Ladies and gentlemen, good day and welcome to the Maharashtra Seamless Limited Q1 FY2027 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. 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 is being recorded. I would now like to hand the conference over to Mr. Vikash Singh from ICICI Securities Limited. Thank you, and over to you, sir. Good morning, everyone. Welcome to Maharashtra Seamless Q1 FY2027 conference call. On behalf of you all, welcome to all. Sorry to interrupt you, Vikash. Your voice is breaking. Is it better? Yes, this is quite better. From the management we have with us Mr. Kaushal Bengani, Deputy General Manager, Investor Relations and Finance. Without taking any much time, I will hand it over to Kaushal for his opening remarks. Thank you, Vikash. Good morning, shareholders, thank you for joining our earnings call. At the outset, I would like to inform that one of our independent directors unfortunately passed away a few days ago. Mr. Ashok Bhandari was a man with a stellar reputation and his contributions are immensely appreciated by the company the company believes that he would have contributed much more, due to the sudden and sad demise, we are no longer able to benefit from his knowledge and experience. Just wanted to place that on record before commencing this call. The results for the first quarter of FY 2027 have been good in this quarter we have dispatched 96,000 tons of seamless pipes. Dispatches in this quarter were impacted by disruption in gas supply in April. Otherwise, we would have been able to dispatch around 105,000 or 110,000, which is the usual run rate. Despite lower production, margins were not impacted. The encouraging sign in the current environment is that our order book has improved materially from when it was last reported. The order book currently is at INR 1,709 crore, which is an improvement by 31% from when it was last reported. After many quarters, I am pleased to inform that 42% of the total order book are orders from the oil sector 20% of the total order book are export orders, primarily to the U.S. and Canada. These two segments specifically are higher margin segments we should see the benefits of this order book in the coming quarter. On the treasury front, there is an improvement in other income on a quarterly basis with an amount of INR 175 crore. The previous year average per quarter was around INR 97 crore per quarter. This improvement in other income is primarily driven by the improvement in the equity markets, which has been recently seen. On reviewing our Q1 FY 2027 performance versus Q4 FY 2026, revenue improved by 3% to INR 1,266 crore. EBITDA declined by 23% to INR 184 crore on account of lower production. However, PAT improved by 150% to INR 271 crore on account of better other income. EPS in this quarter was INR 20 per share. A point to note here would be that the immediate performance in the first quarter is not so reflective of the way we'll perform in the next quarter or the quarter after that, because the revival in the order book and the kind of orders that we've been able to accumulate in the past few months has pleasantly surprised us. Due to the lower expenditure in the oil and gas sector in the previous few years, we were waiting for a revival, and we believe that the revival is just around the corner, as is indicated by the data which is coming in. I would now request Vikash to kindly open for questions. Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself, you may press star 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 our first question from the line of Saket Kapoor from Kapoor & Co. Please go ahead. Yeah. Namaskar Kaushal bhai. I hope I'm audible. Yes. We can hear you. Yeah. Thank you first of all for the opportunity, and thank you, Vikash bhai, for hosting the call today also, and thanks to the management. It is after a gap, and we hope for the continuity of call, and I hope all good at your end also. Firstly, Kaushal, if you could just dwell further on the optimism in your opening remarks in terms of how is likelihood the EBITDA margin trajectory or the EBITDA per ton going to shape up on the basis of the closing order book? Also since you have you mixed we articulated that it mixes also skewed better. So if you could just give us more color touch, that would suffice. On slide 15, the order book is detailed. In that slide, I have mentioned that INR 714 crore worth of orders are from ONGC and Oil India, which is the oil sector, which is generally a higher margin segment. In addition to that, 20% of the total order book is from the export segment, which is again a higher margin segment. Further, these special orders of INR 100 crore of cylinder pipes, which has also been mentioned, is also there. All of these dispatches are likely to take place in the second quarter, with a little amount being spilled over onto the third quarter. The point which I was making was that almost 63%-64% of the total order book comprises high-margin orders, which is a pleasant surprise for everyone because this has not been the case in the past few years. Sir, just to get a bit on the color on the number part. When we look at our Q1 number with the type of outages because of the gas issues, and I think the labor was also a factor. We did an EBITDA