SG Mart Ltd (NSE: KRL) Q3 2025 Earnings Call dated Jan. 23, 2025
Corporate Participants:
Anubhav Gupta — Group Chief Strategy Officer
Analysts:
Harsh Pathak — Analyst
Abhishek Gupta — Analyst
Heath Pari — Analyst
Krunal Shah — Analyst
Chirag — Analyst
Rishikesh — Analyst
Alisha Mahawla — Analyst
Dharmil Shah — Analyst
Ayush Vimal — Analyst
Vikas Mistry — Analyst
Vivek Patel — Analyst
Bhavin Pande — Analyst
Rakesh Jain — Analyst
Aastha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to SGMart conference call hosted by MK Global Financial Services. 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 the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note. I now hand the conference over to Mr. Harsh Parthak, MK Global Financial Services. Thank you. And over to you sir.
Harsh Pathak — Analyst
Yes, thank you, Manav. Good evening everyone. First of all, sorry for the delay due to some technical slack during uploading the results we had to postpone the call. However, we’ll start the call now. I would like to welcome the management and thank them for the opportunity we have with us today. Mr. Shiv Bansal, Joint Managing Director. Mr. Suraj Kumar, Chief Financial Officer. Mr. Anubhav Gupta, Chief Group Chief Strategy Officer. And Mr. Naman Rastogi, General Manager, Strategy and Investor Relations. I shall now hand over the call to the management for the opening remarks. Now over to you gentlemen.
Anubhav Gupta — Group Chief Strategy Officer
Thanks harsh. And thanks MK for hosting SGMart for its quarter three FY25 earnings call. I welcome all the participants who have who have joined on this call. We would like to apologize for starting this call late as there was technical snag with the stock exchanges while uploading the results. I’m not sure how much time everyone got to look at the results but. But I would quickly run you through the results and we’ll discuss about our performance and then we will have Q and A session. So if we look at the revenue, we did a range We did around 13.5 billion which was of course a big jump on yy basis. But quarter on quarter it was a decline because of our B2B business where there were no imports. In the quarter three Q2 there was a bump up in the B2B metal trading business because of heavy imports. But in Q3 imports were not viable. So all the sales, all the supply was domestic. We’ll talk about segment wise performance once I finish the rundown on the quarter three results. Our business, our business EBITDA recovered sharply to 28 crore rupees which is a big jump. QQ and YOY last quarter we had two book inventory losses. But this quarter was business as usual. And our operating margins, operating ebitda margin was 2.1% which we have been guiding for and because of other income. The net Profit also was 28 crores which increased both Q2 and YOY with the net margin of 2.1%. The working capital days were 10 which was slight which was which are higher compared to FY24 March numbers. But here nothing to worry because the inventory days and debtor days are stagnant. It is just that the creditor days have reduced as we are sourcing more steel from domestic players. So a lot of money is into advances to buy steel. But still our roce on this working capital is 32%. So again we are getting two normalized WC and also more and more service stations are opening. So working capital days as we have guided for will remain between 15 to 20 days. But still we have some time to go there. And roe stands at 8% which includes obviously 800 crores of fixed deposits in the balance sheet. Otherwise ROE would also be a word of 20%. If we calculate this business ROE then there is a big jump in the registered customers. So now we are servicing 2126 customers which was like 1270 last quarter. So a lot of new customers got added. And at the same pace the registered vendors, the suppliers for various product that also increased to 223 from 145. We spent, we spent around. We spent around 142 crores in the first Nine months of current fiscal year towards the CapEx. So 2 of our service centers are operational. The Ghaziabad and the Bangalore. The other three Dubai and Raipur and Pune. We spent money to finish the construction and start those units. So one by one all will be operational in Feb. Plus we have identified five new locations for new service centers for which the CAPEX should start. Next month we started identifying the land Then update on our solar structure business. We have ordered the machinery which will roll the solar mounted ground structures and we expect as we are talking the trials are underway at the machine supplier end and we expect to have a first sale in month of February itself. We see it see this as a big revenue potential for SGMart. As we are getting into as we are getting into high hyper growth renewable sector in the country which will boost our revenue and profitability both. Now coming to the segment wise. Now There are like three segments for revenue. Number one is B2B metal trading. Second is service center business and third is B2C which is which is distribution business. Now now 350 crore of console revenue in Q3 it it results to sales volume of like 290,000 ton pad below 300,000 ton. Now out of this the B2B metal business if you look at the imports like there was absence imported steel. So this business declined from like 1200 crore to 700 crore rupees q on Q. And the service center business is ramping up pretty quickly. So here there is a small small jump on quarter on quarter basis. But this will be heavy jump in Q4 as the Pune, Raipur and Dubai service centers operationalize. Plus we will see quarter on quarter growth for a number of quarters as more and more service centers will keep on opening. Then third the B2C which is distribution business. Here Also we saw 5% jump on quarter on quarter basis with TMT sales gaining some momentum as the construction activity picked up in Q3 and we expect that Q4 the construction activity shall further pick up and it will boost our RT sales volume. Then like last quarter we introduced light structural business as well. So that is also ramping up gradually as we are adding more and more customers to sell those products. So overall the run rate of 1.2 1.5 million ton of sales volume is what we are looking at on annual basis with 2.1% to 2.25% EBITDA margin. As the business scales up and once we have more service centers coming up, once the solar structure sales start, you will see the margin also picking up pretty strongly and we will achieve towards 2.5% of guided EBITDA margin. And our revenue guidance of for 18,000 crores in FY27 that remains stable. Except the fact that the steel prices depending on like how the steel prices will behave, the exact value will vary on that. But the volume which we had in mind which was like 2 and a half to 3 million tonnes, this is what we’re going to achieve by FY27 with the desired EBITDA margin of 2.5% and 20 days of 15 to 20 days of networking capital cycle which will keep our ROCs in a word of 30% range. That’s it from our side. And now we can have the Q and A session. Thank you so much.
