Good afternoon, everyone. A warm welcome to Q4 FY '26 Jindal SAW conference call.

From the management side, we have with us Mr. Narendra Mantri, Chief Operating and Financial Officer; Mr.

Vinay Kumar, President and Head Treasury; and Mr. Rajeev Goyal, Senior Vice President, Corporate Finance.

Without taking any much time, I'll hand it over to Mr. Mantri for his opening remark.

Over to you, sir.

Hi. Mr.

Mantri would take up the questions, I'm Vinay Gupta, let me give the preface, and Rajeev, Mr. Mantri, me all sitting together, we would be addressing the questions of the participants.

If it is okay, can I start?

Yes, sir.

Fine. Good afternoon, everyone, and welcome to the Jindal SAW's FY '26 earnings call.

I'm Vinay Gupta from Jindal SAW. We'd like to extend our thanks to the ICICI Direct team for organizing the session and facilitating the discussions.

The Board of Directors approved the audited financial results for 2026 on April 27th, 2026, which has since been filed with the stock exchanges. We trust you have reviewed these documents.

Now let me present the highlights of the financials and some brief about that. Performance in Q3 improved relative to the immediate previous quarter of FY '26, and we expected and we mentioned in last call that Q4 is expected to be better than Q3.

This is what we mentioned on the call for Q3. On the contrary, the performance of Q4 of FY '26 dropped if compared with the previous quarter, which is Q3.

Performance FY '26 also dropped as compared to FY '25. Now before we go to prognosis and what is happening, let me very quickly cover the numbers, the highlight numbers of standalone, consolidated quarter and full year.

For financial year, on the standalone basis, the company registered a total income of ₹3,852 crore, representing a decline over Q3 FY '26 by approximately 7%. EBITDA for Q4 FY '26 stood at ₹413 crore, showcasing a decline over Q3 FY '26, which was ₹527 crore, representing a decline of 22 crores.

PAT for Q4 is reported at ₹114 crore, showing a decline over Q3 FY '26, which was 227. It represents a decline of 50%.

On consolidated basis, for the quarter four, the total income stood at ₹4,657 crore as compared to ₹4,963 crore in Q4 FY '26, representing a decline of 6%. EBITDA stood at ₹504 crore, showcasing a decline over Q3, which was ₹632 crore.

It was a decline of 20%. PAT for Q4 FY '26 is reported ₹124 crore, showing a decline over Q3 '26, which was ₹248 crore, representing a decline of 50%.

Now let's talk about the full year, FY '26 and FY '25. On a standalone basis, the company registered total income of approximately ₹14,745 crore, representing a decline of approximately 19% as compared to FY '25, where the total income was ₹18,178 crore.

EBITDA for FY '26 is ₹1,835 crore as compared to ₹3,456 crore for the previous year, representing a decline of 47%. PAT for FY '26 is reported at ₹784 crore against ₹1,874 crore, representing a decline of 58%.

On consolidated basis, the company registered total income of approximately ₹17,987 crore as compared to ₹20,948 crore, representing approximately 14% decline. EBITDA for '26 is ₹2,306 crore as compared to ₹3,548 crore of the previous year, showing a decline of 35%.

PAT for FY '26 is reported ₹925 crore against ₹1,458 crore, representing a decline of 37%. In terms of our indebtedness, as on 31st March 2026, company standalone net debt reduced to ₹2,453 crore as compared to ₹3,154 crore on the previous year.

This includes long-term debt of ₹529 crore only. Net institutional debt on console basis has reduced to ₹2,528 crore as compared to ₹3,346 crore, which was on 31st December '25.

Long-term debt on 31st March was ₹692 crore only. Debt profile of the company remains robust despite the business volatility.

Now the prognosis for the results are, number one, Q4 and FY '26 saw decline in overall sale, primarily driven by weakness in the ductile iron pipe segment amid ongoing water infrastructure sector challenges. Despite positive policy announcements under the Jal Jeevan Mission, project execution on ground remains sluggish, impacting our total water pipe business during FY '26.

Despite a robust export order book, including 600,000 metric ton of job work contract from Saudi Arabia, all export shipments have been suspended since March '26. This is due to the activation of the force majeure clauses following the outbreak of the military conflict in the MENA region.

