Jindal Saw (NSE:JINDALSAW) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Jindal Saw Limited Q2 FY 'twenty seven Earnings Conference Call hosted by ICICI Securities Limited. Please note, this conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded.

0:51 I now hand over the conference to mister Singh from ICICI Securities Limited. Thank you and over to you sir. Thank you Good afternoon everyone. A warm welcome of Q2 FY twenty seven conference call. On behalf of ICICI Securities, I would like to thank management for giving us the opportunity. From the management side, we have with us Mr. Chief operating and financial officer Mr. Gupta, president and head treasury and mister Rajiv Kumar, senior vice president of. I'll hand over the call to the management for their opening remarks. Over to you. Good afternoon, everyone. I'm Vinay Gupta representing Jindal Saw Limited.

1:39 On behalf of our management team, including Mr. Narendra Manthi, Mr. Rajiv Goel, I'm delighted to welcome you all to our Q2 twenty twenty seven earnings conference call. Our sincere thanks go to the team of ITC direct for facilitating this call also. Now let me now take you through the operational and financial performance of Jindal Saw and its key major subsidiaries for the second quarter of February twenty seven, with a focus on the key developments that are shaping our business performance and future growth prospects. In today's presentation, we will cover three key areas: First, the financial performance, which Board has approved on last Friday. This is for Q2 of FY 'twenty seven and H1 of FY 'twenty seven.

2:34 Second, the business scenario and outlook. And the third update on the new project in. And through this discussion, we aim to provide you with a clear perspective on our performance, business priorities, and growth opportunities going forward. Now let us first let me first present the high level summary for the Q2 FY 'twenty seven, comparing it with the Q1 FY 'twenty seven and the corresponding quarter in the previous year. During Q2 FY 'twenty seven, the company delivered improved top line with gross margin revenue hitting INR 3,870 crores, which is up by 3% on quarter to quarter basis and 14% year on year basis. However, operational headwinds compressed the EBITDA to INR $2.54 crores, down from INR $3.41 crores in Q1 of FY 'twenty seven and INR $3.34 crores, which was in Q2 of FY twenty twenty six.

3:41 Below the operating line, finance expenses rose to INR 92 crores, which includes INR crores negative ForEx impact. Normalized finance cost to debt is modest of INR 77 crores. And finally, the profit after tax debt came in at rupee 63 crores compared to rupee 110 crores in q one of FY 'twenty 7 and 80 crores in q two of FY 'twenty six. This is net of a 30 crores tax credit received in the quarter. Financial performance on a stand alone basis for H1 'twenty seven and H1 of FY 'twenty six. The company delivered improved top line momentum in the first half of FY 'twenty seven, with gross revenues rising 13% year on year to INR 7,627 crore, up from INR 6,736 crore in H1 of the previous year, which is FY 'twenty six.

4:41 However, operating profitability faced pressure as EBITDA contracted to INR $5.95 crore from INR $8.94 crore in the similar period last year. On a positive note, finance cost fell to INR 163 crore from INR $2.39 crore in H1 of FY 'twenty six, showcasing efficient capital management despite INR depreciation against the USD. Ultimately, higher tax expense and lower operating margin impacted the bottom line performance of the company. PBT finished at 2,178 crores, down from rupees $41.02 crores, while the Fed had landed at rupees $1.72 crores compared to 446 crores in h one twenty six, a reflection of rupees 6 crores tax expenses this half versus INR 31 crore tax credit last year.

5:37 Overall, H1 twenty seven has delivered a increase in the revenue and lower finance cost, although profitability remained under pressure due to lower operating earnings and couple of other things. On consolidated basis, this is we'll now discuss Q2 versus Q1 of FY 'twenty seven with Q2 FY 'twenty six. On a consolidated basis, gross operating income increased by okay. On a consolidated basis, our top line expanded by 8.8% sequentially to rupees $4,518.12 crores from INR 4,476 crores in Q1 FY 'twenty seven and rose 5.8% year on year basis from INR 4,264 crores in Q2 FY 'twenty six.