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 their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. We have a first question from the line of Abhishek Gupta from AB Capital. Please go ahead.
Abhishek Gupta
Hello. Yes sir. Hello. Am I audible? Yeah. You had guided for 7,000 to 8,000 crore revenues for FY25 and 13 to 14,000 crore revenue for 26. Are you still holding on to that guidance?
Anubhav Gupta
So see, the guidance is based on the volume, right? And net selling realization. Because steel prices have fallen sharply by 15 to 20% in last 12 months. So that’s why the value will decrease. Because anything we do is pass through to all our customers. So yes, I mean the basis of 7,000 crore. 7,000 crore revenue guidance was around 1.2 to 1.5 million ton of sales volume. So this is what we are going to achieve. Right. And next year it was based on around like 1.82 million ton of sales volumes. Again this is what we shall achieve. So sales volume we shall achieve. The exact revenue will depend on the value. What we get, what we realize on steel prices.
Abhishek Gupta
On value terms, can you tell how much it might be?
Anubhav Gupta
I’m sorry, can you come again
Abhishek Gupta
In value terms, can you give put a number to it as to how much you will achieve in FY25 and in 26 based on the current prices.
Anubhav Gupta
Yeah, yeah. Right. So so far we have around 900,000 tons. And if we do like another 350,000 ton in Q4. So we shall surpass 1.2 million ton for the full year.
Abhishek Gupta
No, no sir. On value term.
Anubhav Gupta
So again see value term so far we are at like 4300 crores, right? Somewhere around. And if we do 7, 16, 1700 crores. Right. So we shall be around 6000 crores.
Abhishek Gupta
Okay. Okay. And in FY26 can you tell a number?
Anubhav Gupta
So you should expect like 40% jump over this.
Abhishek Gupta
Okay. Right.
Operator
Thank you. We have our next question from the line of Heath Pari from Ashika Institutional Equities. Please go ahead.
Heath Pari
Good evening and thanks for the opportunity. So my question is on the service and the business. So Raipur and Dubai service centers were going to be operational this quarter. So what caused delay in these centers? And number two, sir, the already existing two survey center business. What kind of volumes are being we are seeing from those centers? We firstly mentioned about reaching up to 40,000 50,000 tons a month of volume from those service centers. So how is the demand side there?
Anubhav Gupta
Right. So. So right now the volume from service center is around. Like 40,000 ton per month, right? From these two service centers. Okay, now with the so. So this is our so. So like you know, that’s our maths as well. While opening the service center, that service center in a metro city, right? That should give volume between 20 to 30,000 ton a month, right? And, and, and, and. And the smaller centers in smaller cities will give volume near about 5,000 tons, right? So far the two centers which are operational, they are in metro cities. That’s why the volumes are high. 40,000 ton put together. And Pune also, we started like Pune. What we have done is that since our service center is still not finished, so we took a service center on rent, right? And started seeding the market. So next month when we move from the rented place to our own service center, the volume will increase. And Drypur and Dubai of course will further boost the volume. And the reason why these service centers got delayed were because of some extended monsoon in the quarter three which hampered the construction. Which hampered the construction of the industrial sheds.
Heath Pari
Okay. And so what about the zinc business? How is the volumes.in this product?
Anubhav Gupta
So zinc. So zinc business is like, you know, a bit of opportunistic, right? This quarter the, the. The revenue from. From zinc was not that high, right? At peak like at peak it was doing say 5 to 10 crore per month. But this quarter it was a bit low because there was volatility in zinc prices. So we did not try to do much.
Heath Pari
Then if you could quantify.
Anubhav Gupta
There will be like a very small number.
Heath Pari
Okay? Sure sir. And sir, lastly, if you could give me the breakup from all the three verticals in terms of volume for this quarter as well as for nine months
Anubhav Gupta
That we are tagged below 300000 tons, right? 150000 ton is 150000 ton is B2B, right? 50 60, 000 ton is 50 60. I’m talking about the quarter, right? So 100000 ton is. Is for the service center and around 45,000 tons is for distribution business. That’s how the mix becomes around.
Heath Pari
And so lastly, sir, we haven’t booked any inventory loss discount. If I may, I was just confirming we haven’t booked any inventory loss this quarter. Right?