per ton in our guided range of INR 15,600. Now, taking into account the mix, the export, the high value added segment, what should be the likelihood of the EBITDA per ton for the coming quarter with the confirmed order book in execution now? If you could just give us some more color. How is volume likely to shape up for the year? Or for the ensuing two, three quarters, if you could give us some more color, sir. Specifically on the number, I would not like to comment because it varies on the kind of products that we dispatch in a particular quarter. What I can say with reasonable confidence is that margin should be maintained, if not improved, in the coming quarters. On the dispatch front, dispatches in the first quarter were impacted due to disruption in gas supplies in our Telangana plant in the month of April. That has been resolved. We should see dispatches in current quarter of around 105,000, 110,000. Oh. Which would mean that a yearly average of around 410,000 to 430,000 would be reasonably possible. Okay. 410,000 tons to 430,000 tons would be reasonably possible. Okay, sir. Sir, we did 420 or 419 rather for FY 2026. That number may inch up to the 430 bracket. Yes. Just in continuation to that, what is the update on the finishing line for the southern unit, and whether we will garner any benefit of the same for the current year? On the finishing line, we have placed orders of INR 107 crore and made payments of INR 89 crore. We are still waiting for the finish line to be completed. Maybe next quarter I'll be in a better position to give you a specific update. Okay. Can you explain to us, sir, is it this geopolitical setup or the long-time delivery of machinery that are related? Because these are inordinate delays in our commissioning of finishing line. I stand corrected if you could just explain to us. In the past year and half, we were not pushing this aggressively because the market was not so buoyant. The revival in the order book in the current situation will push the company to complete the finishing line sooner rather than later. Sir, in continuation to the same, can you give some more color on the bid pipeline now? Also, how is the tendering process currently looking, both from our oil PSUs and also from the export market, which you have just mentioned that have revived, and the contribution would be higher, I think so, for the ensuing year. Then some more points. I would refrain from commenting on the bid pipeline, but I will give you some data points which will probably give you a better sense. In financial year 2023, exports were 25% of total dispatches. In financial year 2024, exports were less than 5% of total dispatches. In financial year 2025, exports were again less than 5% of total dispatches. In financial year 2026, exports were less than 10% of total dispatches. In the first quarter of FY 2027, exports were around 22% of total dispatches. I think you should be able to make a reasonable assessment on how things are positioned for the future. Sir, since we do not have the closing order book for the March 2026 closing order book, can you give some color or the exact number of what the order book was in the month of May or March? Any number which you have, which is comparable to this INR 1,700 crore number? The number which I was referring to earlier was INR 1,303 crore, which was the number which was reported in the call for Q3. The number for Q4 would be around INR 1,300 crore only. Not much change. Okay. That is a very significant aspect on a quarterly basis, which you have just explained to us also. Sir, I would also like to have a word on the update on the scheme. If you could just like to mention about what are we exactly planning to do. I think so some revision is also there, which was expected to be submitted. I am referring to the three companies or the three portfolios for Maharashtra Seamless. If you could just explain to the shareholders what exactly it is, what are the rationale and your thought process behind it. There is no update. The scheme has been withdrawn. Okay. Okay, sir. Sir Lastly, sir, on the change in inventory. That is also attributed to the lower dispatches only, and that will get corrected in the ensuing quarters. There is nothing more to read into it. Correct. Okay. Last point on the premium connection, sir. When we look at your presentation slides, give me a second. Slide number 10, we have seen that for the June quarter, under the Jindal Premium Connections, the ICD value has moved up from the closing balance of INR 10 crore to INR 14 crore. Firstly, with respect to the premium connection part, where are we in terms on the JV, which we've expected on some collaboration, and what does this minor increment in the ICD signify? The joint venture agreement with JFE was done through our wholly owned subsidiary, Jindal Premium Connections Private Limited. We have commenced operations on manufacturing of premium connections, and we have successfully dispatched few orders. The increase in ICD exposure to our wholly owned subsidiary is because the wholly owned subsidiary has started manufacturing, and it requires few equipment's and initial funds to start and improve production levels. The capacity of this plant is around 8,000-10,000 tons per year. It is a value addition product. We