6:40 The EBITDA slipped to INR $3.12 crores from INR $4.20 crores in H1 in Q1 of FY 'twenty seven and 482 of FY 'twenty six. Finance expenses rose 15.7% sequentially, up INR 17 crores to INR 5 crores from INR 28 crores in Q1 FY 'twenty seven, although remaining lower than also remained lower than rupees $1.53 crores, which are logged in Q2 FY 'twenty six. EBT dropped 2 rupees 14 crore after the adjustment of the joint venture and compared to INR 43 crores in the previous quarter and INR 183 crores year on year.

7:33 Profit after tax is reported at INR 35 crores from INR 91 crore in Q1 FY 'twenty seven and INR 139 crore in Q2 FY 'twenty six. Notably, 24 tax credit caused by that amount. On consolidation basis, our top line continued on a higher side with gross income expanding by 7.4% to rupees INR 8,900 crores. However, severe operating margin pressures impacted overall profitability. EBITDA declined by 38.3, leading to a 5.9 percentage point contraction in EBITDA margin to 8%, while a 27.8% reduction in finance cost down to 232 crores offered some relief. Pre tax savings EBITDA after JV share fell 73.8 to INR 146 crore.

8:40 Finally, the operational slowdown combined with higher tax provision resulted in 78.7% EBITDA in profit after tax. Now in terms of our loan profile, indebtedness, as of 09/30/2026, the company's annual net debt narrowed to rupees 2,245 crores but this 2,346 were on 06/30/2026. This includes long term debt of $5.22 crores, which is the entity subscribed by LIC, and it is repayable in year twenty eight, twenty eight, thirty. The net institutional debt on control basis has reduced to rupees $21.74 crore as compared to rupees $24.73 crore as of 06/30/2026.

9:26 And the long term as of 06/30/2026, the long term debt was $5.32 crore only, including Abu Dhabi, US and all. Further, in June 26, K ratings has affirmed k r a one plus for short term debt facilities, including commercial papers and clear double a with the outlook stable for long term debt facilities. Now what is the prognosis for these results? Overall, while our revenue increased, profitability got impacted, and the major reasons for this weaker performance are agenda. Ongoing geopolitical tension in West Asia have worsened due to recent escalations in South Africa, a reason where we hold significant export order exposure.

10:12 The main challenge is not other order cancellation, but rather delay in shipping and revenue recognition. If these projects delays per... Delay persists, dedicated production facilities will remain unutilized and continue to drive up fixed and operational costs. Then second, the ongoing global conflict has given up international and domestic logistic costs. This directly impacts our operations, particularly because most of the sales contracts are structured on a delivered basis for silicon. Serving raw material costs, particularly for coking coal, have a steep margin in the DI pipe business. This pressure was further compounded by lower capacity utilization due to lower execution of water pipe business as softness in domestic water business continued.

11:05 This resulted in the impact on the profitability. The Abu Dhabi DI plant is facing a combination of cost overruns, underutilization, and delivery constraints, including difficulties serving customers who cannot be reached through such great transportation. This resulted in lower production phase and impact on profitability. In the seamless business, while the DPI license reinstated in June 26, are for our eligibility for the key orders, though immediate financial impact remain limited in q two. The seamless buy business is currently bidding on new orders to rebuild its order book and is witnessing the improvement in the backlog. So now to summarize the performance for q two, the weaker performance appears to be the result of combination of geopolitical disruption, continued weaker demand of the offtake in domestic intra...

12:06 Water intra segment, increased raw material prices, increased logistic costs and other cost inflationary factors, and also supply chain constraints rather than a similar adverse factor. The impact is particularly visible in the ductile pipes... In ductile pipes and similar pipes businesses. Wherein key for sense of optimal capitalization had impacted the profitability. Now to meet... Mitigate or minimize the impact of the above risk to the businesses, company is positioning ourselves, and we are taking couple of... We are now highlighting couple of pointers that how we should be positioning ourselves for the q three or s two.

