Shyam Metalics and Energy Limited (NSE: SHYAMMETL) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
Unidentified Speaker
Pankaj Harlalka — Head of Investor Relations
Mr. Brij Bhushan Agarwal — Vice Chairman and Managing Director
Deepak Kumar Agarwal — Executive Director, Finance & Compliance
Analysts:
Unidentified Participant
Amit Dixit — Analyst
Shaleen Kumar — Analyst
Rajesh Majumdar — Analyst
Anupama Gupta — Analyst
Rudraksh Raheja — Analyst
Deekshant B — Analyst
Sumeet Khaitan — Analyst
Presentation:
operator
Ladies and gentlemen, you are connected to Sham Metallics and Energy Ltd. Q4FY25 earnings conference call. Please stay connected, the conference will begin shortly. Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Sham Metallics and Energy Limited hosted by MUFG in time. 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 touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Pankaj Harlalka , head IR Shyam Metallics. Thank you.
And over to you sir.
Pankaj Harlalka — Head of Investor Relations
I, Pankaj Harlalka , Head of Investor Relations at Shyam Metallics wish you all a very good afternoon and a warm welcome. To the fourth quarter. FY25 post results conference call before we delve into discussing the quarterly numbers, I hope you all had an opportunity to review our press release and the attendant investor presentation. Read along with the Safe harbor statement which are available under the investors section of our website and the same are accessible in the BSE and NSC websites. To discuss the fourth quarter and full year results FY25, I am joined by Mr. Brij Bhushan Agarwal, Chairman and Managing Director Mr. Deepak Agarwal, Executive Director Finance and Compliance and Mr. Sumeet Khaitan from Orient Capital, our Investor relations partner. Now I would like to invite Brij Bhushan ji to provide his perspective on the performance.
Thank you and over to you Sir.
Mr. Brij Bhushan Agarwal — Vice Chairman and Managing Director
Very good evening. Namaskar to all our valued investors and parivad of Shyam Metallic family. Especially for those who are going through these difficult time near the border our all the best wishes and it is a very very crucial moment for our state as we are going with lot of challenges and with our capability our governance of the country we are pretty sure that we will come with a very good output outcome. And thank you and Jai Hind to all. I am pleased to report that despite ongoing macroeconomic challenges we have delivered a Reese silent performance re sales performance this quarter.
Our revenue grew 15% year on year while the EBITDA record a strong 17% year on year growth. This was driven by our focus on the operational efficiency, disciplined cost management and maintaining a balanced product mix in line with our growth strategy and better served to our customer. We inaugurated our new corporate office in Tarathalla, Calcutta this quarter. This office will serve as a Hub of sale Customer engagement Regional operations strengthening our presence and responsiveness across India. A significant highlight this quarter was launched by our new range of color coded roofing sheet under SCL Tiger brand introduced in the variant of Royal Elite Azure Alpha.
A different brand, a different category and product and price mix manufactured at the art of old rolling mill facility with the with the most modern technology utilizing the best resources so that in the time to come we can overcome and prove ourselves as we have done in our past business with the best product at the best price. This launch further expand our value added product portfolio Catering rising demand in the construction and industrial sector since we all know that we have a huge distribution network across Eregion as it catered in the same supply chain management with the dealer D network we expect that it will strengthen our supply chain management and create more comfort and confidence of our customer, dealer, distributor and entire supply chain management.
We have also ventured into a B2C market and launched a food grade aluminum foil under SEL Tiger foil produced at our Jharkhand plant. With the demand of aluminum foil in the food business, we expect that we should be growing around 8 to 10% CAGRADE by 2030 and we will be well positioned to capitalize on the rising demand and emerging opportunity in this sector. Our blast furnace facility in Jamuria also got commissioned in Q3FY25 and continued to operate efficiency efficiently leading to a big iron sale in this last quarter with full year we expect achieve we will achieve more than 100% efficiency for the year 2526.
I’m very happy to share that today in a very very few months of operation we have achieved 100% capacity and we expect that we should be overcoming the 100% into 110% capacity for this year. We believe our strength lies in driving efficiency through both vertical horizontal integration enabling us to enhance the profitability and diversity our customer base and reduce more cost and increase the more efficiency. Our continued focus on the backward integration will further boost operational efficiency and increase the revenue contribution from our final products. Our production capacity have remained robust reflecting our commitment to the operational excellence and continuous investment in the advanced technology and repeated upgradation and modernization.
On the regulatory front, we welcome the government decision to impose a safeguard duty on the aluminium foil imports from China. This policy is very positive step to support the domestic manufacture by mitigating unfair pricing pressure. With our established aluminium foil production facility, we are well positioned to benefit from stronger domestic demand and improved market dynamics. We remain fully committed to execute our growth Plan as of FY25. We have increased the CAPEX of. We have incurred a capex of 6,584 crore. 6,584 crore representing our 66% of our planned expenditure. We have capitalized 4,908 4,908 crore as on date.