Anubhav Gupta
Inventory was lost.
Heath Pari
Yeah, inventory loss last quarter, we booked around 17 to 18.
Anubhav Gupta
Last quarter there was very sharp decline in the steel prices of almost 15%. Right. So this doesn’t happen often. It’s a once in a decade scenario when prices fall back sharp. So, so, so, so, so, so, yes, I mean thousand, two thousand rupees per ton movement does not impact our business model or our margin.
Heath Pari
Yes, I was just confirming. So there was no effect on. On this, in this quarter.
Anubhav Gupta
That’s right, yeah.
Heath Pari
Okay, so thank you. Thank you.
Operator
Thank you. We have our next question from the line of Krunal Shah from NM Investments. Please go ahead.
Krunal Shah
Hello. Hi. Clarification on the numbers you mentioned. So you said Service center did 110, 100,000 tons kind of volume for the quarter, right?
Anubhav Gupta
300,000 ton.
Krunal Shah
No, no, the service center business.
Anubhav Gupta
Service center, yeah. So there are two things. One is stocking sale. Right. And second is the sheet cutting. Right. So you put together, it’s around that.
Krunal Shah
Okay. Stock and sale and sheet cutting. You put it together over there. Okay. Margins would be different, right. For both because cutting would be higher. Stock and sale would be just low. Your normal liability to be. No. So stock and sell is higher than B2B.
Anubhav Gupta
In B2B we get like, you know, 1, 1.5% margin. But in stock and sale, you sell in retail. Right. So obviously you get a better margin. Much higher.
Krunal Shah
Okay. And so in terms of the blended margins for the service center business, right now, where would that stand at?
Anubhav Gupta
You can assume like around. Around. Around 3 to 4%.
Krunal Shah
3 to 4%. Okay. So that, that is including the stock and sale. Because that.
Anubhav Gupta
Yes, yes.
Krunal Shah
Okay. Okay, got it, got it. And so now we have all these three service centers running in terms of capacity utilization, what would that be? Or, or in terms of peak capacity, what could that be?
Anubhav Gupta
The service centers can do minimum like 70, 80 more. 70, 80% more business from what it is, because like I said, the inventory, see, stock and sale, you just need. To keep inventory. Inventory is still small, right? It isn’t much. And space, we have lost space available. If you come and look at our service centers, we’ll find that like, you know, some service centers are pretty big. Right. Then second is sheet cutting. Right. So there also, if demand is more, we want to ramp up more. We can order machinery. Right. And install new. So, so, so from existing setup, we can easily sell 70, 80% more if there is demand.
Krunal Shah
Okay. Okay. So that 20,000 number that you mentioned can easily go to 40,000 kind of.
Anubhav Gupta
Yeah, yeah, yeah.
Krunal Shah
For the larger demand
Anubhav Gupta
In that region.
Krunal Shah
If there is demand in that region. Right. And so now you have identified five more sites. So these would be mostly the smaller cities.
Anubhav Gupta
Three are big, two are small. So right now the focus is to leverage on the larger cities. Right. Because that’s easy sell. Okay. And then in second phase, we will move towards smaller city. But we believe that in India we can have at least 15, 20 large service centers.
Krunal Shah
Okay. And in the larger city, how is the competition reacting to your entry in the service center business?
Anubhav Gupta
So they’re very small. We don’t have any organized players here. Right. So they are pretty small mom and pop stores. So at such, I mean, difficult to say the reaction because they’re unorganized and small mom and pop, Right. But yeah, I mean we have our strength in steel sourcing and then strong brand. Right. So what we have to do.
Krunal Shah
Okay, got it. And in terms of B2B metal trading, you said that imports were unviable for the quarter. Can you just elaborate a little more on that?
Anubhav Gupta
So one is that there is a risk of silver duty. Right. So anyways, the imports are minimalized. Okay. Then second, the domestic steel prices have come off so much that the steel prices, after all the duties, right. In India, they are also at parity. Right. So there is no. Okay, no point of keeping up 90 days of cycle. Right. Swings. Right. So okay, steel is viable today.
Krunal Shah
Okay, got it. So this for import, you have a 90 days kind of cycle, right? From ordering to delivery.
Operator
Sorry to interrupt, sir. May please request you to please rejoin the queue.
Krunal Shah
Yeah, sure. Thank you. Yeah, yeah, yeah. So. So vessel takes like 90 days to reach. Okay, thank you so much.
Operator
Thank you. We have our next question from the line of chirag from White Pine Investment Management. Please go ahead.
Chirag
Hello. Hello. Am I audible?
Operator
Yeah, please go ahead.
Chirag
Hi. Thanks for this opportunity, sir. So, just clarification. Our business model works on per kg basis, right? And not on margins basis. Because if steel price keep coming down then if a business model is on margin basis then it has a direct impact on our profitability. So that’s what my question is. So is our business model based on margin basis or it’s on per kg basis
Anubhav Gupta
And then obviously steel. Normally you look at rupees per ton, right? That’s the right way to look at it.