12:53 The company has order book of... Confirmed order book of USD 1,135,000,000, which approximately repeat INR 10,700 crores, and it further received letter of intent for approximately $575,000,000, which is mix of exports and domestic business. This this LOIs for US$7.05 75,000,000. These orders are not from MENA Region, and the export out of five seventy five countries for $25,000,000 approximately, and this is oil and gas sector. With this and on the seat of the order, our order book will be at approximately INR 16,200 crores. And the the the LOIs might get converted in next couple of weeks. And... But the execution of these orders is likely to be from the month of February, March, because we would be receiving the fee accordingly.

13:52 Another good thing is that post the board meeting on Friday, we have received another LOI for approximately USD 50,000,000. This is for export to Southeast Asia. So if we add this 50,000,000 further, so this will be the... Our total order book would be in the vicinity of 17,000. Now the existing job work order of approximately six lakh metric ton to Saudi has been delayed significantly, primarily because of the war in Middle... Middle East. While it has not blocked our working capital, because it's a job work order, but it impacted the caps utilization and revenue recognition. Now parties, including the buyer, are engaged to work out an out of the box solution for transportation or logistics services.

14:46 If a solution works out, then we may see the positive impact on the capital utilization driven efficient in next few months time. Now on the same left, right, the API license is reinstated in June 2026. The company is billing for new API orders very aggressively. API business has a better margin. We expect the impact of the same in next quarters. The Thai business may take some more time due to the micro and macroeconomic issues. However, we expect some export orders in GI business, where we could be able to reduce concentration of business in the domestic market. Pallet business and profitability has been impacted and may remain impacted to some extent due to increase in the diesel prices, lower fee content in the iron ore, coupled with higher stripping ratio.

15:40 We have seen reduction of current assets in q two, and we expect further reduction in the inventory and receivable amounts. This helps us to improve our liquidity position and thereby reduce bank borrowings. We are focusing on improved capacity utilization in all facilities for adoption, cost control, and deliveries. We're also keeping our eyes open on the capital allocation for CapEx, not only in India, but also in the. All these measures should start to better results or demonstrate better volumes and thereby better margins. And we expect... As we said last time also, we expect H2 to be better than H1.

16:31 Now let us discuss about the Amina region. The company initiated this project when the region... When the MENA region was stable. Our pipe manufacturing investments in US Saudi River designed from day one to serve as permanent foundation for the region's essential energy and water ecosystem. The economic fundamentals underpinning these projects remain entirely unchanged. Today, the project implementation is progressing well. By manufacturing locally, we are mitigating international logistic risk, improving local content integration, which is ITV, in UAE, and IT PV, EVA in Saudi, and ensuring that critical utility infrastructure continue to build without disruption.

17:26 Now let's talk a bit about our progress of our pilot in Abu Dhabi. Jindal Saw proposed project in in Kijar in this area, Abu Dhabi. We... Is progressing through the initial development. The project with a proposed capacity of 300,000 tons per annum and an estimated investment of approximately US$330,000,000 is intended to strengthen the company's presence in MENA East Middle East oil and gas market. By securing a developed leasehold land with existing civil infrastructure, we have accelerated our construction timeline. Procurement of critical long lead equipment led the way, supported by active l... L... Letter of credit and initial cash balances.

18:19 With financial closure projected in coming months, the project remains firmly on track to commence commercial operations in FY twenty twenty nine. Jindal Saw's Abu Dhabi strategy reflects a deliberate move to establish a strong regional manufacturing hub by combining inlet price for the oil and gas sector and the entire enterprise for water sector... Infrastructure. This growth platform approach is strategically aimed at capitalizing on The Middle East long term investment in energy security, hydrocarbon development, and water infrastructure while strengthening customer proximity, enhancing regional market access and creating a diversified platform for sustainable growth across the energy and water sector.