No shipment has gone from 1st of March 2026. Export business typically yields higher margins as compared to domestic.

The deferment of all the planned export shipments to MENA region of all kinds of pipes in March '26 resulted in lower Q4 profitability as compared to Q3, missing our original expectations. This will get reflected in '26-'27 once the shipments will start.

This is basically a deferment or postponement on the timescale. Company also reported a ₹48 crore foreign exchange cost during this quarter following the revaluation of US dollar-denominated exposures.

This was driven by the rupee's sharp decline over the quarter. It fell from ₹88.88 per dollar to ₹94.84 per dollar.

This is perhaps one of the quarters in the last so many years reflecting a depreciation of more than ₹5. Now some update on our carbon seamless pipe segment.

On February 26 15th February 2026, we reported to stock exchanges about developments in our carbon seamless product. It was reported following an API audit, non-conformances were identified.

A suspension letter was issued prohibiting the use of the API monogram on our seamless pipes. All requested data has since been presented to API authorities within the specified timeframe.

All NCs have been promptly addressed and closed as per the requirements of API authorities. Auditors appointed by API authorities are scheduled to revisit our factory in Nashik in May 2026 for verification.

Following this, the final approval to use the API monogram on seamless pipe is expected in due course. Given this, providing a specific timeline for approval at this stage would be very speculative, and due to this regulatory timeline, we anticipate a temporary impact on our sale of API seamless pipes.

To mitigate the impact, the company is leveraging flexible manufacturing capabilities to reallocate production towards alternative seamless pipe products to minimize the loss on account of the overall volumes and the business. Profitability in API business typically is comparatively better than the non-API business.

Now the MENA region has impacted all the businesses who are catering to MENA region or any inflow or outflow to that region, and we would like to address that point also. Now following the escalation of conflict in the MENA region starting 28th February 2026, we're experiencing severe logistic disruptions, including non-availability of vessels.

Consequently, all shipments from India and Abu Dhabi facilities in Middle East are suspended until further notice and until safety conditions allow for safe passage. Abu Dhabi plant sales are restricted to customers in the countries which are within the trucking range.

We are continuing the business, but wherever the trucks can go. Where the ships have to go, that business is temporarily suspended.

This has impacted Q4 and FY '25 '26 sale and profitability at standalone and console level, and where the revenue recognition is deferred to '26-'27. Now this ongoing crisis in MENA region has necessitated a strategic shift towards securing energy infrastructure, generating new opportunities for pipeline expansion, repair, and replacement, particularly for projects designed to bypass volatile maritime chokepoints.

This transition is accelerating investments in infrastructure that bypasses high-risk areas, offering substantial opportunities for pipe manufacturing and EPC providers. We expect the countries in MENA region to invest significantly in the replacement and new pipeline infrastructure for oil, gas, and water.

Similarly, India will also need to invest significantly to work on energy security. We may expect new pipelines requirements in the next couple of months.

In March '26, the government has issued a landmark order to fast-track piped gas rollout across the country. Bureaucratic delays, excessive charges, and local bottlenecks that once slowed projects are now being swept aside, and time-bound approvals and decisive Center backing.

Apart from this, ONGC has also announced in March '26 deepwater exploration projects of approximately $20 billion. Now what is there for us in all of this?

While conflict in MENA region presents significant challenges, the resulting shifts are creating new avenues for growth. Jindal SAW is actively capitalizing on these emerging opportunities through strategic expansions and local manufacturing in the region itself.

As company has already announced its investments plans to set up a carbon seamless pipe plant in Abu Dhabi through our subsidiary. There are good developments in the project.

A developed piece of land with civil infrastructure has already been secured. Ordering for equipment with advance payments and opening of LCs has started.

Project company has signed long-term lease agreement with AD Ports for land parcel. In Saudi Arabia, company has established a joint venture company with its investments of 51% and balance 49% is by [Ghut?]

Group in KSA. This JV will set up a LSAW and HFW facility.

Land for one of the projects has already been secured. LC has been established for few of the equipments.

Our endeavor will now be to set up all these plants in Abu Dhabi and KSA on fast-track basis. Now let us discuss couple of other matters, including subsidiaries and joint venture.

