Manaksia Coated Metals & Industries Ltd (NSE: MANAKCOAT) Q1 2026 Earnings Call dated Jul. 23, 2025
Corporate Participants:
Unidentified Speaker
Karan Agrawal — Whole Time Director
Mahendra Bang — Chief Financial Officer
Tushar Agrawal — Senior Vice President
Analysts:
Unidentified Participant
Sakhi Panjiyara — Analyst
Aman Soni — Analyst
Prathamesh Dhiwar — Analyst
Meet Katrodiya — Analyst
Darshil Jhaveri — Analyst
Hardik Chheda — Analyst
Sampath Nayak — Analyst
Tej Patel — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Manaxia Coated Metals and Industries Limited Q1 FY26 results Conference Call hosted by Kirin Advisors Private Limited. As a reminder, all participant lines will be 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Sakhi Panjiyara and thank you. And over to you, ma’. Am.
Sakhi Panjiyara — Analyst
Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Manakshiya Coated Matters and Industries Limited. So management team we have Mr. Karan. Agrawal whole time director. Mr. Mahendra bank chief financial officer. Mr. Tushar Agrawal, senior Vice President. Now I hand over the call to Mr. Karan Agrawal.
Karan Agrawal — Whole Time Director
Over to you sir. Thank you very much. Good day everyone. A very warm welcome to the Q1FY26 earnings call of Manaksiya Coated Metals and Industries Limited. On behalf of the entire management team, I would like to extend our sincere appreciation to all the investors, analysts and stakeholders for taking the time to join us today. I’m pleased to join. Pleased to be joined by Mr. Tushar Agrawal, our senior VP and Mr. Mahendra Bung, our CFO. It’s a pleasure to connect with you as we embark on yet another promising year. Continuing our journey of record breaking growth, operational excellence and long term value creation.
At Manaksia Coated Metals we are one of the leading manufacturers and exporters of premium coated steel products. Offering both pre painted steel and galvanized steel in coil and sheet forms. Our advanced manufacturing facility in Taj, Gujarat and a growing export footprint across 40 plus countries positions US as one of the trusted partners to industries ranging from building and construction, automotive SMCG and white goods. Our Q1FY26 results are as follows. The consolidated total income witnessed a robust year on year. Growth of 29.97% reaching rupees 253.94 crores driven by a strong demand and higher sales volume. Profit before tax recorded an impressive surge of 364.43% year on year amounting to rupees 18.70 crore reflecting enhanced operational efficiency and margin expansion.
Net profit also saw a significant rise of 359.70% year on year standing at Rupees 14.01 crore, underscoring our continued focus on delivering profitable growth. EBITDA increased by 93.36% year on year reaching an impressive rupees 28.62 crore with an EBITDA margin expansion of 370 basis points which is now standing at 11.27% of revenue. Earnings per share improved by a drastic 253.86% year on year reaching rupees 1.42 per share in Q1FY26. The standalone financial performance demonstrated solid momentum across all key metrics. Total income increased to rupees 253.89 crore supported by sustained business momentum. EBITDA improved to Rs.
28.62 crore with the EBITDA margin expanding to 11.27% reflecting better cost efficiency than operating leverage. Net profit rose to rupees 14.10 crore, underscoring the strength of the company’s core operations. Earnings per share or EPS also improved to rupees 1.43 per share, reaffirming the company’s focus on driving consistent and sustainable standalone performance at the end of FY26. Sorry, at the end of FY25 our net debt to EBITDA ratio stood at 2.3x and we are well on track to bring it down to 1.7x at the end of FY26. This target is backed by strong EBITDA performance, improved earnings visibility and healthy cash flows.
With continued focus on operational efficiency and prudent capital allocation, we remain confident in our ability to strengthen the balance sheet while driving sustainable growth. During Q1 FY26 the company delivered robust operational performance marked by record capacity utilization and strong production growth. Galvanized steel coil Production rose by 12.51% year on year while pre painted steel coil production surged 14.66% year on year, achieving full capacity utilization. Export momentum remained exceptional with Export volumes soaring 166.14% year on year and export revenue climbing 182.28% year on year, contributing a record 57% of the total revenue. Overall sales volumes grew 18.69% year on year to 29,248 metric tons.
This was supported by a peak utilization capacity utilization level of 85% in the continuous galvanizing line and 100% in the color coding line. This performance underscores the company’s operational efficiency, global competitiveness and growing demand traction. We successfully raised a total equity of rupees 174.87 crore out of which rupees 161.22 crore has been infused into the company. This raise was concluded in two strategic rounds of preferential warrants. This capital infusion marks a significant milestone in strengthening our financial foundation. The funds have been effectively deployed towards reducing existing debt and supporting our upcoming growth oriented projects. This not only enhances our balance sheet but also positions us strongly for the next phase of expansion and value creation.
I would like to now invite Mr. Tushar Agrawal to speak about the industry scenario and our upcoming growth centric projects. Thank you. And over to you, Tushar. Thank you.
Tushar Agrawal — Senior Vice President
Good evening everyone. The Indian coated steel industry is experiencing strong growth driven by rising consumption, infrastructure expansion and and government support through initiatives like the 6,322 crore PLI scheme and the National Steel Policy. With per capita steel use expected to nearly double by 2030, demand for value added steel products like pre painted and aluminum zinc coated steel is set to rise. These trends align with our product portfolio and ongoing capacity expansions positioning Manaksiya Coated Metals and Industries Ltd. To capitalize on both domestic and export opportunities going ahead, we are actively advancing our strategic expansion and sustainability initiatives to strengthen our growth momentum.