19:06 Regarding our five... Supply plant in South Europe, we communicated earlier also that we have established a strategic joint venture in South Arabia, where Jindal Saw will hold 51% equity stake and more of South... Kingdom Of Saudi Arabia will hold 59. The joint venture and is setting up two advanced pipe manufacturing facility, helical pipe and longitudinal pipe with a capacity of 300,000 metric tons each, catering to the region's growing water infrastructure and energy requirement. The project is progressing well. Land has been secured. LCs for long lead items have been established. We remain focused on accelerating project execution with interim financial project expected on... Over the next few months.

19:56 We recognize that prevailing geopolitical environment and highlighted regional security concerns may create some near term uncertainties around project execution, logistics, and investment time. Nevertheless, our approach remains guided by the long term fundamentals of Saudi Arabia's energy and water infrastructure requirements. Beyond serving domestic demand, the facilities are steadily positioned to capitalize on emerging regional opportunities, including the potential for alternative energy transportation and export routes that reduce dependence on the state of. We remain committed to a disciplined approach to project implementation while closely monitoring the evolving situation in energy. The Jindal Saw Limited strategy leverages a dual platform approach to target critical investment in energy security, hydrocarbon development, and water infrastructure. The company, Abu Dhabi, as a controlled high end base for pipe and the current pipes, optimizing customer access. Meanwhile, its Saudi Arab government, sir, focuses on localized longitudinal helical pipes, creating a balanced diversified corridor positioned for the sustainable reasons.

21:14 Now let's talk very quickly about our the type of operations in Abu Dhabi. You know, like, recent conflicts in MENA has has disrupted operations at our Abu Dhabi facility. The facility remains highly impacted due to the war. 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 plants are restricted to customers in the countries which are working... Which are within the cutting range. In this backdrop, q two of FY twenty seven for Abu Dhabi, we delivered 29,000 metric ton pipes as compared to 34,000 metric ton pipes in q one of FY twenty seven for the DI files. As of September 26, the subsidiary holds order book value the proximity USD 195,000,000 for corresponding 177,005.

22:15 Ensuring operational visibility for next nine to twelve months. This backlog is independent of Jindal Saw India's standard order order book of close to 17,000 including orders plus. Now about Jindal Hunting, a joint venture with Hunting Energy Service Private in Singapore, in which Jindal Saw holds controlling interest of 51%. It generated the revenue of 9.70 crore and a loss of INR 1.5 crore in Q2 of FY 'twenty seven. This business performance is a result of suspension of API license, which is likely to improve in coming quarters of API license as sorry, as API license has been restated. Now the last about the the litigation in Jindal IT... IKF was in NTPC.

23:05 This legal legal conflict... In this legal conflict, the division bench of Delhi High Court delivered a split con... Verdict. Consequently, chief justice has referred the message to a who has now been appointed. The next hearing is scheduled for January 2027. So this is from the presentation for today, and we now leave the floor open for to take certain questions. Mr. Narendra Manfi and Mr. Rajiv Gwal are with me to address any of the questions. Thank you very much, and let's start the question and answer session. Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch phone telephone.

23:51 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of from from Equiris Securities Private Limited. Please go ahead. Yes. Thank you for taking my question. So the first question I have is regarding the new LOIs, right? So just wanted to know how firm are these LOIs and when an approximate date as to when are they expected to translate into some dispatches?

24:41 And the other thing is that, can these orders kind of, to an extent, replace the affected MENA volumes at a comparable margins? Can you come for the second question, then we will provide, let's say, 25,000. Can you repeat the second question? Yes. The second part of the question is that the LOIs that we've received already out of the high 75,000,000 of LOIs and majority of them being outside of UAE region. So I just wanted to know whether these will kind of replace the affected MENA volumes or the delayed MENA volumes at comparable margins? Okay. So we'll not cover the margin at this point of time. Let me discuss two things, which you rightly pointed out. One is that, first of all, we have now after announcement of after, let's say, receiving the additional LOI of $50,000,000 So the total LOIs other than the confirmed orders are $625,000,000.