In UAE, the regional conflicts in MENA regions have disrupted the operations of the Abu Dhabi facilities also. The facility remains in a highly impacted area in this region.

Due to these circumstances and with employee safety as our top priority, operations have been reduced to meet essential demand. The sales from Abu Dhabi plant are restricted to customers which could be served from the truck.

In this backdrop, in Q4 of FY '26, Abu Dhabi company delivered approximately 48,000-ton pipes as compared to 52,000 ton in Q3. As of March 31st, 2026, the subsidiary holds order book of approximately $180 million, which is close to 170 171,000 metric ton, giving a visibility of approximately 9 months of operations.

This is independent of the order book of Jindal SAW Limited. In Jindal Hunting joint venture, this joint venture where Jindal has 51% and Hunting has 49%, we generated a revenue of approximately ₹149 crore with 49 ₹43.2 crore of a PAT.

This is a bit lower as compared to previous year where the top line was ₹177 crore and ₹51.5 crore was the PAT in FY '25. In case of our ongoing litigation with NTPC, the matter is moving with NTPC in Delhi High Court at double bench.

Majority of the arguments by both the parties are completed. There may be one or two more dates before the court reserves its order.

Now with this backdrop, before I conclude this presentation, let me summarize that Q4 FY '26 performance did not meet our expectation of exceeding Q3 results, primarily due to reasons we mentioned above. Factors contributing to Q4 muted performance persist, and we expect its impact on Q1 results of the current year also.

If situation improved, we have capability to ramp up the business very quickly. As of now, as we speak, this quarter, at least few more weeks or some time looks to be getting impacted.

Improved conditions in MENA region will enable the company to rapidly accelerate export shipments because our order book comprise of roughly 29% to 30% export to MENA region. Lot of shipments are on hold.

We would try to push as much as possible immediately the shipments open. The recent announcement by the government relating to Jal Jeevan Mission with allocation, cabinet approval, and funds getting released by the Center to states gradually, this will revive the water pipe business where ductile pipe business would take the lead, and this will be helpful for the operations of the company and the industry as a whole.

Company's new initiatives in Abu Dhabi for seamless project and in Saudi for SAW pipe projects are expected to yield good results once these plants are set up and become operational. In today's volatile time, our high liquidity provides a critical buffer.

With a deleveraged balance sheet and strong working capital lines available with the banking system, we are well positioned to fund future growth. We have made capital expenditures across our Indian facilities to drive growth.

These expenditures focuses on debottlenecking, enhancing operational efficiencies, and providing infrastructure to our staff at the plant. Now to end this presentation, we would still like to add one more line that we are witnessing unprecedented time where projecting the business for future is very unpredictable.

The management is taking all possible steps to safeguard its interest and see how best we can ramp up the operations and business in domestic market pending the export markets opens up. With this note, let me request if there is a question, we open the floor for the question and answers.

Operator, please start the Q&A.

Hello. Sir, firstly, congratulations on a good set of numbers in a tough environment.

Just wanted to ask you how are we getting feelers from these other regions? Are we seeing much more volume uptake, let's say, in FY '27, any numbers we can think of?

Hi, Dhananjai. This is Vinay Gupta.

Dhananjai, at this point of time, if you're talking about the MENA region,

the interaction with lot of customers is not happening on face-to-face basis. What we are trying to accumulate the information and intelligence is from the, let's say, public platforms and public media.

We, of course, since we now have presence in Saudi and Abu Dhabi, our people are trying to get some sense from various stakeholders, including the oil and gas companies there, that how they are perceiving, how they want to go forward.

Having said all this, if you track him, there are a lot of media news where the projects which were in the cold storages, the projects which were stuck for whatever reasons, there is a urgency to push those projects. I'm not saying this will come overnight, but they would cut short the timelines, and there will be urgency in doing this so that if this stalemate converts into the stalemate of Ukraine-Russia, then what is going to happen.

Eventually, there would be some urgency now in the region, and that would be helpful and that would be beneficial for the industry as such.

What about India? How is the India demand?

How are we seeing that coming along?

India water demand remains. The only thing was the water business

took a [unclear]

Jal Jeevan Mission. Jal Jeevan Mission gave rise to another kind of, let's say, business opportunity where the state governments are arranging the funds and state governments are giving the orders.

