Man Industries (India) Limited (MANINDS) Q3 FY23 Earnings Concall Transcript

Man Industries (India) Limited (NSE:MANINDS) Q3 FY23 Earnings Concall dated Feb. 13, 2023.

Corporate Participants:

Anuj Sonpal — Investor Relations

Ramesh Mansukhani — Chairman

Ashok Gupta — Chief Financial Officer

Analysts:

Vijay Kumar — RM Performance — Analyst

Unidentified Participant — — Analyst

Anirudh Shetty — Solidarity Investment Managers — Analyst

Miraj Shah — Arihant Capital — Analyst

Aman Thadani — Solidarity Investment Managers — Analyst

Siddharth Mohan — Maharaja Products — Analyst

Manish Shah — Solidarity Investment Managers — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Man Industries Limited. [Operator Instructions]

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you.

Anuj Sonpal — Investor Relations

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Man Industries (India) Ltd. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the third quarter and nine months ended of financial year 2023.

Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Ramesh Mansukhani, Chairman. We also have with us Mr. Nikhil Mansukhani, Managing Director; and Mr. Ashok Gupta, Chief Financial Officer.

Without any further delay, I request Mr. Mansukhani to start with his opening remarks. Thank you, and over to you, sir.

Ramesh Mansukhani — Chairman

Yeah. Thank you. Anuj. Good afternoon, everyone, and welcome to the company’s earning call for the third quarter and nine months ended financial year 2023. Let me begin by giving a brief of the consolidated financial performance for the quarter. We reported revenue from operations of INR658 crores, which increased about 4% year-on year, our EBITDA stood at INR59 crores with EBITDA margins at 8.93%. We reported a net profit of INR37 crores, which grew by about 19% on a year-on-year basis, the PAT margin stood at 5.65%.

Coming to the consolidated financial performance for the nine months of FY ’23, our revenue from operations stood at INR1,634 crores, representing a growth of about 7% year-on-year. Our EBITDA stood at INR96 crores with EBITDA margin reported at 5.9%; net profit at INR42 crores, while PAT margins were 2.57%. On the operational front, the growth in revenue in this quarter was mainly driven by timely execution of the projects, which gives us the confidence of achieving our yearly targets.

On the capex front, the installation of our ERW steel pipe project is also completed and the trial runs are expected to start the coming week. The work of the induction bending plant is likely to become, that finish by March 2023. The stainless steel for the seamless pipe project is also progressing well with orders of major long-lead critical equipments from Europe and Japan already being placed. We continue to have a robust bid book of more than INR18,500 crores at various stages of evaluation for several oil/gas water projects both in domestic and global markets.

Lastly, to give you a brief update on the industry scenario, as per the recent budget outcome, India will pursue a diversified energy strategy to meet experimental demand, growth in the coming years that we witnessed a sharp rise in refining capacity, a big push towards exploration and a shift to a gas-based economy and a zero-carbon fuel. There is a huge potential for India’s oil demand, share rise to 11% in the global market in the coming years from 5% currently. India’s gas demand is expected to grow over 500% in the foreseeable future, as India had set a target to raise the share of gas in the country’s energy mix to 15% by 2030.

The country’s regasification capacity is set to expand considerably as new terminals and proposed pipelines are being planned. Data shows that India gas line — gas pipeline network has risen 22,000 kilometers currently from 14,000 kilometers in 2014. In the next four to five years, it should reach around 35,000 kilometers for oil and gas sector and a lot of capex will also come in this sector. Overall, the next five years in the Indian oil gas market is expected to register CAGR of 5% to 6%. To get into the rising demand of oil and gas majors are planning to increase their capex to develop network of line pipes.

Additionally, an outlay of INR1 lakh crore has been earmarked for the drinking water program in ’23-’24 up to, which was INR60,000 crores earlier, which will bring in strong demand in the piping industry. With the revival in demand environment and our strategy to diversify our product portfolio, we are confident to scale our business to new heights in the coming years with sustainable and stable profits.

With that, I conclude my opening statements and we can now open the floor for the question-and-answers portion.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have a first question from the line of Vijay Kumar from RM performance. Please go ahead.