The upgradation of our existing galvanizing line to ALU Zinc technology with an enhanced capacity of 180,000 metric ton per annum is scheduled for completion by end of Q2FY26. While the line is fully ready, we have consciously deferred the upgrade to prioritize execution of our strong and high margin export order book. Upon completion, we will be transitioning to a more premium product which has lesser competition. It’s sold at a premium and is known in the market for its superior performance. We are also progressing with the setup of a 7 megawatt captive solar power plant within the state of Gujarat to meet the energy requirements of our Kutch facility.
The EPC contractor has been finalized and the order placement underway. This will help us reduce grid dependency and enhance cost efficiency while reducing our per metric tonight carbon footprint. Further, we have awarded contracts to suppliers of our second color coating line. Which. Is expected to be commissioned in Q4 of FY26. This will significantly boost our color coating capacity to 235,000 metric ton which is an increase of over 170%. This will be significantly improving our value added product mix. These projects are aligned with our vision for sustainable, scalable and high margin growth. Before we open the floor for questions, I would like to take this opportunity to express my sincere gratitude to our dedicated team, valued customers and esteemed shareholders for their continued trust and support in Manakia Coated Metals and Industries Limited. We remain firmly committed to driving operational excellence and delivering long term value.
With that, I would now be happy to take any questions you may have. Thank you once again for your time and continued confidence in our journey.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aman Soni from Invest Analytics Advisory llp. Please go ahead. Yes Sir.
Aman Soni
My first question is regarding the guidance what is the revenue guidance for FY26 and what do you think of OPM in upcoming quarters? Are these level of 10% sustainable?
Karan Agrawal
Thank you for your question. I think pertaining to the guidance of revenue and profitability we can confidently tell you that the performance achieved in Q1 is definitely something as a benchmark that we have set which we expect to continue towards the remaining quarters of the financial year and we would also see a considerable amount of positive momentum in the revenue and profitability from Q4 onwards also when the new projects have their impact getting captured in the financial performance of the quarters. So I think the run rate of revenue and profitability is definitely sustainable and growth can be expected even beyond this.
Aman Soni
Okay, in my second question regarding the. CapEx we are doing including the second line of color coding, what is the peak revenue that we can achieve achieve. And how first do you think we can achieve the optimum utilization?
Karan Agrawal
The second color coating line is stated to come on stream live into production by the end of Q4 FY26 so I think FY27 will be the year where we will see the maximum revenue being incurred by the company by the upgrade of alum as well as the addition of the second color coding line on the basis of capacities being added by us in both these projects we can see in an ideal scenario best case scenario the peak revenue of the company achieve close to rupees 1600 crores with this capacity expansion in FY20 census.
Aman Soni
What is the rational for amalgamation with JP Snack. Do we have any plans of extension here?
Karan Agrawal
The rational for amalgamation with GPS Snack is very simple. This is a subsidiary which was created almost a decade back, more than a decade back for a pilot project that the company had undertaken in the FMCG business. However, this subsidiary has been non operational without any revenue since more than almost now four to five years. And hence in order to simplify our balance sheet, PNL reporting and all of the other activities that we as a company need to undertake as a listed entity, we felt it is beneficial to merge both the entities. Okay, thank you.
operator
Thank you. The next question is from the line of Prathamesh Diwar from Tiger Assets. Please go ahead.
Prathamesh Dhiwar
Yes. Am I audible?
operator
Yes sir. You’re. Yes please.
Prathamesh Dhiwar
Yes sir. Congrats for the great shape of numbers. So sir, actually I’m new to the company so as we are expanding our capacity in two segments prepainted steel and galvanized steel. So let’s say on the second phase of pre painted steel I think we mentioned we could can do around 1600. Crores worth of tongue. And what kind of revenue peak revenue can you generate on galvanized steel? And how much time it will take to work on optimal utilization of 1.818000 MTP capacities.
Karan Agrawal
Pratviji, thank you for your questions. I think the peak utilization with the color coating second color coating line will happen only in FY27 and rupees 1500 to 1600 crore is the peak revenue in the ideal and the best case scenario with maximum capacity utilization for your second question is on the using upgrade. With a capacity of 1 80,000 tons it would take us about at least let’s say 1/4 to stabilize and ramp up capacity utilization.
Therefore the full output or the. You know the. The real enhancement in revenue from the allusion client would Would. Would start to be visible would be start to be visible from the end of Q3 or the early Q4 of the current financial year. Okay.
Prathamesh Dhiwar
Okay, got it. And on consolidated level how much EBITDA margin increase are we expecting when this both the plant gets both the capacity gets live?
Karan Agrawal
That’s a good question. I think the major EBITDA expansion that we are going to witness will be on account of the all using project or the Alucink technology upgrade that we are going to implement at the end of Q2. And going by the industry norms currently with the price realizations that Alu Zinc is commanding and the production costs being incurred for production of Aluzinc we can safely say that an EBITDA expansion of 30% from the existing level is something that the company has the potential to realize.