have mentioned in our earlier calls that the company is focusing on developing and improving its basket of value addition products, and premium connections is one of those products which we wanted to develop, and we have successfully done that. We also have orders of premium connections, and the mill for premium connections is booked till April of next year. Okay. Sir, can you give some more color on what would be its contribution? I think so, it is being clubbed under share of profit in associate and joint ventures. That is where its profitability would appear when we will execute the orders. No. It is a wholly owned subsidiary, so there would be a line-wise consolidation. Okay, sir. For this first quarter, there is no contribution as of now for the. There is contribution of Jindal Premium Connections. Okay. Can you share It is a wholly owned subsidiary. The financial performance of the wholly owned subsidiary will be consolidated with that of the standalone entity. Sir, when I look at the standalone number, it is INR 1,091 crore sales from operations, and consolidated also is the same number. Where we will find this number, sir? You will not find it separately. It is consolidated. In the standalone or company? Can you quantify for us? In the consolidated financials, the subsidiary is consolidated with the standalone financials. The financials of the subsidiary is consolidated with the standalone financials. Yes, sir. That will not appear in the revenue. It will not flow through the P&L in the revenue and then the PBT. I just wanted to understand- It will. For subsidiaries, line-wise consolidation is undertaken. Sales of standalone will see an addition of the sales of the subsidiary as well. Yes. So on for every line item. This is applicable on all subsidiaries. Correct. This 1,091 is having the Jindal Premium Connection embedded in it? Yes. Okay. Can you quantify, sir, what have been the contributions since the value-added aspect, if some more color would have been given? What should be the annual contribution then? I have already spoken enough about it. As I said, it is a market of 8,000-10,000 tons. Overall, it will not make a material difference, but it will lead to a situation where decline in profitability is limited on account of value-addition products. That's why all companies want to develop value-addition products because they are small in the capacity and high in profitability. Correct, sir. Lastly, sir, as investors have been requesting for the cash utilization. Since the scheme has been withdrawn and now the first thought process would be laid into that. What should investors be looking now for the cash utilization, and any more color or what should be the near-term timeline that we should be waiting to hear from the promoters and the board on the utilization and the new effective scheme, if any? Any thought process you would like to share now? There is no update. Whatever I said earlier remains as of now. Okay, Kaushal. I'll join the queue, and my best wishes to the entire team and my condolence on the demise of Bhandariji, sir. A real gem from Kolkata. Thank you. Thank you, sir. Thank you, Saket. A reminder to all participants, if you wish to ask any questions, you may press star and one on your touchtone telephone. We have our next question from the line of Ankur Sawaria, an individual investor. Please go ahead. Good morning, everyone. Sir, my first question is, any clarity on sir why did not we have a con call last quarter, sir? Any particular reason? I'm not sure how that is relevant to the financial performance or the growth prospects of the company. If it was not done, it was not done. Okay, sir. After a long time. It is like me asking why have you not participated in all of our earlier calls? Point taken, sir. Not an issue. Sir, it is good that now the commentary from the management after a long time is very positive on the order book. My question is, after this Samudra Manthan Yojana by the government, do you think that will also contribute in our order book in near future? I was not able to hear you very well. Can you please repeat? Sure. The government has announced the Samudra Manthan Yojana, under which they want to explore oil in deep sea. Will this also positively affect our company? Will we be a part of it? On the face of the announcement, it should positively impact the company because we are an oil and gas sector supplier. Any development in the oil and gas sector prospects will benefit all oil and gas sector participants. The advantage that we have in particular is that we have the maximum size range, the maximum basket of value-added products, and the maximum capacity to supply to the oil and gas sector in India. As and when there is an improvement in expenditure, we will see a direct benefit to Maharashtra Seamless. Sir, what is our capacity utilization as of now, sir? Any color on that? Capacity utilization is around 70%-75%. We have active capacity of 550,000 tons, and we manufacture and dispatch anywhere between 410,000 to 430,000 tons per year. For the seamless segment. Right, sir. Now we have seen that you have given a capital allocation, and it is approximately same for last three, four years. Once you're saying that you are going to go ahead with the capital allocation from now