Chirag
So hypothetical, what I’m asking is suppose on 100 rupee per ton you make 2% to rupee per ton. Kind of ebida with if 100 becomes 90, your EBITDA per ton will also become 1.8, right? It will not stay as 2.
Anubhav Gupta
So how you should look at it that obviously, right, as the prices go up and down, the percentage margin will change, right? But we have been waiting around. It will come right through.
Chirag
Your voice is cracking. Apologies for this, but voice was. Is cracking.
Anubhav Gupta
Am I audible now? Is it better?
Chirag
Yeah, yeah. You back? Yeah,
Anubhav Gupta
That 2% half percent. What we say this is based on the assumption that is breaking.
Operator
Hello, Can I reconnect you? Yes sir. Your voice is break. Started breaking again, sir.
Anubhav Gupta
Yeah, just give me. Okay. Yeah. Let me reconnect.
Operator
Ladies and gentlemen, please wait for a while. We. While we reconnect the management. SA Foreign ladies and gentlemen, thank you for patiently waiting. We have the management back with us. Anubhav sir, over to you.
Anubhav Gupta
Thanks Panas. I’m so sorry. I hope I’m audible now.
Chirag
Yes sir. You’re absolutely.
Anubhav Gupta
Okay, so when we say that two two and a half percent EBITDA margin, right. That is based on the assumption of rupees per ton as well. Right. Back calculation. So if you look at, I mean our EBITDA per ton over the last quarter it has been around like you know, thousand rupees per ton year. This call is now being recorded. Obviously Q2 was bad right? Now ended otherwise on barring Q2 we have been around 1000 rupees per turn plus minus. And that’s why beta range.
Chirag
Okay, now why? Because. Because you always speak in terms of margin and that’s why I was curious internally. You look at per ton basis or you look at
Anubhav Gupta
Per ton basis. Okay, but. But yeah, I mean because there are multiple verticals, right? So that’s why for investors and analysts we are talking about margin. See. I mean but whatever steel prices may behave, right. Say like from 60,000 rupees a ton, right now the selling price is 50,000 rupees a ton. From here on the volatility won’t be that much, right? Obviously there would be some blue moon scenarios, but we should be in that range plus minus 5, 10%. So even if you look at optically, the margins will be between two to two and a half percent.
Chirag
Okay. So if still prices are on the higher side, our margins would be at the lower end. And if still price on lower side, a margin should be at the higher end once the volatility subsidized. That is the way to look at it.
Anubhav Gupta
That is right.
Chirag
Okay. The second is. Can you just talk about this forex accounting. Why it’s a business gain. And. And unlike how the accounting standards ask required to other income. So because you don’t export, right? So this has to be more on the imports only.
Anubhav Gupta
Right. So we gain on import income, right? Steel prices, the margin what we made, right. The auditorium. Wanted to show it as like. Like you know, products gain. But then. Yeah, but then. But then none of our contracts are over.
Chirag
Okay, can you talk a bit about it? How it is exactly structured so that it is not a. Not a volatile income or not a speculative income in that sense. Whenever you will import it will not go into loss.
Anubhav Gupta
No, no it is not. It is not. It’s. It’s a gain on. It’s a gain on sale of imported steel. Right? The why auditors. Why auditors put it in other income is because they classified it as like forex gain. But then our. My point is that we don’t keep any contracts naked. They’re always hedged. Okay. Forex gain comes or forex loss comes when your contracts are naked. Right? None of our contracts are naked. They’re always hedged. But just because of some classification they had to put it in like other income. So what I can tell you on record is that it’s that none of our contracts are naked. They’re always hedge. So there is no, there is no risk or gain to deforex volatility.
Chirag
So when you say hedge you do you refer to the end customer selling, hedging or currency
Anubhav Gupta
Dollar research dollar is astro.
Chirag
Okay. Okay. Okay, great. This is helpful. Thank you. And all the best. Yeah.
Operator
Thank you. We have our next question from line of Rishikesh from Robo Capital. Please go ahead.
Rishikesh
Hi. Thank you for the opportunity. So can you guide for the revenues for quarter three and for FY26 as well?
Anubhav Gupta
You mean the. You mean the volume
Rishikesh
Revenue guidance revenue?
Anubhav Gupta
Yes, I guess. See, I mean we should be. We should be between 1500-1700 crores for, for. For Q4. Obviously we are waiting for some pick up in construction activity which can lift our TNT sales. Right? And also pick up in overall steel demand which is led by multiple industries whether it is capital goods or construction or by goods. So there is like overall stress in the country. That is what is like preventing us from doing 2000 crore of revenue run rate per quarter. But based on current scenario we believe that we should be touching minimum 1500 and things pick up. So we can reach 1700, 1800 as well. But yes, So I mean 1500 days we should definitely do so assuming we do 1500 in, in Q4. So the full year we shall be closing around 6000 crores. Right. And like I said that I mean we should assume 40% jump. 40, 50% jump on this. So yeah, 9 to 10,000 crore is what should come. I hope I’m clear.