Prathamesh Dhiwar
30%. Okay, got it. So this is the last question. So we also expanding in cold rolled steel. So is this going to be like for the backward integration or like a 3 MTP?
Karan Agrawal
Yes. So you are now talking about our phase 3 expansion plan which will be put in the execution stage only by the mid of FY27 not right now. So currently our focus is only to complete our phase one and phase two expansion plan which is the aluminum upgrade, the solar captive power plant and the second color coding line. The cold rolling, you know backward integration investment will happen subsequently after completion of all these plans by the end of FY27.
That is the target.
Prathamesh Dhiwar
Got it sir. Thank you so much sir and all the best for your future. Thank you.
operator
Thank you. The next question is from the line of me meet Katrodia from Niveshai. Please go ahead.
Meet Katrodiya
Yes sir. Thank you so much for the opportunity. So the question was like the export market is gaining traction with top 10 are contributing the LT share in the export export revenue. So how do you see the export market evolving going forward? Like do we have an existing tie up with customer like top panel or other other customer will be there for the upcoming products and whatever we will generate. So what steps are we taking on. The export market side or what are. We looking with the export market?
Karan Agrawal
Thank you. I think it is very important to mention that we have witnessed a very big growth in our export performance which has contributed to a great extent on the upliftment of our financial performance. In Q1 of FY26 we delivered a record breaking 57% revenue from exports which was an all time high and it was three times higher than the export performance of Q1FY25. Now talking about the export market, I would like to tell you that this has not happened overnight or this has not happened due to any spot opportunity. This is a result of hard work and continuous focus on developing very critical and quality conscious export customers in the European continent which has taken place over the last five to seven years.
All the efforts of developing these customers by doing repeated trials, by gaining their confidence and by delivering quality at a competitive price is now resulting in a growth of volumes for export market. And we see that this export revenue or this percentage of export revenue is sustainable for us because we are doing business with only OEMs and not with traders or stockists or service centers. So you know we have long term customers and repeat customers every quarter and very few Spot customers. So I am very confident that we can maintain consistency and this kind of performance in the export side is sustainable on the future scenario.
We feel that there is a lot of potential and scope to grow our exports in terms of quantitative performance and also maintaining the percentage of exports at a similar level even with the higher capacity because the market is very large and we are still, you know, just scratching the surface in terms of the export potential and our positioning which is, you know, port based. We are located in the western coast of the Indian subcontinent and we have very good access and low cost access to export movement of our finished product which is a big advantage in a USP for us.
So.
Meet Katrodiya
So like I’ll be talking with more export customers for the upcoming water production. We will generate like from the Q4 onwards or in between from the QFY27. So are we tying up for these facilities also or like whenever this or our facilities will come online then we have to do the dial production with the customer and it will take time to ramp up. So how this will happen, could you throw some light on this part?
Karan Agrawal
The good thing for us is that the existing customer base that we have in the export market and the domestic market are already users of this new product which we are launching which is Alu zinc. Alu Zinc is the used by all our existing customers in their existing supply chain to and it’s a vital part of their, you know, raw material product mix to produce their finished products in the building and construction industry or H Vac industry or you know, the white goods industry, whatever it may be. So we do not have to reinvent the wheel and find new customers.
But yes, we have to penetrate our existing customer base with the, you know, new product that we are launching which we feel is not a very difficult task.
Meet Katrodiya
Also. Also. Thank you so much for the detailed answer. Like what? I have a question on what what is our realization pattern and EBITDA pattern of value sheets, coils and pre painted steel. Steel and coils
Karan Agrawal
for Q1 of FY26 I can give you an, you know, ballpark number. I don’t have the precise number available with me but the realization per ton for galvanized TV would be roughly around rupees 75,000 per ton. You are excluding taxes for pre painted steel. The realization per ton should be close to rupees between 88 to 90,000 rupees per ton excluding taxes and the blended EBITDA per ton that the company has earned is rupees 9786 per ton.
Meet Katrodiya
Could you Provide the breakup like I just want to know what is the breakup between how much is making a real painted. So I didn’t. I. I require the breakup. Could you please give the breakup of these two.
Karan Agrawal
We will definitely reach out to you with this breakup. And I request Mr. Mendel, our CFO to prepare a note on this request and give a message to Mr. Neet. And I would also request Kiran Advisors to share the contact details of Mr. Neet Katrodia so that we can send him this information that he has requested.
Meet Katrodiya
So is it fair to assume like pre printed will generate high.
Karan Agrawal
Absolutely. Absolutely. That is a very obvious conclusion and a very good conclusion that you have made. Pre painted steel generates the higher portion of the EBITDA earning as compared to the galvanized since it is higher value addition and it’s the final leg of value addition in our process. So that is why also you will see that in the investor presentation we have shown the product mix also constitutes of 75% of pre painted steel sales. Only 25% sales revenue generated from galvanized steel. So naturally the contribution of EBITDA total EBITDA earnings from pre printed steel is much higher than the contribution of galvanized team.
operator
I think the question asked by the person from me has got disconnected from the line. So let me take the next question. The next question is from the line of Darshul Javeri from Crown Capital. Please go ahead sir.