Our ongoing projects are progressing well and we anticipate their timely completion. We expect the majority of our carbon steel capex to be operational by FY26 while our stainless steel and aluminum capex are targeted to be commissioned by FY27. These investments are aligned with our broader strategy of integration, operational efficiency and sustainability. In conclusion, we are proud of the way our team continues to deliver in the challenge of environment. Challenging environment while staying focused on the building and stronger future. By constantly executing strategic project that boost volume and optimize efficiency, we are positioned to achieve a minimum 50% CAGRADE annually.
Thank you for your continued support. We look forward engaging you in the quarter ahead. Now I conclude my speech and would request our CFO Mr. Deepak Kumar Agarwal to take us through our financial performance. Thank you.
Deepak Kumar Agarwal — Executive Director, Finance & Compliance
Thank you sir. A very good evening to all. I will give a quick review of the reported consolidated financials for the quarter under review and for the year ended of the financial year 2425 on a consolidated basis of the company. For the quarter four of the 25 reported an operating revenue of 4005,139 crore, a growth of 15% over quarter four of the last financial year. Like in the previous quarter, in quarter four two we have been able to sell higher percentage of volume sales of finished steel at a higher realization which has enabled the company to grow in terms of revenue and EBITDA over the previous quarter.
As a result, Our EBITDA for quarter four of the financial year 25254 on a consolidated basis was at rupees 515 crore growth of 17% over quarter four of the last financial year and a growth of 13% over quarter three of the last financial year. There has been a decrease in the realization across steel product in the range of 3 to 5% in the financial year 2425 as compared to financial year 2324. However, on the back of increased realization in aluminum foil production and stainless steel, we have been able to maintain the gross margin at 27.7% in the financial year 2425 as against 28.2% in the financial year 2324.
The same has also been possible owing to the simultaneously reductions in per ton cost of our major raw material. We have reported a good ebitda for the quarter 4 of the financial 24 times 25 in comparison with the previous quarter. In order to maintain this growth in EBITDA number, we have been judicious and cautious on all other cost components with quarter 4 25. On a consolidated basis we reported EBITDA margin of 12.5% which is 30 basis points higher on a year on year basis and 40bps point higher when compared on a quarter on quarter basis.
For the year ended 2025 we reported a revenue of 15,138 crore growth of 15% over the last year on the EBITDA front from our company reported an EBITDA of 2,097 crore as against the EBITDA of 1729 crore for the year ended 2324 an upside of 21.2%. We have reported a net profit degrowth of 11.6% for the year over the previous year 2324. This is basically on account of adjustment of brought forward losses carry forward on account of acquisition of Mittal Corp during the financial year 2324 which has been adjusted against the tax arises. That’s why there is a degrowth on account of net profit.
When we compare with the financial year 2324-2425 we could achieve the above margin owing to increase in our steel volume growth contribution from the stainless and aluminum foil segment in the financial year 2025 our working capital days is 22 as against 12 days at the end of the financial year 2024. This is against the backdrop of introductions of blotch furnace color coated sheet and stainless steel. In spite of diversification in the product profile, the working capital days have just slightly increased. Similarly, we have achieved the massive improvement to our capital efficiency during the first half and the same trend is being perpetuated.
Our roce roe at the end of the financial year 2025 are at 15% and 14% respectively. The gross debt to equity which was at 0.06x at the end of the financial year 2024 is slightly higher at 0.07x at the end of the financial Year 2024 25. Our net cash position is 1,062 crore as on 31st March 2025. As against the gross date of 768 crore. As we have cash and cash equivalent along with the long term investments worth rupees 1830 crore, we have incurred a capital expenditure of 1944 crore as against the expenditure of 1578 crore in the financial year 2324 on the declared project from the net cash flow from the operating activity of rupees 1964 crore during the financial year 202425 we have spent the entire amount the capex undertake at our company.
I am glad to share that the financial risk profile of the company is very very strong. Our strategy has always been to incur a capital expenditure in smaller doses in a peaceful manner to ensure the balance sheet is never strained at all point of time. We closely monitor the liquidity solvency and capital efficiency ratio. I would like to assure you that the companies sustained the healthy financial risk profile despite pursuing sizable capital expenditure plan. Out of the 10,025 crore of capex announced since IPO we have already cumulative incurred the amount of 6,584 crore which is entirely from the internal accrual up to the finance area 2025 and capitalized.
Out of this 6,584 crore we have capitalized till date is 4,908 crore worth of assets. We have completed the 66% of the announced capex. The remaining 3,904 crore shall be expanded over a period of next two financial year with the majority of carbon steel related capex being completed in the current financial year that is today the capex relating to aluminum and stainless steel to be completed in the financial year 2627. We spent 2,130 crore on a capex this year and for the next year capex spend is expected on a similar line aided by the internal cash generation and sufficient liquid surplus which will ensure we take only limited debt in the event of any fund flow mismatch.