Vijay Kumar — RM Performance — Analyst

Yeah, thank you. Hi, Mr. Mansukhani, congratulation for a good result. I wanted to ask about the financial interest costs in the quarterly result. So, this interest — this quarter, the interest cost is INR10 crores and previous quarter, the interest cost is INR9crores. So your annual interest cost is around INR40 crores and you have a debt of less than INR100 crores, so how is it possible? Can you please frame the interest charges?

Ramesh Mansukhani — Chairman

Yeah, Vijay Kumar, good afternoon. I’m just passing over to our CFO, which will try to satisfy you. Most of the costs increased, because of the rate of interest, RBI increased, as well as to some new jobs, we quoted that we have to view the EMD, etc, but Mr. Ashok Gupta will explain in much better way. Over to Ashok Gupta.

Ashok Gupta — Chief Financial Officer

So Mr. Vijay, for September ’22, the interest cost was about INR9.2 crores as compared to INR12.9 crores the current quarter, right, increase in mainly because of the increased operations, you can see the top line, it’s increased from INR465 crores to INR658 crores. One reason for increase in interest — finance cost is basically higher utilization of working capital limits. As well as you know that Reserve Bank of India is keeping increasing the rate of interest very often now. So some of the impact is because our increased rate of interest in the finance cost.

Vijay Kumar — RM Performance — Analyst

So sir, what is the debt on balance sheet and what is the interest — what is the interest rates you’re paying?

Ashok Gupta — Chief Financial Officer

Pardon?

Vijay Kumar — RM Performance — Analyst

What is the — your total loans on balance sheet and what is the interest rate you’re paying to the bank?

Ramesh Mansukhani — Chairman

See the long-term debt is about INR165 crores, which is being — which is basically taken for our upcoming new project of ERW over and above that we have a — this working capital facility of INR1,500 crores.

Vijay Kumar — RM Performance — Analyst

Okay, thank you. Thank you very much.

Ramesh Mansukhani — Chairman

All right.

Operator

Thank you. We have a next question from the line of Rahil Shah, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Yes, hello, sir. My question is just regarding —

Operator

Sorry to interrupt, you’re sounding low, Mr. Shah.

Unidentified Participant — — Analyst

Hello. Is this audible?

Ramesh Mansukhani — Chairman

Yes.

Ashok Gupta — Chief Financial Officer

Please speak loudly.

Unidentified Participant — — Analyst

Yes, sir. My question is just regarding the outlook for FY ’24 in terms of revenue and margins. How will they sustain and how are things looking for the next year, revenue, anything on that?

Ramesh Mansukhani — Chairman

Yes, because for ’23, we are computing EBITDA average coming from 9% to 11% depending on project-to-project quarter-to-quarter and we are going to improve because some new project, ERW is going to start very soon. The trial is expected in next two, three weeks. And some value addition coating and bending, etc, we are going to complete next month. For ’23, ’24 will be higher value addition we are expecting.

Unidentified Participant — — Analyst

Okay, okay. So overall, you see that trajectory like going up and maintain the current run rate like what we’re seeing in terms of margins.

Ramesh Mansukhani — Chairman

Okay, thank you, sir.

Operator

Mr. Rahil Shah, does that answer your question?

Unidentified Participant — — Analyst

Yes, yes. Thank you.

Operator

Thank you. We have a next question from the line of Anirudh Shetty from Solidarity Investment Managers. Please go ahead.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Hi, thanks for taking my questions. I had a couple of them. Sir my first question was, wanted to understand what was the status on Merino Shelters? At this point in time, what stage of the arrangement are we at? And also, if possible, could you also quantify how much we could possibly get out of this sale, like how much are we expected to pay the lender and what is the value of the real estate. So if you could give a sense around on how much we can get that will be very helpful?

Ramesh Mansukhani — Chairman

So we’ve already — Anirudh, we’ve already closed the transaction in the sense, signed the document and given an advance to Piramal for Merino. Closure date from — with them is 31st of March, due to the documentation and everything. So it should be completed on or before 31st of March. On the second point which you asked the valuation of Merino, what amount we should get. Reasonable to good market value should be anything between INR125 crores to INR150 crores.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And how much are we expected to pay the lender here? So how much is the net value Man Industries is expected to receive [Phonetic]?