Darshil Jhaveri
Hello. Good evening sir. Thank you so much for taking my question for congratulations on a base. Hopefully I’m audible. Yeah, yeah. Hi sir. So I just wanted to you know ask. A lot of my questions have already been answered. I just want to ask a bit about EBITDA margin. So we’ve seen a very significant jump. It’s you see 7%, 8%. Now it’s near 10%. So just wanted to know what is attributable to and I think sir mentioned a 30% jump in so that means that our 10% margin can be sustainable at 13% or how do we see the margin.
So.
Karan Agrawal
Yeah. Hi Darshanji, thank you for your questions. Firstly, the EBITDA margin that we have achieved in Q1 is now 11.27%, not 10%. So and yes, you are right that we have seen quite an impressive increase which is of almost 94% year on year. So to answer your question, I think yes, the EBITDA margin expansion will happen with Alu zinc and looking at the, you know, the product price that Alucinc commands and the lower cost of production that Aluzinc incurs. We can safely say that EBITDA margins anywhere between 12 to 13% is possible and sustainable at good capacity utilization.
This is very much possible.
Darshil Jhaveri
13 will happen once the using. So that’s really helpful sir. Other income is is what we are including in a market. So what all does our other income include? So I assume there’ll be some element of fundraiser something or how is, how are.
Karan Agrawal
So the other income component in the PNL is basically made up of two components. One is the forex gain loss that the company incurs on account of its foreign currency exposure hedging strategy. And the second is would be any interest earnings that the company would have incurred. But I would like to point out that this forex gain is the major component of the other income part which is a direct result of operational strategy made by the management of the company to manage forex risk. It is not a result of luck or any unforeseen windfall gain but it is a mere result of a strategic, you know, hedging policy that we have which we are executing and monitoring on a day to day basis.
Darshil Jhaveri
Oh that, that’s really grateful. So will we able to quantify how far is there in this quarter, sir?
Karan Agrawal
I mean the forex gain in this quarter is. And as you can clarify,
Mahendra Bang
yes, the foreign Exchange gain is 3.55 crores.
Darshil Jhaveri
3.5. That that’s really helpful sir and just wanted to go in terms of like you know, we’ll see, you know, higher targeting. So will that impact the working capital cycle and you’re also going more into export so that elongate our working capital cycle or you know, how will that impact. That? And it’s something.
Karan Agrawal
Your voice broke up completely. We could not understand.
Darshil Jhaveri
Is this beta, sir?
Karan Agrawal
Yeah, hello.
Darshil Jhaveri
Yeah, so I was just saying now. As we are you know going more and more into exposure that you know, stress are working a bit.
operator
Sorry sir, your voice is brief taking again.
Darshil Jhaveri
I’ll join back in the queue. I’ll try joining back in the queue. Thank you.
operator
Okay, so yeah, thank you. The next question is from the line of Hardik Cheda from Dark Consultancy. Please go ahead.
Hardik Chheda
Yeah, hello. So first of all congratulations on the excellent quarter. I just wanted to ask you elaborated on the margins going ahead after the expansion. I just wanted to ask for the. Current year. The EBITDA margin will be around 11% for the next three quarters or for the full year. Safe to assume.
Karan Agrawal
Hello Harkitji, thank you for your question. I think it is safe to assume that we will be able to keep this EBITDA margins consistent in this year. Because the impact of the expansion projects and the technology upgrade will hit our PNL only from the later part of the financial year towards the end of Q3 or Q4. So it is safe to assume that this level of EBITDA will be maintained and we could be, you know, lucky enough to have, you know, impact of the higher EBITDA in Q4.
Hardik Chheda
So basically for current year 11% and for next year 13% roughly is what we can assume. Based on your assessment for current year we can assume 11% EBITDA. And in Q4 and in Q1 of next year, it seems both of your expansions are coming on stream. So we can assume 12 to 13% EBITDA margin for next year. Is my assessment correct?
Karan Agrawal
This guidance would be absolutely correct. Okay.
Hardik Chheda
And sir, my second question is with regards to export, right now it is 57% of the total revenue for the current year. And for the next year, could you share in terms of percentage how much in summer and most of the margin expansion has come from exports. So what will be the percentage of exports of our total revenue in terms of percentage for the current year and for the next year? What are you targeting?
Karan Agrawal
Okay, so I think before answering that question I would like to give you some background that this level of 57% export is a new record for us. We have earlier been exporting our product, but the export revenue, let’s say in Q4 was Q4 of FY25 was 40%. In the Q1 of FY25 was only 26%. So 57% is an all time high. And yes, we see that we will be able to continue this kind of export performance. But on a conservative side, I would like to give you an answer by saying that we will be able to maintain 50% and above export of revenue for the year.
This is the kind of, you know, projection we have.
Hardik Chheda
Great, great, thank you. And in terms of EBITDA per ton, can we see upward like right now we are doing 9786 blended. Can we see for the quarter is already on. So I’m saying can we see crossing 10,000 in the near term. Like in Q2 it has started. So yeah, very simple if you don’t want to say in absolute terms are the margins increasing further or are they. Stable at the current level? If you could just put it that way.
Karan Agrawal
I think the steel market currently is flattish in the overall global context. It is neither increasing too sharply nor it is reducing too Sharply. So we can expect a consistent level of performance in terms of EBITDA earnings per ton as per the level witnessed in Q1. Now when I say consistent, there is always a tolerance of say you know, 4, 5% plus minus meaning 9,700 can become 10,000 or it can become 9,500. This much tolerance will be there but definitely nothing which is too sharp of a movement.