25:39 That's one. Out of this, $4.30 plus 50. Let's say 480,000,000 is export, and the $430,000,000 is in CIS countries, and this $50,000,000 is from Southeast Asia. Second point is that how con... Confirmed we are for the sale order. So eventually, this is processed. Every every buyer has their own systems and all. So we... When we receive the LOI, then from there, only two, three things remains pending. One is, let's say, of this LOI into a firm sale order, which is a legal thing so that you negotiate the legal thing and do...

26:25 Start doing the thing. Like... But there is the possibilities of, let's say, not getting the order remain very, very low. And when we do... We have already started booking fee for this... These orders also. In terms of the production and dispatches, these production will start sometime in February, March. And because the LOI, once we get the confirmed order in next couple of days or week, after that, raw material which has been... It's already been blocked. We expect to receive the raw material from January or February. So effectively, these new orders... Production will start again with new orders sometime towards the end of the year.

27:11 But having said about the MENA Region order, it's one one of the largest order what we received in terms of volume six sector. And incidentally, the buyer is our partnership partner in Saudi project also. We are we are, like, we are not replacing the capacity for some time. The capacity might not be fully utilized. What we are trying to do, we are trying to find, along with the buyer, alternative routes for transportation. So if that worked out or if the scenario in general improves, then our facilities would get booked very quickly. Okay. Understood. Thank you for your response. The other thing I wanted to ask is that there is also some imposition of antidumping duty on DI pipe imports into Saudi Arabia. So I just wanted to know your exposure to Saudi region, specifically for DI pipes. And can you explain like the specific rates, if possible, as in the antidumping rate that could be applicable if possible on RDI pipes exposed to Saudi?

28:19 Yeah. So, basically, you're right that antidumping duty has been imposed by Saudi Arabia government on the Indian exporter. But good thing is that since we did not export pipes from India to Saudi, so we are not into that anti dumping duty imposition. And we are doing sale to Saudi Arabia through our Abu Dhabi subsidiary. So this is not impacting impacting us. However, the other manufacturers in India, the duty is being imposed on them in the range of 16 to 25 to 30%. Based on the... We are export to this region and we are pricing. So that is something which is positive for us that we are not included in the anti dumping duty liability.

29:13 Yep. So to add one line here is that it will be... It's good for our Abu Dhabi facility since... Because of the anti dumping duty, the Indian producers, the cost of it... The pipe... The profitability will reduce. Hereby, we can sell more pipes in Saudi or a bucket from Abu Dhabi facility. Okay. Understood. Okay. And lastly, one thing I wanted to know is that we have mentioned that we have got some initial order placements from our upcoming Sockeye facility at Saudi. So I don't know if you already mentioned it, but if you could just assign some approximate number as to how much order filling has happened for this plant.

29:59 You're talking about Saudi facility? Yeah. Correct. No. No. So this is a process. So first of all... So as we had mentioned in this call, previous call also, we have acquired lands, and the the land development work is going on. The plant, once it gets implemented, then it will go for inspection. After that, once the approval is received, then only we can participate in the order. So maybe '28, '29 is the time when we are targeting the commercial operation. Prior to that, we won't get orders for this facility. Even though what can happen that our JV partners, he can... So maybe the moment to restart the operation, because they are one of the largest EPC contractor in Saudi. Maybe they can take the order and they can download the order on the Saudi facility. But at this point of time, there is nothing... We we have not secured any order. We are not... We don't have manufacturing facility here.

31:03 Okay. Just one last question, if I could question. There was some something mentioned about a holdup in terms of our Saudi DIY project in the presentation. So just any guesstimate as to when this is expected to kind of move forward? So it will still be within the time lines, right? Or will there be certain delays in terms of commissioning? See, that facility, in any case, initially, that facility was not complete back to back or integrated facility. It was like kind of taking the finished pipe from UAE and finishing it and doing couple of other processes in Saudi. Right now, considering the Saudi scenario, we have put on hold that venture. It is very small.

31:52 And till that time, we finalized in, let's say, our thoughts again. So we would be serving that market from the Abu Dhabi. So that is not... That will... Otherwise, also, that was not adding to the top line or product... Productivity. These are the semi finished pipe getting finished in Saudi and being sold in the Saudi market, which we would... We will continue to do from the Saudi or Abu Dhabi capacity. Okay. Okay. Understood. Yeah. These are the questions from my end. Thank you for answering. Thank you. Thank you. The next question is from the line of Shailesh Taja from three sixty one Capital.