I would like to assure you that the bank limit utilization at the consolidated level is expected to remain moderate going forward too. Also the annual cash accrual should suffice for the capital expenditure requirement and debt repayment. Based on the implementation of projects underway, we are bound to see an upstate on our ebitda. We sell positively and directly increase in our return on equity and return on capital employed. As you all aware that for many years we have been following a prudent capital allocation policy by which 70% of the cash generated is returned back into the business, 20% is retained as a liquidity surplus and 10% is returned to our esteemed shareholder as a dividend on the back of good operating and financial performance with a strong net cash flow from the operating activity of the company in its board meeting declared a final dividend per share of rupees 2.2.
5 rupees per share subject to the shareholder approval. In the ensuing annual general meeting we shall have a dividend outgo of around 125 crore for the financial year 252425 including the dividend of 2.25 rupees per share which was declared earlier in the form of interim dividend. Now I conclude my portion of update and throw the floor open for question and suggestion. Thank you. Thank you to everyone.
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 touch tone telephone. If you wish to remove yourself from the question queue you may press star. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, it seems like the management’s line has got disconnected. Please wait till I connect. Sam. We have the management’s line with us. The first question is from the line of Amit Dixit from ICICI Securities. Please proceed.
Amit Dixit
Yeah. Hi. Thank you for the opportunity and congratulations for a good set of numbers in a very challenging backdrop. Two questions from my side. Now if I look at your Capex execution, it has been excellent. In next two years possibly this leg of Capex would get over. So just wanted to understand, you know what is the next that we can look at because two years possibly things will get over but I believe, I mean you might be thinking of the next. For the next leg of growth for the company. So just wanted to understand the key areas for the same.
And in slide number 21, 22 where you have so nicely highlighted the expected sales volume. Just wanted to understand, you know if today’s prices are taking context then what kind of revenue EBITDA we can look at by FY27. This is my first question, sir, are.
Unidentified Speaker
You talking to Mr. Nagarwal?
Amit Dixit
Yes.
Unidentified Speaker
Okay, just hold on sir.
Mr. Brij Bhushan Agarwal
Yes Amit. No.
Amit Dixit
Yes sir. I will just repeat the question possibly. I mean I was not able to connect.
Mr. Brij Bhushan Agarwal
Yeah, yeah.
Amit Dixit
So the question is that you know the Capex plan that was outlined, I mean 66% we have already achieved over next two years we will achieve the residual Capex. So just wanted to understand what is the next leg of growth that you are looking at? What all sectors or sub sectors that you are targeting. And Also in slide 21 and 22 you have laid out very nicely the sales volume, expected sales volume by FY27. If we take the take today’s prices in context then what kind of revenue EBITDA we can look at at the company level in FY27.
Mr. Brij Bhushan Agarwal
Investment. What sham Metallic is following is on the aluminium sector we are going backward integration in the aluminium, putting up a foil stock plant. We are increasing the foil capacity two and a half times and we are also going forward foil capacity in putting up the aluminium fins and value addition product which is going to strengthen the aluminium business and which we see that in FY27 aluminium business should have a very decent revenue and a good margin business. We will be able to cultivate as we are going backward reducing the price and cost of our existing business.
Also increasing and enhancement enhancing the capacity of our existing business and adding more value addition like aluminum fins which is a very interesting product which is as on date 100% import. And we are seeing lot of air conditioning industries are coming up, lot of cooling towers, air cooling towers, lot of businesses are getting developed and in the time to come I see a very robust demand because it’s a laminated foil, very high tech and today nobody in the country is doing that. Now our second major investment is coming up in the stainless steel. As you know we have commissioned the stainless steel plant from the nclt a sick plant.
And now in last one and a half two years we have learned the operations and this year we expect that we should be able to do a revenue of close to 13 to 1400 crore this year and in this stainless steel. Now from the long product we are getting into a flat product. We are setting up a complete steel melting shop where we will be using our existing iron, our captive power, our specialty alloy, other general ferro alloys and only nickel is a product which we might have to buy from the market or we will be focusing more than 60% on the 200, 400 seals which is almost a nickel free.
There’s no much nickel requirement or it is a nickel free product. In stainless steel we are putting up a flat product mean we are putting up complete downstream where we can cater to the tube market, to the high segment precision steel in the stainless steel sector which is used for the decorative steel in the railways in lot of other businesses in the defense lot of requirements are there so we should be able to cater into that market. So this product is also very very interesting and it is a downward and upstream both integration of our existing plant and it is coming up in the brownfield existing location and we don’t see any challenge in setting up this plant.
The third upmost what we are doing right now is we are increasing the capacity of our color coated Plant. It is very interesting that we just commissioned the plant in the last quarter of the last year and last month we achieved almost 90% capacity utilization. Our product is well accepted in the market and now we are gearing up for high value added product in the existing product and also doubling the capacity of the existing HR color coated gal volume business. What we have commissioned last year apart from that we are adding more DRI facilities which is already shared in our earlier projection with the captive power plant because we will be requiring lot of power to run our existing aluminium plants and other plants.