Hardik Chheda
Thank you sir. Thank you. And once again congratulations on the stellar performance. That’s it from my side. Thank you sir.
Karan Agrawal
Thank you very much sir.
operator
Thank you. The next question is from the line of Sampath Nayak from Mavira. Please go ahead.
Sampath Nayak
Hi sir. Congratulations on great set of numbers. Thank you very much. So my first question is on the demand and supply scenario with respect to aliasing coating. So in the previous call you said there were only four players doing this currently. So can you name them? You know, commentary on the demand and supply?
Karan Agrawal
Yes. Okay, thank you for your question. The demand for all using in the domestic market remains very strong because this product is something that is a new technology and has been, you know, made popular in the Indian market less than 10 years back.
And the prominent players in this particular industry are JSW Steel by the, you know, by their subsidiary which is producing called JSW Coated Steel Products and Tata Steam with their JV company called Tata BlueScope. These are the two large players in this industry and along with that there are other secondary players such as APL Apollo and Jindal India. So I think this is pretty much the market space when it comes to ALU zinc production. And I think I am very confident that the demand of alucinc in the domestic market space will continue to see fantastic growth in double digits because the government and the private sector both are spending an immense amount of capital for building infrastructure, for building, you know, urban and rural infrastructure by way of airports, railways, metros.
You know, warehousing has been put in focus by the government. Cold storages have been put in focused by the government. And there are many incentives and schemes by various states to attract investment which is going to basically fuel this growth of coated steel products and value added steel products for making factories and warehouses and construction sheds and landmark projects such as airports and stations and other government infrastructure.
Sampath Nayak
Okay, thank you sir. So my second question is on. Recently the Central Electricity Authority prepared a draft list and aliasing coating is a part of that list. So is there a, is there any communication from the government with respect to the players who are doing aliasing coating?
Karan Agrawal
I would like to just ask you. There was Some background noise. You said the Central Electricity Authority has issued what?
Sampath Nayak
They have prepared a draft list. Components that are currently being imported and they want to. They want Indian companies to manufacture it and aluminum coating is also a part of it.
Karan Agrawal
Well, Sampaji, we may not have the right comment on this at the moment but we will definitely check on this and get back to you.
Sampath Nayak
Sure, sure. Thank you. And all the best.
Karan Agrawal
Thank you.
operator
Thank you. The next question is from the line of Tej Patel from Nivesha. Please go ahead.
Tej Patel
Hi. Am I audible, sir?
operator
Yes, audible.
Tej Patel
Yeah. Thank you so much. Sir. I’m new to the company. I just wanted to understand how much funds are yet to be received from the conversion of the warrants which we issued two times I think one in 24 and one in 25. How much money are we yet to. Receive from that conversion?
Karan Agrawal
The two rounds of preferential warrants that were issued have been largely converted into equity shares. Only an amount which is approximately 13 crore rupees is pending to be received against the warrant conversion.
Tej Patel
Okay.
Karan Agrawal
Should be received, you know, in the coming three quarters.
Tej Patel
Got it, got it. And how much, how much CapEx are we expecting for this upcoming two phase of CapEx? That is one is for the pre coated and one is for the GI sheet. How much, how much CAPEX are we anticipating and how much of it as we have already incurred because ICCWIP standing on our books. Right. We just wanted to know what was our total capex, how much have been spent and how much is yet to be spent.
Karan Agrawal
The total CAPEX that we are doing in all three projects that are coming on stream in FY26 which is the ALU zinc technology upgrade, the captive solar power plant and the second color coating line, the total CAPEX would be roughly around, you can say close to about 150 crore rupees.
Tej Patel
Okay. And how much is.
Karan Agrawal
Yeah, yeah. Out of this 150 crore rupees we would have already incurred CAPEX of roughly around 50 crores approx. And the remaining would be done as and when the project advances in the course of next three quarters.
Tej Patel
Okay, and how are we expecting it to be funded all through that?
Karan Agrawal
No, not at all. I mean we have raised an equity of about 175 crores approx in the last two rounds of preferential warrants issuance. And this equity would help us have a very balanced view on the financing of these projects. There, there would be healthy mix of the equity and debt both.
Tej Patel
Any number to it, sir. I mean how much cash do we have? Right now how much are we planning to spend it for? Capex? Sort of 100 crore. How much would be the debt portion approximately? I get it, I mean that, I mean you can do an approximation if possible please.
Karan Agrawal
I think you can, you can assume average of close to 70% financing by debt and the balance by equity.
Tej Patel
Got it, got it. And so if you could give more clarity on this phase one, phase two, I think more than 2 lakh tons of color pre color coated is what we are expecting. Right? So if you could explain in how much in that 2,36,000. How much is anything, how much are you expecting to come live in Q3, how much in Q4? And ramping up you said would take about 1/4 each right. For I mean the new lines to come up. So if you could just help us break down how much is expected to come in Q3, how much in Q4?