32:45 Sir, our gross profit per kg, it has declined over the past few quarters from INR 51 to 41 per kg in this current quarter, reportedly due to an unfavorable product or segment mix you were referring. So given the current order backlog of 2,500,000 tonnes that includes including this LOA, I'm talking 500,000 tonnes with approximately 55% is exports and Abu Dhabi operations. So how should we actually assess the quality and the profitability of the order book? And over the next twelve months, what trajectory that do you expect for gross profit to improve? And what could it return to when it will return to that INR 51 spread, which was reported in last year?

33:41 So yes, Salish, you are right because of geopolitical situation and other domestic market situation, profit margins per kg has reduced drastically, which is reflected in the numbers also. What we see that the new order booking other than the MENA region and the execution possibilities are much stronger than what we are experiencing right now in the MENA region. We are looking for better margins, and our target is to, again, reach to that level. What we were... Are in '25. So this is the... And you are the company management, and we are seeing that from q three onwards, we may see some upward trend in terms of margins also because this new orders will change the product mix in the time to come. Yeah. Because the majority of the orders are coming from the oil and gas sector and exports.

34:46 Again, exports, which is executable. So it will... With the product mix, which will lead definitely to the better margins. So we can expect q o three, q four onwards that margins will be moved towards, you know, double digit, and we are expecting... And we expect that very soon this situation will be same what we were doing a few quarters there. Okay. Okay. Great, sir. Sir, our effective utilization is around 67%. Effective capacity, I'm taking 2,300,000 tons. So by... When do you expect that utilization will reach 80%, sir?

35:34 Either in third quarter or fourth quarter? No. So 80% utilization and all all depends on the execution of multiple orders. So in the best case scenario, also, our execution level was somewhere 75%, not crossing that. We achieved the highest volume somewhere in 2425 when we achieved 1,800,000 tons. So what we feel that reaching to that level of execution will take time. However, improvement in the execution, we are expecting q four onwards, definitely. Okay. Okay. Okay. Sir, I'm questioning that the LOI we have received 6,000 crores from non linear market.

36:20 Is this fully FOB order? No. So generally, the trend in the export market is completely... It is not a FOB. It is Mhmm. Generally a CIF where the freight is also included. But Mhmm. This current situation is more volatile, so we have taken a sufficient question about the pricing of all elements, which is on our part. So we have taken care in our pricing, and this very well taken care of. Okay. So in the same region, do we expect, you know, in next two, three quarters more sizable orders in the same region? How how strong is the current pipeline?

37:07 So current inquiry levels are quite high, and we are participating in all larger inquiries. And we are hoping might be things may crystallize, but as of now, inquiry levels are high everywhere, oil and gas and water sector, especially in the export market. Okay. Sir, only last question. Sir, can you provide update on performance of key subsidiaries, particularly, The U. S. And Abu Dhabi? Could you please talk about how it has performed in terms of, you know, operating profit levels? So in Abu Dhabi, as Vinayji mentioned in his initial remarks that because of MENA region situation, the Abu Dhabi facility is operating at around 50% utilization level, and we achieved 34,000 ton in a quarter.

38:03 And, I think 43,000 ton. So in that scenario, this... Because the situation is continuously... Situation is, again, worsen in this region. So we are able to maintain that run rate, but we are hoping because of this anti dumping duty on Indian exporters in Saudi, we may get the benefit of it and we may increase our supplies to Saudi, which will definitely improve the execution and in the coming quarter. Mhmm. Are... Abu Dhabi facility is contributing at EBITDA level positively. Though the EBITDA margins have reduced because of the underutilization of capacity.