Rishikesh
Yeah, I’m sorry. So currently we are at 1.6% EBITDA margin. So what has to happen for us to go to 2.5% level? And by when is it possible, can we say for a full year, FY26 we can achieve that margin.
Anubhav Gupta
So 1.6% for nine months is because of inventory losses in Q2 which are not going to be repeated. Right. So if I remove unity losses, we are already above 2%. Right. As new service centers come up which have more profitable products. Right. So margin should inch up to 2.2, 2.3, 2.4 and 2.5 eventually as we also ramp up our solar structure business.
Rishikesh
Got it. Thank you.
Operator
Thank you. We have our next question from the line of Alicia Mahavale from Envision Capital. Please go ahead.
Alisha Mahawla
Hi Anubhav. Good evening. Thank you for the opportunity. Just wanted to understand, in B2B metal trading you said that imports were not viable because of the spanity of domestic steel prices. Which meant that then we could have just procured domestically. Then why the volume degrowth sequentially?
Anubhav Gupta
Yeah. So he takes time from like you know, to make deals with steel producers. Right. Because they have their own commitments. So it’s just that like you know, suddenly the votes became unviable. Right. And then we started talking to all the steel mills. Right. So, so yes, for Q4 we are pretty sorted. But yes, we didn’t have much time to procure that much steel. Right. And that steel has to come at our cost. Okay. So, so, so yes, I mean Q4 now we have good supply tie ups with all the mills. And see also see in India in last 1112 months. Right. Since NNDC and JSP has put up the capacity after a gap of 5 years in Indian upstream. Sector. Then, then, then JSW2 blast furnaces started. So overall 10, 10 to 12 million ton of new steel capacity came. Right. But, but actual steel in the market is only around like you know, 30, 40% of that rest. The blast furnaces are still getting rammed up. Okay so, so scenario is improving month on month for domestic steel supply. And in Q1 we expect like you know, a lot of steel coming from Indian mills which will, which will, which will boost our B2B metal trading volumes.
Alisha Mahawla
Understood. Just a clarification here. Do we have tie ups or have we started sourcing from all the top five steel manufacturers? Because I believe earlier we were only booking one or two. So have we managed to now have on.
Anubhav Gupta
Yeah, yeah, yeah. We are buying, we are buying steel from top four producers out of five.
Alisha Mahawla
Okay, understood. Now moving to the service center business. Raipur and Pony. Have they started or are they yet to start? I know you mentioned there was a delay, but as.
Anubhav Gupta
Yeah, so Raipur has not started. Raipur will start next month. Pune because of delay. What we did was we did a. We took a small city center on rent, right. And then we will move to our own service center next month when it is 100% ready.
Alisha Mahawla
So the way to understand it is that all three, Dubai, Pony and Raiput will probably start by end of February. Which means they will only start contributing Q1 of next year.
Anubhav Gupta
That’s right. So yeah, there is a three, four months delay because of like this monsoon is taking. Monsoon impacted the construction activity.
Alisha Mahawla
And the five sites that we have identified, how quickly will they commercialize? What is the kind of lead time one can expect
Anubhav Gupta
Next day? I mean steel prices move. See normally, normally, normally steel prices are revised once in a month, right? On the first or second day of every month. So whatever reactions we have, whether plus or minus, we also revise it immediately.
Alisha Mahawla
I think, I’m sorry, I think my question was. I don’t think it was very audible. The five sites that we have identified for the service sector business. You mentioned that you’ve identified five sites, right? Just wanted to know by when can we expect it to commercialize. What is the lead time?
Anubhav Gupta
Sorry. Okay, okay. Yeah, yeah, yeah. So the target is December 2025 to March 2026.
Alisha Mahawla
Always. Towards the end of next year.
Anubhav Gupta
Yeah, that’s right. Yeah, yeah. Because. Because these are, these are larger sites, right? Which can do 15, 20,000 ton of volume every month. So we need the one year to, to fully construct those.
Alisha Mahawla
But original aspiration is to probably add 20 service centers.
Anubhav Gupta
That’s right. Yeah, yeah, yeah. See, I mean, see we just took a pause for two months, okay. Because imports were not happening. Right. And then we were tying up with domestic steel players. And now that the steel looks visible to come in abundance, right. In Indian market. So two months we were slow and now we’re kickstarted. Right. So five we have identified right sides. My team is already talking to like you know, people who can sell land. Identification is in process. And five more new sites we have identified. So the work will start on 10 sites during this year. Five will be finished by December and another five may finish by May, June next year. So and if Q4, like you know, Q1, we have sense that yes, this 10 million ton steel has now started coming in the market, right? And then nothing stops us from going for like you know, 10, 15 sites in single shot next year, 20, 26 calendar year. It’s just that, you know, we cautiously took a call for two months. We just wanted to see how the steel supply behaves. Right. On paper 10 million ton steel has come, right? But in market it’s only 3,4 million ton. Which has come, right. But has to come, right? Because block furnaces have got fired. They have started for two, three months. This ramp up is taking time. The moment it hits, we will be ready with our service centers.
Alisha Mahawla
Understood. And just one last question with respect to the.
Operator
May we please request you to rejoin the queue as there are several participants waiting for their turn.