Ramesh Mansukhani — Chairman

So we have to pay them in total INR70 crores, out of which INR15 crores has already been paid.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it, got it. And the Karnataka land I believe you would have sold it by now. So how much have you received from that net of taxation?

Ashok Gupta — Chief Financial Officer

That payment has already been received.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And could you quantify how much you would have received from that sale of land, net of tax?

Ramesh Mansukhani — Chairman

So approximately INR40 odd crores.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And the last time you had spoken, you had mentioned that you are looking to settle with SEBI. So is there any update on that right now and in case there could be any penalty from SEBI. Could you also quantify how material that could be?

Ramesh Mansukhani — Chairman

So settlement has already been filed with SEBI. It’s under process and mostly, it takes around two to three months once you file the — this for them to analyze, call us and then do the needful and the penalties we’ve seen all the other cases also, so we can’t quantify, but it is not something sizable.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And this settlement, what would it be exactly pertaining to like what issue? Because I remember sometime in Feb last year you had given a disclosure about what the SEBI forensic audit, what was the scope of that in some sense. So what exactly — what are the issues that we’re exactly settling for?

Ramesh Mansukhani — Chairman

Bbasically the major issue was non-consolidation of Merino Shelters and some disclosure delays due to which was the issue other than that there is nothing else.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And sir, we are embarking on a very fairly large capex program and these are towards categories that are more lucrative, but also new categories for us. So my question there was two-fold. One is, do we have the management bandwidth to kind of successfully execute on this? Are we in the process of hiring people or is that something that you’ve already done. So more color on, are the bandwidth to handle this large capex that we are undertaking? And secondly, these are new categories for us. So there are already players who are doing it. So how — what would you say is why — the reasons why Man Industries should succeed in this, why are we well-placed here, if you could give some color around our right to win in this new categories that would be helpful?

Ramesh Mansukhani — Chairman

Number one is regarding the manpower, we’ve already executed the ERW mill, which is going to be up and running, it’s already up and running and in trial stage. Regarding the SS seamless tubes, we have already appointed specialists for that particular business and end of the day, we have — we are running 12 to 13 plants, so we have a capable enough team to expand and grow and we always take the specialist people for a particular project whenever we are expanding. So regarding the manpower and capability, I do not see any issue.

And regarding the product, is — ERW is the same product which we manufacture else, so it’s just a smaller range, for city gas, which we were lacking for many years. So we’ve completed that product range. And SS seamless tubes, we were considering sometime as it’s the same tubing business only and piping business. So that is why it’s not much of a different completely — different sector that we are entering into.

Anirudh Shetty — Solidarity Investment Managers — Analyst

And I understand that in ERW, the costumer segment could be very similar, but in the SS, the customer segment, there would be some overlap but there are also lot of new industries that are catering too, so how long do you think it would take to get the customer trust and approvals there?

Ramesh Mansukhani — Chairman

So it’s a product over there. So basically customer trust and customer approvals will take its due time between three to six months which any business set up and you do a new one, which is — there is no entry barrier as such. So — and majority of the clients including L&T and big companies are common.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it, got it. And just one final question from my end. Our existing SAW business at right now, I understand there’s a bit of overcapacity in the industry, so our utilization levels are lower, but what is a normalized EBITDA margin one can expect from the SAW business?

Ramesh Mansukhani — Chairman

10% to 11%.

Anirudh Shetty — Solidarity Investment Managers — Analyst

10% to 11%. Got it. Okay, great. I’ll just join back in the queue if I have any other question. Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Miraj [Phonetic] from Arihant Capital. Please go ahead.

Miraj Shah — Arihant Capital — Analyst

Hi. Thank you for taking my questions, sir. I just had two questions. First one is on the volume side, if you could give us the details of what are the volumes that we did in the quarter in LSAW and HSAW. And so second one I had on the stainless steel, where I believe the [Indecipherable] is coming in the end of FY ’24. I just wanted to understand, we are aiming to export this product, while there is an import substitution play also going on. So just wanted to understand our thought process on this — these two questions.