Karan Agrawal
Okay, so we have two product lines. One is the galvanized steel and the second is the pre painted steel galvanized steel product line. We are upgrading the technology to Alu zinc and enhancing the capacity to 1 lakh 80 thousand tons. This is phase one. This will come on stream in Q3 of the current fiscal and like I said the capacity ramp up and stabilization would take close to between 60 to 90 days. On the second product line which is the pre painted steel we have a current installed capacity of 86,000 tons and we’re adding a brand new line with the additional capacity of 1 lakh 50,000 tons taking the total capacity to 2 lakh 36,000 tons which will come on stream by the end of Q4 of FY26 and will take maximum about 60 days to become you know, stable and fully commercially viable.
So I hope this answers your question or if you need any more details you can let me know.
Tej Patel
Yes sir.Perfect. One more follow up on this is I just wanted to know what’s our client contribution? I mean who is our top customer and what percentage of revenue is it contributing? Right now.
Karan Agrawal
I think on this front I can say that we don’t have a big concentration in terms of customer specific revenue. In terms of the revenue mix you already have heard that 57% has come from export and the balance 43% from domestic. So it’s like a 5050 kind of a situation. And in this 5050 situation also the total exports are very well balanced amongst more than you know, 35 to 40 customers in the European continent largely and a little bit in the Middle Eastern market in the domestic market also which has contributed 43% of the revenue.
There is a very well balanced in the entire geography of the, you know, Indian market space where we are selling our product, right from Jammu Kashmir to Gujarat to Kerala to, you know, Madhya Pradesh, Andhra, Telangana, everywhere. So it’s a very well balanced and you know, spread out kind of a customer revenue mix. And there is no concentration with more than 5% from any customer.
Tej Patel
Got it. So sir, is it right to assume that by next year on our new capacity as well we will, we would reach about 60% of the utilization for our new capacities? I just wanted to know, is there enough demand that we will be able to reach 60% by next year or do we anticipate more or less than the 60% is what I’m understanding.
Karan Agrawal
On the Alizum climb? Definitely more than 60% because we are already at a run rate of about 1 20,000 tons per annum before the capacity has been added. So I think on the aliasing plan, we can safely assume that within a period of 60 to 90 days of commissioning, we can easily touch 80, you know, 75 to 80% utilization. And on the second color coating line, I would like to say that. Well, I think close to 70, 70% utilization is a safe number or a conservative number that I can tell you we can reach after one quarter of successful commissioning.
Tej Patel
Okay, so 70 is for the new capacity, right? You’re not talking about. You’re not saying blended, right? It’s for just the new capacity.
Karan Agrawal
No, no. Total capacity. Total capacity. We can reach utilization of 70% of the total capacity. I’m talking about.
Tej Patel
It. Got it. It’s blended is what I understand. I got it. When you move from an aluminium line to an aluminium zinc line, I’m just trying to understand. So it just helps us in ability to do galvanization of two types, right? It doesn’t. I mean it’s not a completely new product. Right. It’s just a separate two coating which we will able to do. I mean, the sales per turn would almost remain same after this operation. Also.
Karan Agrawal
I think Tushar can explain you a little bit about the technology and what is the actual change in the technology. And you’d also answer the question on the revenue potential after that?
Tej Patel
Yes. Okay, that would be great.
Tushar Agrawal
Yeah. Hello. So. Traditional galvanized steel, so traditionally steel is protected from corrosion via the process of galvanizing, which is the coating of zinc on top of steel surface. So that’s what we are doing right now where we are coating 100% zinc on top of steel. And this has been the traditional method for over, I think probably over four to five decades or probably longer. Alum coated steel is a new product, new technology which is probably invented roughly 10 to 15 years ago only and it come into India probably six to seven years ago. This product is different how? Because the coating is now replaced.
The zinc coating is now replaced with an alloy which consists of zinc and aluminium where 55% of the coating alloy is composed of aluminium and the remaining zinc. The process itself has various changes where, you know, we need to add a complete cleaning section. The annealing cycle needed to be enhanced for the metal. We had to add another pre melt pot which is critical for the technology for the coating. Where the alloy is melt and the alloy is prepared, the cooling tower height needs to be increased. So various. I’m just giving you a snapshot, but it was a large technical upgrade which had to be undertaken in our Kutch project plant and to be completed.
Tej Patel
So sir, does the application change? And because of that, maybe, you know, the. Our realization improves. Is it something like that?
Tushar Agrawal
It is. It is a superior product. There are fewer manufacturers in India offering this and it provides over three times the corrosion resistance that a regular galvanized product would. So it commands a premium in the market automatically. Especially with India’s large coastline, you see a large potential of, you know, the entire market adapting this product. For example, in Kerala, they all want only I losing because with the highest aligned atmosphere, the market demand the product which will last longer. So they pay a premium to purchase, invest in a product which lasts longer and help them have a warehouse or a building which lasts longer.
Tej Patel
Got it? Got it. Understood, sir. Thank you so much. Yeah. Yes, sir. One more question. Like why are we targeting export market? Just I want to understand like it’s. It’s a more competition in the domestic market. Therefore we are developing export market or it is a reason like we located on the western part of the India. So it is easy for us to export. So what’s your review on this?
Karan Agrawal
Well, I think there are multiple reasons. One is definitely that export market fetches us a higher realization for our finished product. And you know, we are able to make customized products for our, you know, various export customers sitting in the European market for which they are relying on our company to supply the raw material and they are paying a good premium for it, number one. Number two, I think sitting on the port, we are literally 50 kilometers away from the largest ports in the western coast of India. And we want to have a very balanced situation of our sales mix where we Must not rely on any particular market for a major quantity of our sales.