Alisha Mahawla
Sure, I will rejoin the queue. Thank you.
Operator
Thank you. Ladies and gentlemen, please restrict yourself to two questions per participant. We have a next question from the line of Dharmin Shah from Dalmas Capital Management. Please go ahead.
Dharmil Shah
Hi. Hi Anubhav. Just wanted to know why were the imports unviable? If you can elaborate on that part, maybe you mentioned, but I miss it earlier.
Anubhav Gupta
Sure. So see, it’s the costing, right? The landed cost of imported steel in India versus the domestic steel prices.
Dharmil Shah
Okay, so the price prices were quite high for imports. Is this what you are referring to?
Anubhav Gupta
Not high? No, no, not high. But. But for, you know, the gap was so low that it doesn’t make sense to import.
Dharmil Shah
Okay. And usually what is the mix between. In the domestic sourcing and imports. I mean what was it this quarter and what would it. What would you like it to be?
Anubhav Gupta
This quarter was very low. Right. Last quarter was on an average, like I mean given the stress in domestic steel prices. Right. In any way. See, everyone is talking about bringing safeguard duties on every product. Right. So. So if there is safeguard duty on steel also. Right. So then import will be 100 unviable anyways. Right. So. So, so import is not part of our business model now.
Dharmil Shah
Understood. And can you again just give a breakup of segmental volume breakup for all the three divisions
Anubhav Gupta
Which we do. Right. This is what want to break up.
Dharmil Shah
Yeah, Volume breakup for the three divisions.
Anubhav Gupta
Okay, Volume. Right. So. So overall quarter was around 300,000 ton. Right. Out of that B2B2B for the quarter was around 150. Right. 150,000 tons. 100,000 ton was service center and 50,000 ton was distribution.
Dharmil Shah
Understood. And for the solar module.
Operator
Please be requested to rejoin the queue. Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict your questions to two per participant. We have our next question from the line of Ayush Vimal from Peer View Capital. Please go ahead.
Ayush Vimal
Yeah, thanks for taking my question. You know, you’ve scaled up the B2B division quite well over the last few quarters. My question is, you know, are you really displacing the existing distributors which the plants used to cater to or you’re rather distributing capacity from fresh plants that are being set up? Is it more of market share that you’re gaining or you’re more relying on market growth?
Anubhav Gupta
There are two things. One is that they’re not trying to displace anyone. Right. What we are trying to do here is become a large reseller. Okay. Of. Of steel and then distributors can buy through us. Right. It is like say one distributor is attached to steel mill one. Right. But he’s not. So. So he can. So he can buy material from SGMart for steel mill too. Because SGMart is buying from all the steel mills. 1, 2, 3, 4, 5. Okay, so this is one type of growth. Second is like the steel mills are also attached with lot of small. Dealers and distributors. So they themselves are telling us that, okay, you become large reseller and then let the smaller distributors buy through you because their headache comes down. Right. And third is. Yes, I mean steel demand in the country is growing, okay. Compared to like, you know, whatever barechromic data we keep on hearing. So yes, I mean incremental steel supply which is coming in, we are taking that share as well.
Ayush Vimal
Thanks. On point one. Right. What I basically understood is you’re actually pushing down the distributor who’s directly buying from the plants, down the distribution chain. So now instead of directly buying from the plants, he’s buying it through you in terms of pricing and working capital. Is he better off buying through you compared to buying directly from the plant? And if so, why is that the case?
Anubhav Gupta
Because see, the steel mills always work on quantity discounts, right? You buy X time, you get this discount. Like you get X quantity, you get Y discount, you buy Z quantity, you get a discount. Right? So because we are buying more. So obviously just as a slab cycle, right, My cost of purchase is low. Right. So yes, which I keep it to myself and pass it on to the dealers. Right. And, and then I am having steel from multiple steel mills, right. So I’m keeping the stock. Right. So, so for him it becomes just in time.
Ayush Vimal
Got it, Fair enough.
Anubhav Gupta
And you know, from the point. And then if you see, and then if you see, I have 10 days of as well. Right. Whereas steel mills normally don’t offer credit to, to its dealers.
Ayush Vimal
Got it. So basically the steel mills are able to evacuate capacity faster than the deal through you and that is why they’re giving you that quantity discount.
Anubhav Gupta
Right?
Ayush Vimal
Okay, second, just, you know, clarification. So the 6.2 crore of derivative income, that’s included above EBITDA in this port.
Anubhav Gupta
Derivative income? No, no, I mean that’s, that’s a gain on my steel. That’s gain on my steel like sales. Right. But yeah, somehow it just got into classification of forex.
Ayush Vimal
That’s very well understood. I understood the logic behind it. My question is, you know, you had incurred a loss of about 3 crores in the first 2 quarters combined, right? Because the 9 month gain is 3 and a half and 9 month gain is 6 and a half and this 9 month gain is 3 and a Half and this quarter is 6 and a half. So the loss that you had incurred for the first two quarters in your presentation, is it included above EBITDA or is it included below ebitda?