Ramesh Mansukhani — Chairman

Mr. Miraj, most of the — our HSAW, LSAW, the inter-shifting is always there because some surges coming in LSAW, some surges coming in HSAW. But every quarter, every year, that quantity shifted from here and there between LSAW and HSAW, so difficult to announce what will be the capacity utilization, we have to see the overall capacity. As regard to ERW, the new capacity, most of the clients are same. Regarding export, the export is mostly in the LSAW segment by the oil and gas company throughout the world, we had the approvals from around 23, 24 countries, where we get the regular.

One thing is good, again, the Government of India has started the RoDTEP facility which was discontinued for two years, some incentives already they introduced 1% which also helping to get more market which was positive last year. So again, it is restarted. So we hope to get the LSAW business much better in international market.

Miraj Shah — Arihant Capital — Analyst

All right, understood. But sir on the SS — stainless-steel pipe side, we are planning to export — not from we’ve got orders from Japan, but your peers in the same industry are playing on the import substitution idea. So if you could just talk about that, are we going to go that in the future? I do understand that the line will be coming in another 18 — 15 to 18 months, but if you could just give a brief on that if you have something planned?

Ramesh Mansukhani — Chairman

Yeah, the SS, most of the business, we hope to start in a year time because as a lead time, very high of the critical equipments, we already placed the order. Regarding import substitute, because of China, by sending some goods to India and India was doing some process and are we exporting. Now the European Union already put the ban. But now the primary producer like we whatever — which we make the mother tubes and mother metal will have the advantage, much greater advantage who export without any problem.

The only process and giving the — some form is not allowed world market, that’s why — and the import substitute because from China now, it’s difficult to import for this purpose. So it will help to import substitute as I use this tool.

Miraj Shah — Arihant Capital — Analyst

Understood. Thank you for the answer, sir. I’ll get back in the queue if I have anymore.

Ramesh Mansukhani — Chairman

Okay. Thank you.

Operator

Thank you. [Operator Instructions] We have a question from the line of Aman Thadani from Solidarity Investment Managers. Please go ahead.

Aman Thadani — Solidarity Investment Managers — Analyst

Hello, thank you for taking my question. So my first question is, sir, how much debt are we yet to take for the new capacities?

Ramesh Mansukhani — Chairman

See, Aman, so for the ERW [Indecipherable] the project has already been completed. And the SS project which I’m talking about, the total project cost would be around INR500 crores, which we have sanctioned line of INR340 crores in our wholly-owned subsidiary.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. So the remaining part would be funded through internal, am I right?

Ramesh Mansukhani — Chairman

Yeah, just INR150 crores, INR160 crores would be from our internal accruals over the period of time next two years.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. And my second question is that, what’s the update on Man Infra shares and anything — any formality that remains from our end?

Ramesh Mansukhani — Chairman

Aman, the problem is here, because of the record date we already called and the court — there is a court order to not to go ahead on this process, but as to Man Industries completed all the formalities and given to the court, the matter is subdued, therefore we do not want to much comment. We hope, it should be clear very soon we are trying.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. Sir my next question is that, what is the order book status as of now and any update on the $100 million export order that we spoke about in the last call.

Ramesh Mansukhani — Chairman

Yes sir. Today we announced around INR500 crore new order, including around $45 million the export order roughly. And this is the part and the part is coming as per our bid book provision and different evaluation suggests it will come also.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. So the current order book size as of now would be around INR800 crores, that is INR500 crores of the existing order book plus this $45 million, am I right?

Ramesh Mansukhani — Chairman

No sir. $500 million — INR500 crore, including $45 million.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay, okay.

Ramesh Mansukhani — Chairman

The new [Indecipherable] and the rest of around INR200 crores is balance of total order you can say around INR700 crores.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. So the balance — so it would be INR500 crores plus INR700 crores or the total would go to INR700 crores?

Ramesh Mansukhani — Chairman

Total INR700 crores, excluding whatever the turnover of one and a half month roughly, we exclude it, it is coming to around INR700 crores.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay, got it. And sir my next question is that, we didn’t consolidate Merino base is a legal opinion from advisors. It was mentioned in one of your con calls. So can you just explain what the legal opinion was?