This is independent of Jal Jeevan. The whatever business has happened in the absence of fund release from the Jal Jeevan was on account of state, that is a bit competitive.

We expect that the macro-level demand has not died down. Macro-level demand remains the same.

It is only deferment. Hopefully, this year, the business should pick up and the industry should respond very quickly.

Everybody has the capacity, everybody has order book. We are gearing up.

In fact, our fourth-quarter sale is comparatively better than the Q3 sale for water business.

Sure. Sir, with steel prices going up as they are, do we think we'll have a hit by inflation, or we will pass it on on margins?

See, we don't accumulate or hold steel in anticipation of getting the order. It is basically within a very narrow-timed line, we book the steel the moment we get the order for the pipe.

Eventually the volatility in the raw material prices is to the account of the manufacturer. For us, let's say, in this case.

That is why, number one, for example, if these are the steel pipes, then we don't know what kind of, let's say, diameter, thickness, metallurgy the new order will have, and that is where the order is placed only once we receive the firm order for steel pipes. This situation normally does not arise that the steel price going up and down is impacting the pipe layer very significantly.

Okay. Margins henceforth, we bottomed out in '26, and margins should now just be onwards and upwards?

Can you repeat your question, sorry?

In terms of margins, would it be fair to say margins have bottomed out and now margins would just be higher from here going ahead?

That's what we thought for at the call of Q3, we said that perhaps it has bottomed out. Okay.

It's a function of all the things. Margins is not a function of only raw material and sale price, because if my capacity is underutilized, the fixed overheads start hitting you.

Now lot of contracts what industry is today serving, they are delivered products. In case of international, they are duty delivered products.

Now nobody knows how after 5th of May what the crude prices will be in India also. Right?

You people are analysts, you would know whether the crude price goes up or the diesel price goes up. Right?

The freight cost will go up. There are few things which are beyond the control.

The assumptions for the profitability normally are made in the, let's say, a stable condition. As we mentioned in the very last line in the presentation that these are very unpredictable, unprecedented times, everything is looking here and way.

If you say that this is bottomed out, maybe, may not be.

Fair, sure. Sir, any other risk we can think of in terms of obviously, one macro risk, but any other risk we are seeing at the moment?

Because you're trying to understand just from the business risk perspective.

See, this commentary actually is full of risk, what we said. We have not given you high expectation except that we are projecting we are doing setting up the projects in MENA region.

Our perspective was to highlight to stakeholders, to all of you we are living into the risky environments. We highlighted each and every risk.

We highlight Jal Jeevan Mission, we highlight the international shipping issue, we highlighted our API business issue in carbon steel, we highlighted the water business in Jal Jeevan. There could be still issues which are very difficult to project this point of time.

As I mentioned, if there is a spike in the diesel prices, all costs will become inflationary. There are certain measures which the management can take in terms of, let's say, controlling those risk.

There's still would be few risk which we may not be able to control, but given the good liquidity, good, let's say, position of the company and the balance sheet, some of the risk we can still handle.

Sure. Sir, last question from me.

Sir, what capex number are we expecting for the next couple of years?

The capex?

For the next couple of years, how much from domestic?

Few of the capexes what we have done in last 1 or 2, 3 years' time, maybe we are at the last portion of those schemes, maybe, let's say, ₹500 to ₹700 crore all across India in this year. Three project what we have announced in Abu Dhabi at this point of time for seamless pipe project, we are 100%.

We are still trying to work out what would be the debt-equity, what is going to be the revised project cost. We are trying to bring some more efficiency in that project in terms of cost.

In Saudi, it is a joint venture where we are 51%, net impact of the cost of our balance sheet will be lower. Otherwise, then we are not putting very significant let's say, brownfield or greenfield projects in India.

We try to work with the available capacity within India, but just trying to see how best we can derisk our business model. For example, if ductile pipes had taken a backseat, we are working out the facility should not stop, and let's try to work out different options for that also.

The different sizes, export, the domestic shift, and all those things.

Sure, sir. Any number we have only 5 to 600, is that, or it will be more than that?

The capex number?

Total.

For this year for this year, we expect ₹500 to ₹600 crore.