Anubhav Gupta
Nine month numbers have been adjusted, basically.
Ayush Vimal
Okay, so for quarter one and quarter two, the numbers that you have in your presentation. Right in the table, you know the loss is appearing.
Anubhav Gupta
Yeah. Because that number was very small. Right. So we didn’t bother much, but. But this quarter, the number came out to be pretty big, so we had to highlight.
Ayush Vimal
Okay, got it. Got it. Fair enough. Thank you.
Operator
Thank you. We have our next question from the line of Vikas Mitri from Moonshot Ventures. Please go ahead.
Vikas Mistry
Hi. Thanks for the opportunity. So we were discussing that our business is EBITDA per ton. So we said. You said that it’s thousand rupees per ton. Then if the steel prices goes up, which we don’t see will go up in hurry. But if it goes up then the margins would start reducing. And what will be the steady state? We think that your steady state margins will be 1300 per ton. As we’re trying to scale up other two.
Anubhav Gupta
No, no, no, no, no. If steel prices go up, right. What I was saying was like optically percentage margin will look down but it will not impact my EBITDA per ton which is thousand today. Okay. It doesn’t get impacted.
Vikas Mistry
Yeah, yeah, yeah. That’s. That’s also we’re seeing. But let’s assume in Hypothetical case in FY27 the prices still goes to 60 rupees per kilogram. Then your EBITDA margins would be lesser than 2.5 million. It should be around 2%. Is it the right understanding?
Anubhav Gupta
They could be. But then there could be some inventory gains. Like in Q2 I booked inventory loss. Right. Steel prices crashed by 8,000 rupees a ton. Now if we assume
Vikas Mistry
Inventory gain is a one time exercise. So we don’t look at that.
Anubhav Gupta
That’s what? No. So. So when we are looking at our business model on per basis. Right. Then percentage margin like you know, 2.1, 2.5% doesn’t make sense. Right. Plus then we have lot more value added products. Right. Like in service center business, I make 2000 rupees for them which is like 4% margin today. Right. When I will have 30, 40 service centers up and running by 7.7. Right. A lot of my revenue will be highly profitable. Then solar mounted structures. Again it’s a highly profitable product. Right. Which we’re adding to our portfolio. So. So, so. So I think, I think what I can tell you is that normative team prices are 50, 000 or 60, 000 rupees at times. Our focus is that from 1000 rupees per ton we take it to around 1200, 1300 rupees per ton based on the product.
Vikas Mistry
Okay. Okay. Okay. That’s understandable. Okay. That’s all for myself, thanks.
Operator
Thank you. We have our next question from the line of Vivek Patel from Pycom family office. Please go ahead.
Vivek Patel
Very good evening. Am I audible? Hello.
Operator
Yes, you are able. Please go ahead with the questions.
Vivek Patel
Yeah, thanks for the opportunity. Just two quick questions. First is what is the HRC price? As of now. And what are the steps taken to mitigate the recent price change impact?
Anubhav Gupta
Right now the market rate is 47, 500 to 48,000 rupees per ton.
Vivek Patel
And what about the. What are the steps or is it in the model so that the price change would not hurt us as much as it would hurt others, so to speak?
Anubhav Gupta
Sorry, I’m not able to hear you properly. Can you. Can you speak a bit like away from the mic?
Vivek Patel
Is it better now, sir?
Anubhav Gupta
Yeah.
Vivek Patel
Yeah. Thank you. I’m just asking as to the price change that happens. How does that impact us in the sense that how does the business model absorb that? Or resilient to the price change impact?
Anubhav Gupta
Fair enough. So in India like the steel prices are normally revised once in a month on first or second date of every month. 11 out of 12 months. So this is the scenario, right? It’s only like one month. When like you know, the revision could be twice. But normally 11 out of 12 months, the revision is once the first week of the month. Like by second, third. Normally the steel company, the steel authority normally comes out with the pricing. And whatever revision is done, whether plus or minus immediately, we immediately react to that. Right? We immediately react to that.
Vivek Patel
Okay, understood. Thanks. In the initial presentation in the FY27 expected revenues of 18,000 crores. In that slide it is written that we expect 33% of that which is 6,000 crores to be coming from Service center segment. But in the last con call, if I’m not correct or misunderstood, I think you have mentioned the contribution from Service center to be 40 to 50% of your FY27 revenues. Am I understanding it correct or is there any new discrepancy?
Anubhav Gupta
Split into three segments, 66,000 crores each, right? And this 18,000 crore number varies on the street prices, right? So. So yeah, whatever it is, Whether it is 50 or 15,000 crores or 18,000 crores, it will depend on the steel prices. The volume, the volume should be around 3 million tons basically.
Vivek Patel
Okay, understood. Thanks a lot. Thank you.
Operator
Thank you. We have our next question from the line of Arvind Pandey from Athena Investment. Please go ahead.
Bhavin Pande
Hi. Am I audible? Congratulations on a good set of numbers. In our tough environment, how do you look at ramping up of white label products in the mix? You know, because they are more margin accretive. So how do you look at this angle?