Ramesh Mansukhani — Chairman

Actually, the matter started the company when we splitted, demerge of Man Infra in 2015, then the splitted grew, that challenge the valuation of the company, which we splitted, not as Man Industries, the Man Infra, which are not in our control. Then subsequently court, they’ve gone court, after giving the vote in favor of the scheme, they challenge, which is pending in the court and the court has given instruction not to go ahead and they will listen to it. So whatever I told is the record date and this scheme, both are the same coin, the true part of the same coin, both are related.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay.

Ramesh Mansukhani — Chairman

[Indecipherable]

Aman Thadani — Solidarity Investment Managers — Analyst

No, that’s it. And sir I just have one more question. Since most of our bad debts are related to delayed deliveries, so any steps that we are taking to reduce the delayed deliveries?

Ramesh Mansukhani — Chairman

In the current year, there is not any significant case of the late delivery, in the last two, three years because of the COVID, there is no government directive, clearly, there some matters is going on. We are talking to the government to get some waiver, some arbitration, some waiver, that’s why we are trying to recover our money.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. And sir my final question is, what percent —

Ramesh Mansukhani — Chairman

Because the things what are beyond our control. In some cases, we got the relaxation, in some cases, we are getting in future.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. And sir this delayed deliveries, is it a normal part of the business that one should expect?

Ramesh Mansukhani — Chairman

Delayed deliveries is basically the contractual terms, basically if the contract has not been completed in the contractual time, same as then the contractual definitions, they deduct the amount on account of delayed delivery as per the terms of the contract.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay.

Ramesh Mansukhani — Chairman

But our endeavor is always to complete the order well within the time, so as to avoid an unnecessary waste of our time for renegotiation and taking up the matter for they were of time from the client.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. And sir my final question is, what percent of the interest is BG and LC opening charges versus the interest cost?

Ramesh Mansukhani — Chairman

LC, BG charges, no, it is not linked with the interest cost, they recover bank guarantee and LC charges and that is — that ranges from 0.5% to 1.2%, so it is from, because our facilities from construction banks, depend — every time, getting the separate, separate agreements.

Aman Thadani — Solidarity Investment Managers — Analyst

So, let’s say in a year — so if I look at FY ’22 —

Operator

Mr. Thadani, I request you to come back in the queue sir.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay, sure, Okay, yes.

Operator

Thank you. [Operator Instructions] We have a next question from the line of Siddharth Mohan from Maharaja Products. Please go ahead.

Siddharth Mohan — Maharaja Products — Analyst

Hello, sir. What is the horrible portion of the company [Indecipherable].

Ramesh Mansukhani — Chairman

Your voice is not clear. Can you repeat your question?

Siddharth Mohan — Maharaja Products — Analyst

What is the portion of the company, by when we get executed?

Ramesh Mansukhani — Chairman

Yes, one of the investor I already replied, the new order of INR500 crores, the whole pending orders which are coming around INR200 crore, INR300 crores, the total order book is approximately INR700 crores, approximately.

Siddharth Mohan — Maharaja Products — Analyst

Sir, when will it get executed?

Ramesh Mansukhani — Chairman

You can consider is the next four to six months, total.

Siddharth Mohan — Maharaja Products — Analyst

Okay, okay.

Operator

Thank you. [Operator Instructions] We have a next question from the line of Miraj from Arihant Capital. Please go ahead.

Miraj Shah — Arihant Capital — Analyst

Yes, thank you for taking my follow-up question, sir. As you just said, current order book is close to INR700 crores, how much of it would be from the water pipe segment? And if you could also just to explain the difference in EBITDA per tonne margins from water and oil segments if you could just highlight these two.

Ramesh Mansukhani — Chairman

Yeah, Miraj, the 50% out of the INR700 crores, you can say the export and 50% is a mix of aisle and water.

Miraj Shah — Arihant Capital — Analyst

Okay, understood. And, sir, if you could give a highlight on which one would more lucrative?

Ramesh Mansukhani — Chairman

Always oil and gas sector having the high-value additions coating different kind of sections. Always, that have more EBITDA then, water works, a known fact in the industries.

Miraj Shah — Arihant Capital — Analyst

Understood. Okay. Thank you for answering the questions.

Operator

Thank you. [Operator Instructions] We have a question from the line of Aman Thadani from Solidarity Investment Managers. Please go ahead.