So we’ll be generating the power from the waste sheet and also will be able to cater to our existing downstream facilities of aluminum as well as the stainless steel facility. So this is what is the major capex we have outlayed in the present businesses which is pending and we expect that in next one and a half two years we’ll be able to complete that capex. Thank you.
Pankaj Harlalka
To answer the second portion, Amitji, basically if you look at the revenue expectation post 27 based on current realization is about anything between 22,000 to 23,000 crore and EBITDA we are currently this year at about 1866 crores. So it should be anything between 2,800 to 3200 crores.
Amit Dixit
Wonderful. The second question is for Deepakji. This year we saw an inventory build up. I mean inventory days have gone up and you mentioned in your prepared remarks that this is due to the new verticals coming up. So just wanted to understand that whether this is the normal inventory that we should work with around 100 days or there is a chance for working capital unlocking inventory unlocking. Rather as we go ahead it will.
Deepak Kumar Agarwal
Be the inventory days which will be in terms of the new upcoming project the inventory day will be hovering in between 90 to 100 days.
Amit Dixit
Okay sir. Got it. Got it. Thank you and all the best.
operator
Thank you. Before I take the next question I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Shaleen Kumar from ubs. Please proceed.
Shaleen Kumar
Yeah. Hello.
Pankaj Harlalka
Yes. Yes sir.
Shaleen Kumar
Yes sir. Congratulations to the management. I think it’s a pretty good set of numbers in the current environment. So Bhushanji, I missed little bit of your initial remark and I also what I heard that April has been pretty solid and strong for specifically for your blast furnace etc. But what I want to ask over here is that you know while your performance has been very strong for the quarter, is it fair to Assume that it has built over the months because you know some of your capacities have come in past few months. So you know March maybe stronger than Feb, maybe stronger than Jan or was it, was it you know pretty, pretty homogeneous.
Mr. Brij Bhushan Agarwal
I say it is totally cumulative only because market was also end of fourth quarter always. You know we see the markets are always on the better side. The demand was also very good. The realization also improved. No doubt. Also there were lot of changes and improvement in the efficiency side from the cost side and also the new value added products. You know we are regularly innovating like in Pigaron also we are making some great foundry grade materials and high value added. So a lot of thing has cumulatively contributed.
Shaleen Kumar
Thank you. So basically the reason I’m trying to ask is it will help me understand how the 1Q is going to be like you know how strong the March or April is. Any color on that like in terms of numbers.
Mr. Brij Bhushan Agarwal
Market is not bad I would say and I expect that there will be a volume growth, the revenue growth will be also there in this Q1 and I’m pretty optimistic like everything is looking very positive.
Shaleen Kumar
We can expect Q and Q growth right in 1Q with the.
Mr. Brij Bhushan Agarwal
Yes, yeah we can expect. Yeah.
Shaleen Kumar
As utilization goes up for all your new capacities. Right.
Mr. Brij Bhushan Agarwal
Perfect, perfect, perfect. Correct.
Shaleen Kumar
Yeah so that I. Yeah for sure sir, broader I think this is a question from Deepakji. Deepakji, can you put in numbers like what kind of capex we are looking for? FY26 and key areas.
Deepak Kumar Agarwal
Yeah, yeah. The remaining capex of around 3,000 crore out of this 3,000 crore the 2,000 crore of capex will be incurred during the financial year 2526 which comprising of captive power solar and this Comprise finished steel 413 crore Stainless steel 784 crore Aluminium 126 crore which all conclude is there is a capex of 2010 crore.
Shaleen Kumar
Got it sir, Got it. All right. One more question on the capex one and now I’m going back to the Bushanji. I think Amit, Amit tried asking you the same thing. See sir, these are, these are some of the capex one which we know. Right. But you know theoretically I’m not asking you to guide us but theoretically where else and what else you can do, you know because there is enough cash and you know now you almost done a large part of our capex which we announced a few years back. So you know what other things we can think about.
I’m not so I’m just putting like a theoretically not necessarily, you know, telling you to commit but what are the areas which we can evaluate? Let me put it this way, you know.
Pankaj Harlalka
Are you there?
Shaleen Kumar
Hello?
Pankaj Harlalka
Yeah.
Shaleen Kumar
Now I’m asking sir if he’s there.
Pankaj Harlalka
Yeah, yeah. So I, I, I, I, I’ll take it on behalf of sir till he joined. So basically Shaleen ji we have been contemplating a few things obviously.
Mr. Brij Bhushan Agarwal
Can you, can you please repeat the question?
Shaleen Kumar
Yeah, sure, sure. Basically I’m trying to get things more from you. I think Amit tried, right. To get more from you. So let’s say theoretically, right? Theoretically, no guidance, but theoretically. What are the other investment areas beyond what you have already announced, right? Which you can explore, you know, whether in aluminum or in steel or whatever, right? Like wire or HRC or anything. What you, you can talk about, right? Or you know, existing products. Theoretically, what, what all you can explore.