For next year? Let me try to get a broad base, '27-'28.

So 500 for '27 and for '28?

Let's put it this way. We have roughly 10 locations in the country.

Right? Earlier somehow we used to set ₹250, 300, but every time it works out to not less than ₹400, 500, and sometime when one or two more schemes are going on, some replacement, all these things.

Maybe this year, we have done ₹700 to ₹800. So '24 '25-'26, we did what?

₹800.

₹800. Maybe you can consider ₹500 to ₹600 this year, ₹400 to ₹500 next year, something like this.

Sure, sir. Thank you, sir.

Thank you so much.

Thank you.

Thank you for giving me the chance. Sir, I had one question.

See, the macros are very uncertain, and we may not want to guide. That's perfectly fine.

Just wanted to know that in all the products that we have, basically SAW pipes, seamless pipes, ductile iron, stainless steel, and HDPE, do you see any overcapacity in the system? If the demand bounces back, say, water in the next 12 months, then oil and gas after, say, another 6, 9 months, will we again go back to the old levels of profitability, or is the capacity in the system high that we may need a higher level of demand to go?

If you can just segment-wise explain how do you see the overcapacity or in each of these segments where we operate?

Rajeev, would you like to explain this?

As you mentioned that overcapacity position if there is a demand which is coming back, what we feel that in ductile iron pipes, there may be some oversupply in terms of capacities, but apart from this, other segments are well placed, like longitudinal, helical, as well as seamless. If in future demand is there, the capacities are available to cater the demand.

There will not be any overcapacity, but ductile iron pipe is something which we feel that overcapacity position is there.

Okay. In these ductile iron pipes, can we do something else in those lines, or no, we'll have to live with the lower utilization for some time?

Honestly speaking, yes, we have to live with this condition because major capacity expansion in DI pipe was in the estimation or anticipation of demand from Jal Jeevan Mission and multiple projects at state levels. As of now, because Jal Jeevan Mission scheme is not kicking off very well, this position seems to be remaining as it is for quite some time.

Got it, got it. Sir, and one data point is how much sales did we lose because of the Middle East war, not getting ships, not delivering products?

We did 13.76 lakh tons of volume this year. Just in this quarter, how much would we have lost in terms of crores of rupees?

What would be the revenue loss?

Basically there is no loss per se. It is a deferment because shipments are going to go once the situation is improved in this region.

Approximately 30 to 40,000 tons material was ready for shipment, which were deferred. Apart from this, there is no loss as such.

This deferment would be worth ₹30 to ₹40 crore, right?

In terms of value, it would be more than that, but as of now, we have the quantities available which got deferred.

Fair. Okay.

Fine, sir. Fine, sir.

Thank you so much. I'll come back in the queue.

Sir. Thank you for taking my question.

Sir, I have two questions on the stainless steel pipes business. The first one is on the seamless stainless steel pipes business, sir.

We are hearing a lot of peers adding capacity and they are receiving approval in the critical piping segment as well. Wanted to get a sense from you on its impact on our overall business, both in terms of capacity, overall industry capacity, and on the margins in this business.

That's question number one on seamless stainless steel pipes. Second one is on the welded stainless steel pipes.

I wanted to get a sense from you because I think I've seen there has been some decline in the overall margins in this business. How are the things shaping up and how do you think about that business going forward?

Okay. In stainless steel pipes business, we are trying to capture the upper-end segment of the customer who requires more stringent quality.

Impact of that will come I think in this year, the second half. Otherwise, I would say that commodity business of the stainless steel will face a margin challenge.

Okay. Sorry, sir.

Are you talking about the seamless business or welded or both?

Both. I'm talking both.

We have to capture the value-added product, and for that, as you mentioned, that we are trying to get the approvals from the customer and for our facility and for our product.

Sir, on the welded side, is there a upper segment as well? I thought that that would be true for the seamless business.

Is there a upper segment within the welded as well?

Welded also.

Okay. We are trying to move up the ladder in terms of quality.

Yeah. Yeah.

Yeah. That is the only way to capture the high-end or high-margin business.

That margin expansion will happen from the second half of FY '27. Is that the expectation?

Yeah. Actually, as already mentioned by Mr.