on, do you foresee a good demand coming in the sector after a long time, sir? We expect revival in demand. We also have started the capital expenditure a couple of years ago. It is not that we have not done anything for the past two years. We have put in a cold drawn line at our facility in Mangaon. The capital expenditure work for the finishing line at Telangana was also started in 2024. We were not pursuing it aggressively because the market was not supporting us. Now that we have seen a revival in demand, and hopefully this should continue for the coming quarters, we also want to complete the capital expenditure work as early as we can. That's clear, sir. The project on which we are focusing right now is the finishing line at Telangana, for which we have placed orders of INR 107 crore and made payments of INR 59 crore. My last question is regarding the EBITDA per ton for the ERW, and it has come down by a long margin. Any particular reason regarding that, sir? The ERW segment generally is a very small segment of the entire company. It accounts for less than 7% of total EBITDA. Secondly, the ERW segment comprises of two sub-segments. First, the ERW pipes which are used in the oil sector, which are API certified, and secondly, the ERW pipes which are used in the water sector, which are IS certified. The margins in the API certified ERW pipes, which are used in the oil sector, are much higher than the margins which are there in the IS certified ERW pipes, which are used in the water sector. The variation in margin on a quarterly basis in the ERW segment as a whole is reflective of the kind of products that we dispatch in that particular quarter. Got it, sir. If I may ask, sir, at one point of time, our EBITDA per ton for the seamless pipe had reached somewhere about 21,000-22,000. You said that it was just because there was the change in the rate of inventory that had increased our EBITDA per ton, and then it came down to somewhere about 12,000, 11,000. Slowly it is again increasing to 15,000, 16,000 per ton. Is it again the reverse effect of the raw material, or are we able to increase our EBITDA per ton due to our order book? In quarter one FY 2027, the improvement in margins was on account of the product mix, and that improvement is likely to continue because of the order book regarding which I had spoken at length a little while ago. The change in inventory which you are talking about, which happens on account of mark-to-market of the inventory that we are carrying with the current price, that adjustment was not so much of a factor in the first quarter. It was more applicable in the fourth quarter of FY 2026 and is usually seen in an environment where prices rise rapidly or prices fall rapidly. By prices, I mean prices of raw material, which is steel billets for us in the seamless segment. That's great to hear, sir. All the best from my side, and thanks for answering the question, sir. Thank you. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Gaurav Khanna from CapGrow Capital. Please go ahead. Hello. Am I audible, sir? Good morning. Good morning, Gaurav. Yeah. My question is, where do we stand on the demerger right now? That scheme has been withdrawn. We had already intimated the exchanges. Oh, okay, sir. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Next question is from the line of Jyoti Singh from ICICI Securities. Please go ahead. Hello. Hello. Yes. Hello. Yeah. Good morning, sir. Thank you for your patience. Good morning. My first question is regarding the order book. With ONGC stepping up its drilling program, including a significant number of new development wells, how are you seeing this translate into the incremental demand for seamless pipes? Have you seen any meaningful improvement in the inquiry levels yet or order inflows in terms of visibility? Yes. Is it possible to quantify that? I would not want to comment on the upcoming orders, if you look at our order book composition, which has been very transparently displayed and is available in public domain, you will be able to make an assessment as to why the order book, which has been reported yesterday to shareholders, is different from what it was in the past couple of years. Okay. Besides, there are several reports around the increased exploration and drilling activity across the Indian eastern basins and offshore regions. How meaningful is this opportunity for Maharashtra Seamless? Are we seeing any customer inquiries or any orders linked to this project? The reports that you're talking about, these reports were in circulation for the past few years, but nothing was happening on the ground in a commensurate level with the reports that were being circulated. However, in the past few months, we have seen an improvement in our order book, which again, has been very transparently displayed in the presentation, and I have also spoken about it towards the start of the call. Around 64%-65% of the entire order book comprises high-margin orders. Okay. My third question is with regards to the U.S. imposing duties, the tariff on steel imports. Are we still cost competitive enough to win and execute orders in the U.S. market, basically given the current U.S. regime? Just one second, madam. 