Singh
Understood. Sir, just lastly on the fixed price percentage of our total sales. So what would — what it would be currently in terms of order book positions then?
Anish Bansal
Sir, approximately, out of our monthly sales volume. So all our OEMs projects, so these are not fixed prices.
Vikash Singh
Okay. And that would be broadly 20%, 25%?
Anish Bansal
25%.
Vikash Singh
Yeah, sir. And that’s all from my side. I’ll join the queue if I have more questions.
Anish Bansal
Sure, sir.
Operator
Thank you very much. We have next question from the line of Ronald Siyoni. [Operator Instructions] We are taking the questions from the line of Ronald Siyoni from Sharekhan Limited. Please go ahead.
Ronald Siyoni
Yeah. Hello, sir, and thank you for the opportunity. Sir, I had a question with respect to your upcoming capex. So have you decided the mix of brownfield and greenfield capex for the next 1 million tons?
Anish Bansal
Yeah. Good morning, Ronald. So yes, that is work in progress. So Central India is one where we are missing right now and the Eastern part where we are still not there. There is no manufacturing facility there. We will be certainly covering these territories and also strengthening our current Northern, Western, and Southern markets.
Ronald Siyoni
Okay. So it will be more of a broad-based?
Anish Bansal
Yeah, absolutely.
Ronald Siyoni
And about this fixed-price contract, sir, you continue to undertake fixed-price contracts because if you know it can also hurt margins going ahead if the trend reverses. So is it a regular phenomenon or it was just one one-off phenomenon during Q2, which had ended your margins?
Anish Bansal
Yes, when it comes to fixed price contract, so we factored in some degree of like steel price volatility, we factor that in before taking the orders. So for the Q3, we are — I think we are more or less — we have covered whatever steel price hike that may be there.
Ronald Siyoni
Okay. So post Q2, how has been the trend in terms of demand and also the spreads, are they still at around INR2 to INR3 per kg or has there been movement in the spreads? And also about the HRC prices. So just three things if you can highlight post Q2, how has been the situation?
Anish Bansal
So I think the steel prices should move-in a tight band from here. So like in Q2, there were like a lot of imports, all the mids are — have taken that into cognizance and they believe the import should not come in India and a lot of restructuring have resorted to that. And I think the prices should move in a tight, steel prices.
Ronald Siyoni
And about the spreads, how are they currently? Spreads in terms of between primary and secondary?
Anish Bansal
So there is a gap of around INR2,000 to INR3,000 per ton between primary and secondary currently.
Ronald Siyoni
So it’s still there. It’s not increased.
Anish Bansal
Yeah, it is stable there. And I think the secondary steel prices will definitely be like INR2 to INR3 cheaper, otherwise, there is no incentive for anybody to buy. So this is it and I think it should be like this going forward. But this is a sustainable differential between primary and secondary.
Ronald Siyoni
Thank you very much, sir, and best of luck.
Anish Bansal
Thank you, Ron.
Operator
Thank you very much. [Operator Instructions] We have a question from the line of Muskan Rastogi from B&K Securities. Please go ahead.
Muskan Rastogi
Thanks again. Sir, from the channel checks, we found that these one, two days small functions like managers confidences, mostly secondary steel is used because of the cost difference. So let’s say primary market is 100 and secondly is 100 with the same spread of INR5 to INR7 per kg, how do you see the conversion happening from this under the secondly in the future and how will it narrow down?
Anish Bansal
So Muskan, earlier, there was a price gap of INR12 to INR14 per kg if we go back like the six months to seven months previously and that spread has come down to INR2 to INR3 per kg right now. I think within this gap, definitely primary players will definitely have an edge over the secondary players. And this — we are seeing a strong momentum coming from this side, side — from the distribution — trade and distribution side. And it is only accelerating the shift from secondary to primary.
Muskan Rastogi
So how much conversion will happen if you can give the number?
Anish Bansal
It is very hard to quantify in terms of — but then like overall, we are seeing a lot of shift that is happening from secondary to primary in a lot of markets.
Muskan Rastogi
Okay. Sir, just the rebate that you are getting that you mentioned, is it a policy that a supplier gives or is it because of the sharp decline or like a one-off rebate that we got, the suppliers case? So let’s say, like if this there is a steep decline in the steel prices like INR2,000 or INR3,000 per month and like we are seeing that lot of correction has been happening. So will we continue to get the rebate or how is it?
Anish Bansal
So HRC Steel Authority of India Limited, the prices are governed by them for the entire nation. And these — the like Steel Authority, they were — they have taken the imports in the cognizance and they have corrected their prices in line with the international prices. So whatever imports that has happened, the people have not made any money imports. While they were cheaper at the time of ordering, but then when the deal actually hit the port, there was no gain there. So the mills are working with the international prices in mind and they are taking the decisions of next year depending on the market dynamics.
Muskan Rastogi
Okay. Okay, sir. Sir, in telecom sector that you mentioned the previous participant, what pipes are you using there? And what is the opportunity size there, if you could give the estimate?
Anish Bansal
Yeah. So these are high tensile steel and different grades of steel are being used and different sizes are there. And this — there has been a shift from steel telecom towers to tubular steel tube towers in last five years, six years and this is accelerating now the shift. And we see a strong demand coming from 5G deployment.
Muskan Rastogi
What would be the opportunity size, sir?
Anish Bansal
So in India, we are poised, we are adding approximately 50,000 tons — 50,000 towers every year. So this means approximately like 500,000 tons of steel tubes and pipes.
Muskan Rastogi
All right, sir. Okay, sir. Thank you so much.
Operator
Thank you very much. We have a question — sorry. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to Mr. Vikas Singh for closing comments.
Vikash Singh
On behalf of PhillipCapital, I would like to thank High-Tech Management for giving us the opportunity to host the con call. Now, I hand over to Anish sir, for his closing remarks.
Anish Bansal
Our focus on innovation and efficient operations and market diversification positions us as a forward-thinking leader. We remain adaptive to market trends, seizing opportunities to meet the evolving needs of our customers with advanced steel solutions. As we move forward, we are confident that our strategic initiatives will drive sustainable growth, value creation and reinforce our leadership in the steel manufacturing industry. Thank you for your continued trust and support in Hi-Tech. We look forward to delivering consistent and sustainable growth for our stakeholders. Thank you.
Operator
[Operator Closing Remarks]