Mr. Brij Bhushan Agarwal
The stainless steel lawn product. We have recently commissioned the wire division and the bright bar division. These buyers are all very high precision wires which has a incredible export market and has a very unique utilization and very few limited companies are there in the country. So we just commissioned the plant now bright bar and wire and we expect that, you know, it will take close to three months to six months to stabilize because it has lot of high esteem buyers which has their rules and regulations of approvals and all. So this is one thing, what we are doing in the long product of stainless steel in aluminium as we said that we have already been approved in the battery foil business and we expect that, you know, once we see any battery plant commission so we will be as on date we are only the choice in the country who has been approved and is well established to supply the battery foil in the EV battery space.
Apart from that, if you see down the line all of our new investment, what we did was in, we cultivated hardly a couple of years before. It is majorly focusing on the high value businesses in the terms of Delta. Also if you see the ROC of these businesses are very high because if you think of setting up a half a million ton of stainless steel plant, you know, any half a million ton of stainless steel plant would have cost close to around 6000 crores. Because stainless steel is a very unique product. But since we had all the establishment of power plants, steel making, specialty alloy, land, everything.
So you know, at a very minimistic cost, you know, we are doing half a million tons. So it’s close to around you know, 1500 crore. So all these business has a very high RoC and also it is very well integrated with our backward and forward. Because if you have your own raw material then your inventory cost, your working capital cost, everything is very well taken care of. Then apart from that, you know we are adding lot of energy, you know power plants. As you know we have a cold washery and we generate a lot of rejects.
So since we are adding the DRA capacity we need to add our power plant to consume that middling and rejects which is a byproduct of our washery division. So all these things is you know all along cumulatively is increasing and enhancing the bottom line and also getting integrated in the numbers of the total consolidation. Thank you.
Shaleen Kumar
All right sir,
Deepak Kumar Agarwal
in addition to this I would also like to share you that since we have a capital allocation policy and we are generating cash of more than 2000 crore year on year basis and 70 to 80% further it will be reinvested in the business. As you said, after two years what we will done we will definitely announced various project. Our capex team is already working on it and we all whatever we will invest where the roe and roce would be more than 20% will be there. So we are working on it and we will be definitely shortly announced maybe next quarter or in the next quarter.
Shaleen Kumar
Got it. Deepak Ji, can I take this opportunity to ask a little bit more on your stainless steel wire. You know just few basic questions over there. In terms of end market, you know the capacity, what kind of EBITDA per ton can we expect in that and you know how big is the opportunity?
Mr. Brij Bhushan Agarwal
See Sahleen, we just have installed a very mid sized capacity because you know wire business and all they take little time to develop. Sure sir, but overall I can tell you, you know comprising of wire and bright, our total installed capacity is close to 40,000 tons per year presently.
Shaleen Kumar
Right.
Mr. Brij Bhushan Agarwal
And on an average I can say that you know once we establish our product and we are through with all the overcome all the challenges because we had put up the world class facility. So there’s no doubt and since it is a forward and backward integration of our existing stainless steel long product division which we have acquired through the nclt you know in Indore. So we expect that you know close to 7 to 12,000 rupees per ton is going to be an average EBITDA. What there are certain products where we might fetch more than 30,000 rupees a ton.
But what conservatively I am sharing with you is we can say that it will be close to, you know average will be 10 to 12,000 tons.
Shaleen Kumar
And sir, end market, end customer and usage any sense on that huge, you.
Mr. Brij Bhushan Agarwal
Know, the lot of export market is there. There are a lot of defense company which require wires. You know, there are a lot of in railways. A lot of requirement of wires are there on the machine side and also on the decorative side. So it has a very spread wire is a very big segment in today’s time.
Shaleen Kumar
Just last bit sir, on this then is there a entry barrier in terms of the product qualification like or do you think that that’s not a big challenge?
Mr. Brij Bhushan Agarwal
No, it is a challenge. It is a challenge like you know any of these. We are not talking of a commodity wire in today plant. We are making, you know, welding electrodes wire. Nobody you know in the country is doing this. So we are, we are the company who has developed the welding electrodes wire. Like for all the welding electrodes. We make a special quality of wire which used to be, you know, was an import from outside. So all these wires, they have a very special application. I will not be able to. Share. All the details because you know I’m not directly day to day involved on the product side. But briefly I’m telling you so it will not be right or appropriate for my from my end. But I can tell you like these are all the high niche wires, decorative. A very big segment of this stainless steel wire. Then you know, the defense. All the, you know, in the construction also in the specialized construction also the stainless steel special quality wires are very much important, you know. So in the machinery side, on the heat exchanger side, their wires, filters, if you have seen a filters, you know.
So there are lot of requirement are there on the automobile side also you know some components are there where these requirements are there. So it’s a huge like wires like, you know, it’s like an ocean. Like when we see all category of wires are there. But specialty wire has a very different market.
Shaleen Kumar
Exactly. That’s what I was trying to ask you. No, it’s. I think it’s very, very exciting. Sir. I’ll go back to the queue. Thank you so much. Really appreciate it.
operator
Thank you. Before I take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Rajesh Majumdar fromB&K Securities.