Vinay Gupta that at this point of time, everybody is a little slow in investments and slow in giving the orders.

Okay. Okay.

Got it, sir. Got it, sir.

Thank you.

Hi. Hello.

We lost you.

Yeah. Congrats, sir, for reporting strong positive CFO of ₹1,800 crores even in this challenging times.

Given the lower order intake expected from the Middle East due to ongoing challenges, and talking about the new order intake, how are you approaching our selection in the near term? This is specific to our helicals saw capacity.

Do we wait for a recovery in MENA region to secure high-margin order, or are we open taking up the lower margin orders in the domestic helical saw segment to support utilization level? What is our near-term strategy?

Sailesh, you'd resume this situation would start working out once the region is fully operational. Because as of now, let's say, a couple of regions are there where people are flying for the safety, for example, UAE, right?

The life is still not back to track. Saudi is still working, operational, but the business has taken a bit backseat for everybody.

Our stronghold in MENA region are like Saudi, of course, Qatar, Oman, Iraq. Iraq is equally disturbed at this point of time.

People are not thinking of giving the order immediately. The discussions which perhaps are happening that how they have to create the energy security mechanism in near term.

It might take a year, 2 years, 3 years, whatever. Coming to your second question that let's presume that there's a normalcy in the region.

Everything has been sorted out, shipment is not an issue, ships are available, insurance premiums have come down, insurance available, and all those things are there. Then, of course, we would like to have the order book which should give a reasonable amount of visibility in terms of time and high utilization.

We are still booked. Our facilities are still booked provided that we are allowed to produce and sell.

It's not that we have a slot available to take the order for immediate next 2 months, 3 months. Actually we are fully booked for couple of quarters.

If we have to given the option to take order, we might not be able to take order for next two or three or four quarters' time. To my understanding, the industry is reasonably booked for export as well as domestic.

The challenge is that you don't have means to transport and dispatch.

Okay. Sir.

Just to give an example, for the job work order what we have, it's a 600,000-ton order, and we are sitting of roughly 200,000 ton of steel, which is supplied by the buyer. We are holding on the steel and you can't supply the pipes.

We are not making the pipes, storing the pipe will be a larger problem than storing the steel.

Okay. Okay.

Okay. Sir, that both Indian and local players, including ourselves, are adding capacities.

Do you believe that there is a sufficient demand to support attractive returns like 3, 4 years payback on this investment? Also could you please talk about the opportunities in the GCC region for helical SAW, LSAW, and DI pipe?

Let's talk about the simplest one, which is ductile. We are not adding additional capacity in ductile.

It is basically we're trying to set up a complementary facility of our Abu Dhabi plant. What we're trying to do for our Abu Dhabi plant that we should be able to have the access to the entire MENA region, wherever there is some bottleneck, we are trying to, let's say, set up a complementary facility for that.

It's not a full-fledged plant of, let's say, starting from blast furnace going up to the finishing and everything. In case of seamless and SAW pipes, they are greenfield projects, completely integrated with coating, all kind of coating and everything.

In terms of, let's say, the demand, we are fully conscious that the competition is already there, they have acquired or they're setting up, and we are considering, yes, the competition is always good for a healthy market. We believe that there is enough demand, and the demand is likely to increase exponentially because of this new crisis which has emerged in the MENA region.

This is top-up on that plain pizza. We won't like to discuss too much on the call, but we understand that there is enough on the plate.

Okay. One last question.

As we plan to undertake significant capex over the next 2, 3 years with current net debt at that ₹3,400 crore, what do you expect that peak debt level during this capex phase? Additionally, what is the peak net debt to EBITDA that we are comfortable operating at?

See we try to communicate to everyone that let's differentiate between the working capital debt and the long-term debt. Out of the current debt, standalone 2,500, console 3,200, whatever, the long-term debt is hardly at standalone, it is ₹525 crore; at console, it is ₹650 crore.

There's a good amount of appetite of the lenders to lend the long-term debt to the company for setting up the projects. Since we have demonstrated in the UAE in last couple of years, there's a good amount of traction amongst the lenders, they want to lend to us.

Now because Indian lenders are also geared up through the GIFT City or direct presence into the MENA region, they're equally interested to lend to this. Appetite-wise, or can the balance sheet handle increase in the debt?