Anubhav Gupta
There are two main products here. One is light structural, second is TNT bar rebars. Right. Both are using construction. Right. And unfortunately construction demand has been pretty slow. So we’re not able to ramp up TNT sales significantly. Right? But yes, I mean we wait for the environment to become better which it should in next few months and then vital products will grow at a much faster pace.
Bhavin Pande
So we can expect some benefits to flow through towards margins, right?
Anubhav Gupta
Definitely. Definitely. Yes. So see, I mean for margins, right. A service center will boost my margin. Solar structure will boost my margin. Boost my margin. We have enough reward, enough new products, enough ramp up which will keep on boosting my margins.
Bhavin Pande
That’s helpful sir. Thanks a lot and good luck.
Anubhav Gupta
Can we take last two questions please?
Operator
Sure. Sir, we have a next question from the line of Rakesh Jain from RK Capital. Please go ahead.
Rakesh Jain
Hello sir. Good evening. I wanted to know what will be the interest expense trajectory going forward? So even though you are sitting on cash today, there is a significant interest cost due to your working capital requirements I believe. So how should we see this interest expense trajectory as. As well as the other income trajectory in the next over the next few quarters?
Anubhav Gupta
My gross block today, right. My. I mean my total capital employed, right. Which should be all funded from cash in my books, right? But I have not done that. Right. So working capital why you see debt on my books is because I tell my salespeople that hey, you don’t have cash on your company balance sheet. Okay. So say for example my fake deposit rate is 7% today. Right. I take unit from HDFC bank at 7.1%. Right. 10 pips extra and then I tell my salesperson that if you are using this working capital which is at a cost of 7.1%. Right. So he is always under pressure for the collections, right. If I tell him that this is companies equity, companies network companies, cash on the books, right. So the receivable cycle may deteriorate which I don’t want to. Right. So just to put pressure on our sales team that this is like you know, interest bearing loans and you have to ensure that the working capital cycle remains pretty low.
Rakesh Jain
Just. Okay. I hope your self employees are not listening to this call. Anyway
Anubhav Gupta
That’s what we have. So it’s only us, the management here on the call. That’s right.
Rakesh Jain
Okay. No, but. But going forward like this interest expense trajectory like as and when you start opening more and more service centers. And so you will have to maybe take some debt or raise some equity as you. As you progress
Anubhav Gupta
To reach. See, I mean this money which we have in the books, right? But the cash flow is what we are think today, right? It is enough to do 30,35,000 crore business, right? The total, the total cap employed, what we understand is like 2500 crores, right? So. So. So 13, 1400 crore is my. Is my. Is my, is my cash. When we started the business plus 7, 800 crore will be cash cumulative generation, right? So. So 2500 crore is what we shall invest, right? To generate 30, 35000 crore of revenue.
Rakesh Jain
Okay. So the interest cost will remain stable at these levels or it’s not going to increase in the future the interest expense.
Anubhav Gupta
So it will go, you know. See if I grow my business, I will need more working capital, right? So. So my. So my other income will also increase and my interest income will also increase, right? So more or less like you know, they will remain same.
Rakesh Jain
Okay. Okay. Understood. Understood. Okay. So. So it will not be the case that your other income will start going down in the future as we open more and more service centers and your interest expense will continue to rise. So that’s not the case. Basically both will offset each each other more or less.
Anubhav Gupta
Yeah, yeah. Because. Because right now this is one very light working capital days, right? Unless like you know, we have 2025 service centers which will take my working capital to like 2025 days. Which eventually it will, right? Till then the interest income and the interest costs shall match each other. But the 2025 service centers you are planning to open over the next
Operator
Maybe. Please request you to rejoin the queue.
Anubhav Gupta
Yeah, yeah, yeah, yeah. Just to end to it. Yeah. I mean next 15, 20 months we shall be like 15 service centers operational and 10 will be under construction.
Rakesh Jain
Okay. Okay. Thank you so much. Thank you.
Operator
Thank you. Ladies and gentlemen, the last question for today is from the lineup. Asta from PKD Advisors. Please go ahead.
Aastha
Hello. That we saw first time in our Q2Q revenue. The revenues has dropped in our for the first time. And we have revised our revenue guidance as well. So is this the seasonality finally catching up?
Anubhav Gupta
The reason for fall in quarter on quarter revenue? Was on the account of less imports right in Q3 compared to Q2. Q2 there was a big spurt in import volumes but this quarter import was not viable and it took us one to two months to make deals with the Indian steel mills for steel supply which we have now in place. So Yes, I mean 3, 400 crore revenue loss may be there for the whole year of FY25.
Aastha
Okay, got it. That’s it from my answer. Thanks so much.
Operator
Thank you ladies and gentlemen. That was the last question for today and I now hand the conference over to the management for closing comments.
Anubhav Gupta
Thanks Manav. And again thanks to Harsh and MK for hosting us. And apologies for this delay for the call to all the participants. If there are any question unanswered, please reach out to our team, Naman, Suraj and myself. We shall address everything. Thanks so much. Have a nice evening.
Operator
Thank you so much sir. On behalf of AMK Global Financial Services, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.