Rajesh Majumdar
Yeah. Good evening all and congratulations Bhushanji on becoming the chairman of the company. So I had a couple of questions. One is the fact that the Di5 plant, I think there is a time lag of about one to one and a half years or two years before the plant kind of Stabilizes as per my understanding from the other persons who put up this plant. So will we see a period of losses for the DI plant? Di PI plant. And is that incorporated in our estimates? That was the first question.
Mr. Brij Bhushan Agarwal
DI plant, yes. It takes around nowadays it doesn’t take one year to one and a half year because you know, DI has become like a commodity. It is not more a very niche product, if you ask. And all the past procedures, challenges in this industry is more or less sorted out since we have shifted this DI plant from our existing Jamuria to Ramsaroop, you know, which is near to the port and cost wise it is more economical and the downstream because we have taken a Ramsaroop plant where we had a blast furnace and we want to create some product mix where, you know, we can set up a downstream product and all.
So I don’t see there is much challenges, you know, but yeah, it do takes time in setting up a plant of a di, it takes close to one and a half to two years, six months establishment time is good enough. And right now all the rules and regulation, what was created by the old precedent, you know, is no more in the system. So it is not a very difficult thing to sell the market in the market. Thank you.
Rajesh Majumdar
Thank you, sir. And my other question was on the excess melt shop you mentioned that we’d be focusing on the 204. So this will be a blast furnace. This will not be a scrap based. This will be a fully primary unit. Is that correct?
Mr. Brij Bhushan Agarwal
Primary unit? Yeah, correct.
Rajesh Majumdar
Okay. So we will not be using scrap at all. We’ll be using or I don’t know.
Mr. Brij Bhushan Agarwal
Yeah, yeah, we will be using the scrap in case we want to have a nickel. You know, because there are certain scrap, if you buy a virgin nickel, it is more expensive. So every stainless steel manufacturer globally, they source scrap to reduce the price of the nickel. Because there are certain scrap where you get nickel at 60% of the normal value. It depends. But you know, we don’t have much pressure on nickel because you know, our major focus would be close to 200 or 400 series. And I expect that, you know, a certain stage you have a requirement of a nickel that should also be available in our portal because we can’t allow our customer to go to another window for any other material which has a very low requirement.
Rajesh Majumdar
And what about ferrochrome, sir? Will we have a ferrochrome plant as well or will it be sourcing ferrochrome from outside?
Mr. Brij Bhushan Agarwal
No, no, no. We are already making ferrochrome, manganese, Low carbon specialty all 80%, 89% of all the specialty products. We are the largest supplier to all this chainless steel company globally. You know. Perfect.
Rajesh Majumdar
And sir, if I could hazard a strategic question on your capital allocation policy or very low space for dividends. So are we fairly confident that we’ll be reaching the 20% ROCE for our company? Because we hardly see much dividend payoff in this company. That was the last question.
Mr. Brij Bhushan Agarwal
Thank you. That is Mr. Deepak Agarwal question.
Pankaj Harlalka
Definitely. So we are already if you look at last post listing Since 21 we have doled out a dividend of around 11% as per our policy. And so we are always on the capex right now. So if you look at a large capex happened in terms of blast furnace which was like spend of more than 12001300 crores spread over two to three years. So that is why the ROE was lower. I think going forward things will be back to normal as far as overall company roe is concerned.
Rajesh Majumdar
Thank you.
operator
Thank you. The next question is from the line of Anupam Gupta from IIFL Capital. Please proceed.
Anupama Gupta
Yeah. Hi sir, one of the earlier questions you had answered in terms of the expected EBITDA when you reach this the full volumes in FY27 of 3200 crore. But if you actually look at your volumes and the mix as well, the finished steel capacity is doubling. Your stainless steel is coming up entirely in FY27 and aluminum also is doubling. Only the only the carbon steel intermediate products is where you have 20% growth. Ideally does the 3200 crore number is a very conservative number. But ideally you should be closer to that 4000 crore given that already at a run rate of 2000 crore EBITDA on an annual basis.
Pankaj Harlalka
Yeah you are right.
Mr. Brij Bhushan Agarwal
2800 to 3200. Yeah, we would love to talk conservative. Like if you see in last three years in Shyam Italy our deliverable is 120%. Like you know when we did an IPO the revenue of the company just three and a half year before was 6,000 crores. And next year we are talking of 18,000 crores. Our EBITDA that time was close to 600 crores. This year we are talking more than close to 1800 to 2000 crores. We would love to be conservative because you know, you never know what kind of changes happen in the geopolitical situation.
And we want to be pretty sure that our deliverables and our commitment should not disappoint our investors. Though we will give our best shot and let us keep this in the trade in the business like you know, how the market reacts, how the pricing goes up, how the raw middle things happen so that in the time to come we should be able to deliver more and more what we commit.
Anupama Gupta
Sure sir, that’s helpful. Just one question related to that since you mentioned that you want to be conservative here apart from macro any specific thing which you worry about in terms of. Let’s say so far your execution has been very great in terms of how the capex has implemented but any other risk which you worry about to achieve this sort of growth which you have indicated.