Yes, balance sheet can handle increase in the debt. Secondly, as we mentioned that in Saudi, it's not a 100% subsidiary, we would be 51%.

At the best, a proportionate, let's say, impact would come. In terms of debt to EBITDA, again, if you have to include the working capital debt into the overall indebtedness and then to test it, this, of course, will be on a bit elevated level.

It depends what we are talking, when we are talking, because in '24-'25, we had EBITDA of ₹3,500 crore, and then we thought that in 2 years' time, we would have significantly higher EBITDA. If we go back to that similar levels in sometime, then we would still be in the range of, let's say, 2, 2.5 of debt to EBITDA, all-inclusive, including working capital, everything.

Yeah. Okay.

Sir. Thank you, sir.

All the best.

Hello. Thank you for giving me the opportunity.

My first question is in terms of we had started our business in Saudi, and you mentioned in your opening remarks about how things are not moving there. Considering things as normal in war as to be a better state, how do you think the demand panning out over there?

Also a lot of our competitors also have their factories based out of Saudi. How do you see the competitive intensity there?

Vanshika, first of all, once that normalcy is there in the system, our domestic facility in India, that will be fully functional and will start executing the export order. We have pipes in store, and we'll start producing the pipe out of the steel given free of cost by the buyer to us.

That's one. Secondly, perhaps you want to mention how the demand in Saudi or neighboring countries would be taken care of.

In my view, in next 1 year, the majority of the requirement would still be serviced from the imports in Saudi because whatever, let's say, other people are doing, they would still take some time to set up, take approvals, and then meet the criteria and do it. Till that time, if a major requirement comes, that hopefully, that could be serviced out of India.

In next 2 years' time, I think we would also be operational, others would also operational. Then it would be how much demand is coming and how this is being serviced from the, let's say, the local units in the MENA region.

It is not only Saudi. We are trying to, let's say, gauge the sense.

There is likely demand from neighboring countries of Saudi also, which would be serviced from Saudi and then by India.

Okay. My second question is in terms of coal cost increase, which we are seeing.

I think the coal cost has increased almost 10% to 15%. How is the cost escalation being impacted?

How is it in our order booking?

Can you come back which cost you said will increase?

Coal, coal, coal.

No, we never mentioned the coal. We gave an example is that how the inflationary trends can impact the profitability.

Then I gave that example that if, let's say, the fuel cost increased or diesel cost increased or anything which is pushing the shipments increase, it has a overall impact on the profitability because in case of sale, majority of the sale happens on delivered basis. Whatever orders are sitting in the order book for last couple of months or a year, then there will be some impact on the profitability on account of the increased cost.

Of course, we would try our level best to pass on some of the cost, but there's no guarantee that this cost would eventually be passed on to the buyer.

Earlier, I remember, we used to take as a variable contracts where the total pass-on was around 30% to 35%. Has this percentage increased for us in terms of variable contract?

No, when we say there is a mechanism, that mechanism is restricted to, let's say, ductile projects, and that was based on the, I think, pig iron prices indexation. It is not for each and every component of the product.

It is the pig iron-based prices because pig iron has its index, pig iron pricing is fairly, let's say, transparent. That was where, let's say, a lot of volatility was there in the iron ore and coal prices, and then some of the contracts had this escalation clause.

Right.

Vanshika, as you mentioned that 30%, 33% or the strategy was like that in ductile iron pipe to pass on the cost or to protect the company from the volatility in raw material prices, especially for ductile, it was like that we do have the stocks with us also, coal stocks. We are getting the coal ships every quarter, so that is something which is already inbuilt in the pricing mechanism.

Apart from this, certain states came out with the escalation clause as Vinay ji mentioned, through which that if the prices are moving beyond certain limits, then escalation metrics were there and we could pass on certain escalated costs. That is strategy which we are already following.

That is predominantly for the local. Ductile.

Local. Local market, domestic market.

Got it. In terms of DI pipes, I think you mentioned in your investor report that you have a 1 year's order.

However, we have seen that some state finances may not getting the amount, etcetera. How is the execution pace right now, and what do you think of newer avenues like Jal Jeevan Mission 2 and PNG, incremental adoption of PNG, how will this help?