That’s why we want to keep it very balanced. So whenever there is any stress in the domestic market we can always tilt towards export and vice versa. So this is the reason why we want to keep a very balanced, you know, equation of export versus domestic.
Tej Patel
Got it. Interesting. Sir, if you could just help us, I mean I know you already answered this for one product. If you just help me understand what who are our peers in terms of capacities or in business. If you could just help us name the peers in in the color coated segment and of course the galvanized pipeline and are those integrated players or other players like smaller players like us also who are buying the CRC and then you know doing this value addition?
Karan Agrawal
Oh absolutely. There are two categories of players producing the finished products which is Alu Zinc or pre painted Alu Zinc. One is the category of integrated players wherein you have two names, JSW Steel and Tata Steel. They have their subsidiary companies that are producing Alu zinc and Prepatrin Alu Zinc. Tata Steel has a subsidiary called Tata BoostCode and GSW has a subsidiary called JSW Coated Steel Products. In the non integrated space there are two more players which are buying raw material from integrated steel producers like JSW, Tata ArcelorMittal Steel Authority of India or even Jindal steel and power etc.
And are then producing finished products by doing value addition. These players are the likes of apl, Apollo or Jindal India and obviously we are also in the, you know in the same market industries. Yes,
Tej Patel
the interesting.So quite surprising, you know there are almost like 6, 7 players only in India. Right. I’m just trying to understand if possible for you, is it possible for you to put a number to it, what’s the demand in terms of tonnage for let’s say a pre painted coil or a galvanized coil and is it are imports also you know major portion of the overall market in India currently.
Karan Agrawal
The demand for pre painted steel which consists of pre painted galvanized and pre painted aluminum. Today in my view I don’t have the updated number but definitely the in the entire country demand should be close to about between three to three and a half million tons per annum currently And I think yes imports were, let’s say it was a significant share of the contribution to the importance Indian demand being met. But now the government has taken very very prudent policy measures where they have restricted the imports into India and restricted cheap dumping from countries like China by putting measures like safeguard duty and hence the domestic market has become more accessible to domestic producers.
And, and you know the threat of cheap product entering in the country has minimized to a great extent.
Tej Patel
Interesting. So what would be the duty percentage? 20, 25%.
Karan Agrawal
The customs duty which has been already in place before the safeguard duty itself was about 7.5%. And now the safeguard duty which has been recently announced in the month of I think April, if I’m not wrong, April May is another on top of that first 12%.
Tej Patel
Got it. And sir, what will be the installed capacities of this 6, 7 players which you mentioned? The integrated as well as the guys buying CRCs including us. So what would the installed capacity right now?
Karan Agrawal
I think in my view the installed capacity is at parity of the domestic demand number. But you must take into account that the demand is increasing in double digits in India due to the massive infrastructure creation and investment that is being done on the public side and the private side in the Indian market space. And we also have a very big export potential where US and many other producers in the country are also exporting to various markets in Europe, Africa and Middle east and Latin America. So there is definitely a good opportunity to invest more and to you know, create more capacities in the, you know, Indian market to cater to domestic demand as well as export opportunities.
Tej Patel
Got it, Got it sir. And, and I get that point that you know, since our capacity is low, we might not face enough competition. Competition because you wanted to get your view on, you know, Chinese competition in the export. I mean are we enough price competitive or what’s the scenario on you know, countries right now which we are exporting? You said Europe, right? Correct me if I’m wrong. Just wanted to get your view on in terms of competitiveness of our with China.
Karan Agrawal
Yeah, no, it’s a very important question. I think China is definitely the most vital and the largest producer of steel in the world. So it is always relevant in any context. But today you must have been reading and seeing that all the countries in the world are resisting and creating barriers for Chinese products to enter there economies or their markets. That is being done by way of fiscal measures and non fiscal measures by way of tariffs or you know, quality restrictions, etc. And this is what we are seeing even in our existing markets of European countries as well as a few Latin American countries where, where many countries and economies have restricted Chinese products by putting anti dumping duties or you know, quotas or you know, quality standardization, so on and so forth, which is helping Indian producers a great extent to penetrate and grab market share and you know really implement that China plus one kind of a policy in favor of Indian exporting community.
Tej Patel
Makes sense. Thank you so much for that answer this last question that I will submit about. So sir, first I mean two questions in it. I’m really sorry. So. So what, what is our major end use sector today? Is it the cold chain sector? I mean where our materials are currently going in with what is the end use sector? And second is for the third line, what is the plan in terms of you know, funding and how much fund are we planning for that? The third phase which are, which we are planning to do in FY27 because you know more sort of we will be planning on that stage at least in this financial year.
Right. So just wanted to understanding on your end use segment sector and what is the planning for funds for your third CapEx?
Karan Agrawal
I think on the third phase that you are talking about is a total capex of close to about 220 to 250 crore rupees for which we still have some time to finalize the funding strategy and the funding mix of debt and equity. We wish to fund it as much as possible via internal accruals and the profits that the company is generating through the course of FY26 and partially FY27 and we wish to use as little debt as possible to fund that capex since it’s a large one. So clear and a crisp answer can be given to you in the later part of the year when we are more clear on the performance of the company and the, you know, the stabilization of all the current projects in hand.