20% of the entire order book, that is approximately INR 340 crore worth of orders are to North America, which comprises U.S. and Canada. Despite the disruption in the Middle East, we have been able to obtain orders and dispatch to the export market. From this order book, how much of the tariff burden is being absorbed by the customer versus the Maharashtra Seamless? Entirely. We will not absorb any cost incidence. Okay. That's it from my side. Thank you, sir. Thank you. Thank you. We have our next question from the line of Shriram, an individual investor. Please go ahead. Thank you for the opportunity, sir. I just have one question. Are we seeing any benefits of the anti-dumping duty? Given that the existing duty will expire next year in January, do we expect the duty to be continued beyond that? What is the company's action plan to ensure its continuation? I am not in a position to give you the kind of answer that you want from me, because implementing or renewing a duty on which product and at what level is not within my control or the company's control. We can only petition the government, individually as a company or together as an industry, to make necessary adjustments to the duty levels. An encouraging sign is that the duty has been extended on an interim basis from October to January, which means that they are looking into the data, and they found reasonable cause to make an extension. I will not be able to give you a specific response or a definitive response that duty will be renewed or at what level. Since we are continuing our capital expenditure, we are positive on the prospects of the industry and the future of the company. Sir, is it benefiting us now? I mean, what is your sense now? Yes. It is benefiting us. It has become less prohibitive than it was before, it is still better than no duty. Okay, fine, sir. Thank you. Got it. Thank you. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Saket Kapoor from Kapoor & Co. Please go ahead. Yes, sir. Just in continuation to what the earlier speaker and you replied about the extension of the anti-dumping duty timeline, sir. That was 2027, now for four months to 2028. If you could just give the timeline year-wise also. What is the- The duty was from 2016 to 2021, then from 2021 to October 2026. Last month it was temporarily extended from October 2026 to January 2027, pending completion of review of the extension of the tenure of the duty. Okay. Sir, correct me here, earlier we have also introduced some new products which were not covered under the anti-dumping regime at that time because they were not produced in the country, and MSL was, I think, were doing this. You have earlier explained that China, there were imports from products which were not covered in the anti-dumping, hence they were benefiting from the same. Now if- Correct. there will be an overall review of the things in entirety, then this product will also be included. Correct. May be included. Yes. Okay. Right, sir. Sir, if we take now the optimistic scenario because of the closing order book and your commentary, then what should now be the new timeline of execution of the CapEx in terms of the Nagothane part of the story, which is a large CapEx of hot mill upgrade. We would like to understand the sequence now. For Narketpalle, you have clarified that we are now pushing forward for the completion so that we can participate in the improved order execution. When will the bigger CapEx of the hot mill upgrade at Nagothane will follow suit, sir? We have not started that project at all. We are focusing on completing the Telangana project first, then we will get back to you. Okay. The factors that will lead for upgrading and all are not still in place. We will first capitalize on. I don't understand why you keep repeating the same thing. I have already clarified that we have not started that project, we are focusing on the Telangana project. Specifically, on the Telangana project, I also informed you that I will give you a definitive update in the next call. What more do you want from me? No, sir. I was only trying to make myself understand. You are absolutely correct on your thought process, sir. Last point is only, sir, wage revision part on the employee aspect and the availability of labor. If you could just give us some color, how is our mills and our work being insulated, or how is the employee availability and the cost inflation in terms of the employee expenses? likely to be or what have been factored with the new code and all. If you could just give your thoughts on that. There was an incidence of INR 3 crore, which was captured in the fourth quarter of the previous financial year. Apart from that, the regular increments of employees have already been undertaken. There is nothing else to add on this point. Availability of labor is also not an issue for concern for our mills? Correct. Okay. Right, sir. Thank you once again, Kaushal, Vikash, for the call and for giving all the elaborated and pointed answers. My best wishes to the team. Thank you, sir. Thank you. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one on your touch-tone telephone. Next question is from the line of Amit from Determined Investments. Please go ahead. Yeah. Thank you so much for the opportunity. Can you hear me? Yes, sir. We can hear you. Okay. Thank you. Sir, just one question on the exports business. Thanks for the detailed explanation of the past trends. Fiscal 2023, about 20%, then down to 5%, then about 10%, whatever, 5%-10% last year, things are picking up this year. Two points. One is that fiscal 2027, given your order book and what you have already executed in 1Q, the trends sort of seem to be very clear. It is going to be between 15%-20% of your sales for this year seemingly. How should we look at this going forward, which is basically beyond fiscal 2027, going into fiscal 2028, 2029. How do you sort of see the export market in general and with respect to specifically your own exports? In the past, as I sort of recall, you have given a commentary that the focus of the company will continue to be primarily the domestic market. The second point was on the margin side also, I was a little bit surprised because best to my understanding, as far as the U.S. market is concerned, the duties on steel products sort of still continues to be very high. They are not part of the changes in U.S. import duties which have sort of happened this year, the Supreme Court judgment. To the best of my understanding, steel product duties in the U.S. are under a separate section, which remain unchanged from last year. What is sort of driving this kind of traction in U.S. exports given the high level of duties and especially the point on margins, because these are not going to indicate that the margins will be higher on these products, given the high level of duties which I presume that these products would be under. If you can just sort of provide some clarification on this point. Regarding forecast, let's say six months, one year, two years into the future, it is not something that we can provide because unlike other companies, we operate on a short cycle order book. That is not something which is a norm in the industry, but it is something which we actively practice because we want to maintain a three to four-month order book at all times. Not more than that, not less than that. The reason why that is the case is because the duration of the order book should match with the holding period of inventory. Every time we receive an order, we immediately book raw materials against the said order so that we are not impacted by fluctuating steel prices and profitability per order is maintained at all times. That is a golden principle for our company, and we have diligently followed that for the past 35 years. For us to give a guidance six months from now or one year from now would be something which is not data-driven. If it is not data-driven, it is not something which I would want to comment, because it is not a philosophy of the company to overcommit and underdeliver. We have always been very conservative in whatever we communicate to the general public. Regarding exports to the U.S., it is on account of improvement in drilling activities in that location. We have always exported to U.S. and Canada. It is not something which is new. It was impacted due to the tariff tantrum, and before that, due to a slowdown in oil and gas expenditure. Immediately after the boom in oil and gas expenditure caused by the Russia-Ukraine war, we have seen a revival, and we are able to dispatch to that geography despite the war going on in the Middle East. All right. Just a clarification, how are you able to generate, given the fact that U.S. tariffs, specifically on steel products and the pipes are principally that, still continue to remain high. How do you explain a very high level of margins from these orders, basically? Definitely higher than the company average, basically. High duties, also high margins also doesn't seem to gel together. The only logical explanation would be that the selling price is even higher. Okay. Things sort of seem to be quite buoyant on that respect. All right. Understood. That's it from my end. Thank you. Thank you. Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Vikash Singh from ICICI Securities. Please go ahead. Thank you. Kaushal, just one question regarding currently the competitive intensity. I believe that last quarter, one of your larger competitor was not in the race for the orders because of the API certification cancellation. Going forward, what's your view in terms of competitive intensity, and including the imported part of it? Does the INR depreciation have made you guys a little more competitive at this point of time? Your views on these things. You're absolutely right. The INR depreciation has made us more competitive. Further, we've also benefited from the disruption in the API license of our competitor, and we've been able to capture orders. Therefore, we believe that we are in a better position right now, and we'll be able to maintain that going forward. Based on the feedback that I've received from the sales and marketing team, I think we'll be able to maintain a good order book immediately going forward. Noted. That's all from my side. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, shareholders, for participating in the call on a Saturday. We appreciate your inputs and guidance, and we'll ensure that all necessary updates regarding the company are made available to you. Thank you. Thank you. On behalf of ICICI Securities Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your line.