PNG? Piped gas.

Vanshika, we are mixing PNG with ductile.

No. First question is for ductile.

Let me just break my question. First question is for ductile.

Yeah.

Let's first discuss about ductile. On, let's say, very high level, ductile, 6 to 9 months ago, people were focused on the Jal Jeevan Mission primarily.

Then there were some setbacks on liquidity issues in the Jal Jeevan Mission, then the states also moved to issue the orders based on their arrangement of financing. That's where the new contracts which were coming, they were coming backed by the state funding.

State was arranging the funds through the multilateral agencies, domestic, international, whatever. There, they were not depending on the Jal Jeevan Mission funding, whatever it is.

Those orders' executions had also started, and the pricing and profitability on those orders are different as compared to the pricing of the old orders. Now we understand that the Jal Jeevan Mission there's some momentum in that.

This is paper news also in the open public platform that Center has released funds to some of the states, which has gone to the state government. State has to, let's say, induct their own funds, whatever percentage it is, and then they will start moving the funds to the EPC and all.

That system is still getting formalized. We understand that there will be new mechanism, monitoring system.

Now the motto of the Jal Jeevan Mission is also shifting from putting infrastructure to ensuring the service at the end level. There might be some initial hiccups in terms of fresh implementation, but once it is set up, then it will be business as usual.

There will be more monitoring from the Center also, but it will be business as usual pending that the execution has a higher mix of state-backed funds backed by state funding, and those executions are happening currently. That is also reflected out of our fourth-quarter sale where majority of the sale is for the state-backed funding.

Of course, we are supplying to EPC. Then second question is the PNG.

No. The second question is for the Jal Jeevan 2, the second 2.0 which has come.

When is the execution going to start, because if the current execution has not been completed and the money has not been received, how do we see the Jal Jeevan Mission 2.0? Because system [foreign language] rebuild [foreign language].

As of now, the whole system, because people like us or any pipe producer is in the value chain, we're in the supply chain only. We don't interface directly with the state or the Center.

That interface is by the EPC. We supply pipe to almost every EPC who is buying pipe from anybody and everybody.

The challenge is with the EPC for the liquidity. You would be talking to all those also.

There is a issues with the EPC. They are small, large, medium-sized.

Funds would be released to them, they would settle their initial issues, and then they will start buying it. We still feel that it might still take a month or two before the execution starts in a reasonable way.

You think so maybe post-monsoons then?

Yes, you're right. Could be.

It does not mean that we are not producing. We have a mix of business or orders state-backed as well as Jal Jeevan.

State-backed is happening, Jal Jeevan is not happening, right?

Jal Jeevan is not happening in the full draught.

Right.

If this MENA region logjam is cleared, we have export consignment which are on hold, even those will go.

Okay. For city gas distribution, I was talking about

Sure. Thank you.

This is Riya this side. Thank you.

I think he's not connected.

Yes. I just have one question.

Can you just give us an idea about the current demand for the seamless pipe industry, industry as a whole, also the margins there?

Demand in seamless segment domestically, it is more or less 1.5 million approximately, and there are multiple players. As government or the PSUs have announced certain projects in deepwater exploration, we can see big opportunities to come when these projects are executed.

Announcement is there, intent is there, government is focusing on it. There will be a demand, and there will be a matching capacities to cater this demand.

Okay. You said it's 1.5 million ton, am I right, the demand?

In domestic.

Okay. Sir, how are the margins there as of now?

If you were to compare it to last year.

Margin product-wise, we are not discussing because we have multiple products. You can get some sense from the

No, this is as I'm asking you directionally that how would be the margins in that segment as of now versus last year directionally, not in terms of absolute per ton.

There will be improvement in margins in seamless segment because we envisage that demand should remain robust, and that will actually result into the little bit better margins.

Okay. Sir, broadly, if somebody were to be buying steel from outside and making steel pipes, then in a rising steel price scenario, should they be in a better-off situation, or it's not like that?

No, it's not like that.

That's all from my side. Thank you, sir.

We thank you very much to all the participants on this call as well as to ICICI Direct for hosting this call, and we hope that the issues what we discussed gets overcome ASAP so that we have a good call next time. Thank you very much.