Mr. Brij Bhushan Agarwal
I am only worried about my investors. They should be happy, that’s all. I’m only concerned that whatever we promise we should be able to deliver more and investors should be more and more happy. Actually not bothered at all. I think we are pretty mature and if you see last so many years, so many quarters you have seen like with the best of the metal company visibly the Shah metallic year on year, quarter on quarter we had ever tried our best to deliver more and more better. So I think now our investors should have a prolonged confidence on their company like on our Deliverables, on our CapEx plan, on our dividend policies and all what we stated three and a half year before we are trying to maintain as per our commitment and what we foray we had forecast for three years.
Pankaj Harlalka
Sure sir, that’s helpful. Thanks a lot.
operator
Thank you. The next question is from the line of Rudraksh Raheja from I thought PMS before that I would like to remind participants that you may press star N1 to ask a question. Please proceed.
Rudraksh Raheja
Yeah, thanks for the opportunity sir, my question pertains to the DI pipes industry. 12 to 15 states have started accepting OPVC pipes so how do you think that affects DI pipes industry?
Mr. Brij Bhushan Agarwal
Can you please repeat your question?
Rudraksh Raheja
Yeah, I’ll repeat it. I wanted to ask about how OPVC pipes introduction affect the DI pipes industry since we are expanding into that product.
Mr. Brij Bhushan Agarwal
Very correct. It is affecting. It is affecting and in the time to come it will have a great competition with the Di5 below 300 size. So if you see today a complete Di plant if you think of establishing a complete Di plant with the Sinter plant blast furnace infrastructure and all it is not going to cost you less than 2000 crore but in our case a small capacity of DI plant is just a kind of ancillary to our existing brownfield project what we acquired through the nclt. So if we are able to like DI pipe has been able to gain the ebitda of close to 18 20,000 rupees a ton in last one year and presently I think it is struggling between 7,8000 to 10,000 rupees a ton.
I’m telling you a ballpark figure. I’m not 100% sure but yes, 95%. If we invest on 300,000 tons capacity, close to 350 or 400 crores and if I’m able to gain the ebitda of say 5000 crores, 5000 rupees a ton we make close to 150 crore EBITDA every year. So if you see the RoC RoI on my additional investment on DI which helps us to de risk our business, which help us to space ourselves in the product and which is a very small investment for such a conglomerate like Sham metallic in the terms of the future opportunity.
Also in the terms of utilization of our existing hot metal. So this is one of the idea what I have. But you are very correct, this is a challenge and this is going to be a strong challenge in the time to come. But OPBC has always been in the international market for dunces of years. If you go to any of the western country but there are certain areas where still the DI is the major pipe which is being procured and utilized. So we would like to restrict ourselves with the minimistic and conservative capex in the first go so that this period we should be able to regain.
And in the worst of the time if we discount ourselves on the 50% of our ambition then also our ROC and ROI is very interesting. So this is the reason like we are absolutely optimistic on this business.
Rudraksh Raheja
Got it sir, Regarding this sir, how which sizes do you think that are getting most affected in this segment? Or how much percentage of below 350?
Mr. Brij Bhushan Agarwal
This is close to around 40 to 50%.
Rudraksh Raheja
So you just to clarify, you are saying 40 to 50% of the industry is being affected.
Mr. Brij Bhushan Agarwal
40 to 50. But still there are sizes of 80 to 350 where people are using DI. They have not rejected it. Like if I am putting up a steel plant, I need a water supply. I will definitely like to put up a DI plan Di5, not the OPVC pipe. So it depends on the usage, the area, the concern of the utilization and also it all has a unique, you know, properties like, you know, you can’t hundred percent replace it. But yes, in certain places it can be replaced. When it is an open space you can’t put up a plastic pipe.
OPVC is just a plastic pipe. But in the open Place BI is very well installed and it is as good as, you know, the hard surface. There are certain areas you know, where you can replace, but yet it is a challenge. I completely agree with you.
Rudraksh Raheja
Sir. Got it. Thanks for the clarification.
operator
Thank you. The next question is from the line of Deekshant B from DB Wealth. Please proceed.
Deekshant B
Hi. Congratulations sir. So I want to understand from a larger term perspective, of course you are a growth company and we have always portrayed a good growth scenario and also deliver on a good growth scenario while being conservative. But our margins are still at 12% and we have an outlook to be doing Capex which is going to be enhances. But what do you think? FY27, what kind of margins can we be expecting from our business? On a steady state? Not any, you know, cycle gains that we get, but on a steady state what kind of margin improvements can we expect?
Mr. Brij Bhushan Agarwal
The margin is a very, very speculative statement as on date. But we have to understand that in the toughest scenario the company has delivered a decent margin and now whatever the future growth is there it is coming up with the high value added businesses. So margin is definitely going to enhance. Apart from that, if you see all the future businesses investment is also helping us to drive down in the cost side by adding, you know, the backward integration or the forward integration so that the realistic value in that business is also increasing. So it is going to increase, but at this point of time I will not be able to state like, you know, whether it will be 25 or 15% or blah blah, blah.