Aman Thadani — Solidarity Investment Managers — Analyst

Thank you for taking my follow-up question. So sir, coming back to the last question which I asked, sir is BG and LC charges are part of the finance cost in P&L?

Ashok Gupta — Chief Financial Officer

Yes, Aman.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay, so sir, can you give me a split like in FY ’22, I see INR37 crores or INR37 crores of interest. So can I get a split between what is — what would pertain BG and LC charges out of this?

Ashok Gupta — Chief Financial Officer

See, around INR10 crores of pertains to LC/BG charges. Some bank charges like processing fee and other bank charges and major portion is on interest, basically on working capital facilities and some not.

Aman Thadani — Solidarity Investment Managers — Analyst

Okay. This explains well sir. Thank you so much.

Ramesh Mansukhani — Chairman

Thank you, Aman.

Operator

Thank you. [Operator Instructions] We have a next question from the line of Manish Shah [Phonetic] from Solidarity. Please go ahead.

Manish Shah — Solidarity Investment Managers — Analyst

Thank you for the opportunity. I had two questions, one is that we have a lot of debtors in arbitration right now. So theoretically speaking, if I look at your debtors as of September, how much should be ones that theoretically we might have to write off in the future? While we are contesting this and hopefully we will get all of it back but can you give us a broad range of what we might have to take as write-offs over the next two or three years?

Ramesh Mansukhani — Chairman

Manish, good afternoon. Manish, it’s a very difficult question you are asking. We cannot predict what will be that, some matters are under settlement, some matters arbitration, some matters we have gone to the government to get the waiver for COVID, somewhere we are already successful, somewhere we’re still trying. Very difficult to announce, what what be this thing. But one thing is very sure, now everything timely deliveries is started. The past two, three years, they were difficult and we cannot say how much money we are going to put in the bad debts in this thing is very, very difficult. But of the company endeavor and total, we have to recover our money, because there are some Supreme Court decision in the force majeure and some oil and gas company if they have not made any loss because of our supply delayed, they are not supposed to cut the penalty.

There are Supreme Court three decisions also there in last two years. We are trying to use this to recover our money, but we are trying our hard to recover all the money.

Manish Shah — Solidarity Investment Managers — Analyst

Okay, very clear, sir. Just I understand your perspective and I hear where you’re coming from. I think just the challenges that every time when one sees write-offs, you always wonder about the accounting policies being followed by the company. So, I don’t know how to think about it, but I understand your perspective. My second question, last question sir is that now, assuming you can see fill with SEBI and SEB’s timeframe. But if SEBI told you not to, if SEBI issue is non consolidation of Merino, but you have got legal advice not to consolidate Merino. Are you going to consolidate Merino for FY ’23, how are you going to deal with this issue?

Ramesh Mansukhani — Chairman

Manish, the situation like this way. The SEBI is working separately and Bombay High Court decision, stay order, restraining order whatever you say is a separate thing. So we have to see both in the combination. The SEBI can — the SEBI cannot insist — SEBI can ask only why you’ve not done, SEBI cannot say, you do it. But if Bombay High Court decision, which we are expecting very soon, maybe on our top priority, the top priority, we are taking of other law firm, which is coming and this is coming, then we’ll do the consolidation is for the law. And also, we will give that, what is the total impact last seven, eight years, the total impact is coming very minimal, very minimal, not even — not the total profit out the last eight years, even the coming — even the 0.5%. So we are confident we will resolve this issue. And apart from non-consolidation, there is not any major issue with SEBI, whatever we already replied to them and trying to settle on the issue. So very soon, I think next few weeks, you will get something we hope to go to positive manner.

Manish Shah — Solidarity Investment Managers — Analyst

Okay sir. Thank you very much.

Operator

Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to management for closing comments. Over to you, sir.

Ramesh Mansukhani — Chairman

Yeah, thank you all for participating in this earning con call. I hope we were able to answer your questions satisfactorily and at the same time offer insights into our business. If you have any further question or would like to know more about the company, please reach out to us through our Investor Relation Manager at Valorem Advisors. Thank you. Stay safe and stay healthy. Thanks.

Operator

[Operator Closing Remarks]