I think definitely like to answer this question a little later.
Tej Patel
Got it. And in terms of end use sector, I mean who are your clients and what sector do they get into?
Karan Agrawal
End use sector I think building and construction is one of the major end users for our product where our product is used in industrial, commercial and residential construction for the purpose of industrial sheds, warehouses, you know, mainly infra projects which consists of airport buildings, railway stations, metro stations, thermal power plants etc. Etc. Apart from this our product is used again producing insulated sandwich panels which in turn is used for the cold storage industry or the clean room industry, pharma, clean rooms, cold storages, refrigerated trucks, etc. This is a very large let’s say consumer base of our finished products.
Apart from these two then I would rank value added end users such as metal ceiling systems which are used for you know, building interiors or you know, major projects, interior ceiling systems etc. And then I would rank metal, sorry, general engineering which includes, you know, things like your air handling units or you know, solar, solar equipment and many other engineering components like elevators and doors and windows, etc.
Tej Patel
Got it, got it, got it. And the last question after the crc, I mean I know it’s a far sighted question, but just wanted one understanding. After the CRC expansion in 27, you know, what margin expansion do we anticipate? I mean a broad, broad approximation or something like that because it’s a raw material for us. Right. So I anticipate gross margins to improve significantly. Right. So if you could just help us understand how much margins do we anticipate to increase because of this expansion.
Karan Agrawal
I think the backward integration by way of producing our own cold rolled steel would definitely give us access to expand our margins by another one and a half to 2% on the, you know, the PBT level. This is possible and achievable once we achieve handsome capacity utilization.
Tej Patel
Got it. And so in terms of ROCs, I’m just trying to understand with this two new CapEx which we are planning and you know, considering the ramping up will take, let’s say one or two years, what payback are we looking on this new project? Five, six years, what then? What, what, what’s the number? Shall we keep in mind?
Karan Agrawal
So I think on the projects that we have already in pipeline for FY26, we are looking at, you know, aggressive, you know, returns on the investments that we are doing and we are targeting something on the lines of four years payback for these projects.
Tej Patel
Okay, okay.
Karan Agrawal
The solar, solar project is going to be faster because the savings against the cost of electricity is very, very high. So the payback for the solar project can be as early as two and a half years. On the Hallucin Klein and the second color coding line we are definitely targeting aggressive and three to four years is the targeted payback.
Tej Patel
And sir, for solar, how much out of the 150, how much was solar? Sorry I missed that part. I’m sorry. Out of the 150 capex overall. Capex which we planned, how much is for Tula.
Karan Agrawal
Will be anywhere between 30 to 35 crore rupees.
Tej Patel
Okay, the 32 to 5 crore was just solar. And how much power savings? I mean if you could say in terms of how much incremental EBITDA are we expecting from this power saving?
Karan Agrawal
At the existing level of our power consumption, we are quite sure of saving anywhere in the range of 6 to 7 crore rupees per annum. If you go by the Number of existing power, power consumption and power cost. As and when our capacities increase we will have to add additional solar capacity to keep that saving percentage consistent.
Tej Patel
Got it said. How much would be the power cost as a percentage of sales?
Karan Agrawal
Our cost as a percentage of sales I think. Mandaji, can you work this out and tell the precise number?
Tej Patel
Yeah, I’ll give you something. No, no, no problem, no problem. And sir, do we, I mean this is like really far sighted. Just wanted to get your views by. The end of let’s say. I mean what’s, what’s an overall plan? Do we, do we try planning. Are we planning to be become, you know a fully integrated player where we will be looking to unite up HRC also maybe in the future. I’m just, just. I mean just wanted to get a far sided view.
Karan Agrawal
I think our medium term vision is quite clear. We wish to keep adding value in our current business which is the downstream of the value addition business on top of the upstream products which is by adding capacities of value added steel. I think in the medium term we are not looking at backward integrating into steel production itself but we definitely wish to become one of the leading and the top players in the downstream product line of value added steel which is let’s say not too capex heavy and the payback periods are quite, you know it’s a very reasonable kind of payback period.
Whereas integrated steel producer is definitely something which is going to invite a huge amount of capex in thousands of crores and the payback periods are also longer. So currently given our size scale in the medium term we are looking at becoming a player which is, you know in the top three players in the country for producing value added downstream products with a targeted capacity of half a million tonnes.
Tej Patel
Got it, got it, got it. Thank you so much you know for patiently answering all the questions. Although I have few more questions on payback I will just work out my math and get back to you. I mean thank you. Thank you so much sir for patiently answering all the questions. Thank you.
operator
Thank you ladies and gentlemen. This was the last question for today and I now hand the conference over to Ms. Saki Panjiara from Kirin Advisors for closing closing comments. Over to you ma’.
Sakhi Panjiyara
Am. Thank you everyone for joining the conference call of Manaksha Coated Metals and Industries limited. If you have any queries you can. Write to us@research advisors.com. Once again thank you for joining the conference call. Thank you current sir. Thank you Tushar sir. And thank you Mahindra sir. Good, good day
Karan Agrawal
thank you very much. Good day.
Tushar Agrawal
Thank you.
Mahendra Bang
Thank you, viewers.
operator
Thank you. On behalf of Kirin Advisors Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.