So. But yes, definitely the trend is going on the upper side. That much I can tell you.
Deekshant B
Nice, I completely understand that and it would be unfair for me to ask you something where it’s so speculative, but what I’m trying to understand here is that let’s assume that the businesses that we are going in, they are live today and in current market situation what kind of margin we would have expected.
Mr. Brij Bhushan Agarwal
So I am, I’m not till I’m getting a good ROI in the roc, you know, I’m happy irr. So margin, you know, I told you, you know, it’s very volatile. So it depends on the demand supply, geopolitical situation, today’s time, since last two, three years, nothing is going uniform across the planet. So in spite of that, in spite of so much challenges, you know, if you see quarter after quarter, if you compare your company with the best of the metal companies, you know, I’m not saying we are the best, but we are among the best.
Deekshant B
So not. Certainly, certainly.
Mr. Brij Bhushan Agarwal
Thank you
Deekshant B
so follow up question here is do you think that the sort of dumping if happens. Of course we our government has been able to help us a lot. But if there is any sort of dumping that does happen, do you think that affects us in our particular product ranges.
Mr. Brij Bhushan Agarwal
Majorly not because you know if you see in our business product module a very less percentage of import threat is there but overall the psychological scenario do matter. Like dumping was happening before but you have never seen, you know the numbers or the graph or the margins have come down. So this is a true example and explanatory to your question. But yes, anything on the positive side drive up. Anything which is on the negative side also do affect. But in our business model where we are too much based on the Indian demands and the product what we had been doing is majorly the product which is consumed in the country and which doesn’t have majorly an import.
If you see on the total portfolio. So it do affect but very marginally. Thank you.
Deekshant B
What itself. My last question here is on depreciation. Now of course we judge ourselves by Ebit, Roce ROI and these sort of numbers. But like is it only when the cycle turns and we get those windfall profits that we can expect our net profits to be in the higher range? Or like do you see a point of time where the depreciation growth tapers down and our operating profits are such high that the depreciation no longer really matters? Do you think that happening anytime soon.
Mr. Brij Bhushan Agarwal
In our balance sheet? If you see the interest payout is marginal or it’s hardly, you know, we are. So depreciation is just a statutory accounting norm. So if you should see that net cash which is more important. Most of the company in our terrain has is with lot of debt baggage and lot of corporate debts and blah blah, blah. So it really doesn’t really bother us. We are more concerned on the net cash which we make on the EBITDA side and the after tax. What is majorly is a net cash. What is what is available.
Deekshant B
Got it, sir, Got it. Thank you so much sir. This is very helpful. Congratulations.
Mr. Brij Bhushan Agarwal
Thank you. I have another meeting. Can we. How many questions we have now?
operator
This was the last. I think we are closing.
Mr. Brij Bhushan Agarwal
Wonderful, thank you. So, anything else?
Unidentified Participant
Hello.
Mr. Brij Bhushan Agarwal
Yeah.
operator
There is only one question in the question queue.
Mr. Brij Bhushan Agarwal
Okay. Please.
operator
Shall I move with that question or.
Mr. Brij Bhushan Agarwal
Shall I please, please. We don’t want to. Yeah.
operator
Okay. The next question is from the line of Shaleen Kumar from ubs. Please proceed.
Shaleen Kumar
Cash is important. So is it possible to share the maintenance Capex for this quarter or rather from next time onwards so that we can think about cash profit because optically profit is looking lower, right? So we can at least know what’s the cash profit because we can add back the depreciation minus the maintenance effects. So it’s not now but.
Pankaj Harlalka
So Shaleenji, this, this, this here. If you see the Capex was around 2148 crores, right? Of which the capex that we had announced for that the capex was around 1940. 44 crores. So. So we incurred about 200 crores out of maintenance capex this year leading to improvements in our existing plants.
Shaleen Kumar
And all the deposition, if I can ask you. Accounting depreciation.
Pankaj Harlalka
What did you ask sir? How?
Shaleen Kumar
How much was the accounting depreciation? Depreciation.
Pankaj Harlalka
Depreciation was around 7, 700 crores, right?
Shaleen Kumar
Okay. So basically you’re saying that X of maintenance CAPEX roughly 500 crores we can add to the pad to commit the cash profit, correct?
Pankaj Harlalka
Correct.
Shaleen Kumar
That’s just the way to succeed, right?
Pankaj Harlalka
Thank you sir.
Shaleen Kumar
Thank you.
operator
Ladies and gentlemen. That was the last question for the day. I would now like to hand the conference over to Mr. Sumeet Khaitan from MUFG in time for closing comments.
Sumeet Khaitan
Answering all the queries today we are from MEFG In Time Investor Relations Advisors to Sham Metallics and Energy Limited. For any queries please feel free to reach out to us. Thank you everyone.
operator
On behalf of Shyam Metallics and Energy Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.