38:51 The US facilities, which are under Jindal support, they are performing well. They are contributing positive. They are largely in job work areas. They are double jointing, quoting, and some medical enter activities we are doing in various entities in South US. So these entities are contributing positive. Okay. Now compared to last year, is there any improvement that you see, sir? So their performance is quite consistent. US entities performance is quite consistent. However, there is a decline as compared to last year in Abu Dhabi facility because of Middle East situation. Yeah. Yeah. Okay. Thank you, sir. Thanks. Yeah. Thank you. To ask a question, please press star and one now.

39:42 The next question is from the line of Vipul Kumar, Anupchan Shah from Sumangal Investments. So in your presentation, you mentioned that export volume is 41% of your total order, but value wise, it is 28%. So are we getting a substantially reduced realization first on in export market, or is my understanding wrong? No, sir. Volumes are including the job work order of rough... Roughly six lakh ton where the volumes are high. However, this order is job work order where only the job work value is included. That's why the well... In terms of value, it is 28.

40:29 However, in terms of quantities or volumes, it is high. So will it not be better if you put the the separate slides to the presentation so that this confusion does not. So overall, for manufacturing export and domestic margins are almost same or is there any difference between the two? In general, export orders are more profitable than the domestic margin in terms of water. Oil and gas, they are pretty similar. So this six lakh tons which you are referring to is pure jobber order. That's why margin is low. So it's a water pipe order.

41:14 Jobber is generally... Basically, the raw metal cost is not included. That's why the value is lower. Okay. Okay. So the raw material is being supplied by the buyer free of cost to us, and we are doing the value addition, making the pipe and selling them. So it is only the conversion and the margins which are included in the order. That's why the value in terms of value, it is low. So I would request if if competitive pressure do not or we do, then you make some separate disclosures like these orders in the presentation. Okay. Well noted. Thank you, sir.

42:00 Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead. Namaskar, sir, and thank you for the opportunity. Hope I'm audible. Yeah. You are audible,. Yes. Yes. Thank you. Sir, firstly, in terms of the part, how how are we seeing our scheduled for H two? And what kind of volume growth are we expecting comparison to what we did for FY twenty six in terms of the only pipe segment? So in terms of pipe segment, we are expecting some betterment in terms of volume in pipe segment specifically because till h one, volumes are higher than the previous h one figures. So we expect that the same momentum should continue in h two. So overall volumes in FY twenty seven should be higher than FY twenty six volume.

43:07 And sir, when we look at our realizations also, since the volume was up, but the realization was not commensurate to that and hence the margins were also lower. So taking into account the existing order book, excluding the LOI one and the recently added orders, are we expecting the margin profile for the pending order book, which is to be executed for s two also remaining in the same vicinity as was for the quarter two? So in H2, we are expecting a little bit change in terms of sales mix because this quarter sales mix was altogether towards water sector, which is in general a low margin and specifically in domestic market where now oversupply situation is there due to which margin pressures we are experiencing.

44:03 However, in the coming quarters, q three and q four, we are expecting some improved volumes in oil and gas sector, which will definitely lead some better margin or margin improvement as compared to h one. Okay. And so this EBITDA margin should have bottomed out in this 6.8 percentage level last last year also where... When we had the December quarter, we had double digit margin, and margins were always closer to 10%. So can q three q three still see the reversal in in improvement in the margin, or how should we in the EBITDA margin profile for h two come... Taking into account what h one was?

44:49 Right now, we can comment on h two blended because things are so volatile. We are working out certain modalities to export even the the over quarter also. So we we cannot comment on exact numbers as of now, but h two should be better than h one. That is something which we are sensing right now. Right, sir. And for the pellet segment, sir was commenting about some factors that have led to the decrease in the margin. So can you elaborate what exactly are the troubles in the pellet segment? And I think so some EC clearance were also pending for the enhancement of the capacity.

45:36 So where are we in terms of pellet pellet performance going there? So in pellet, as Vinayji mentioned in his initial remarks that... Okay., in pellet, the kind of mines which we have, We have high stripping ratio and low grade of iron ore. So because of that, our margins are under pressure now. And the depth of the mind has gone up, and we are working how to, you know, enhance or maintain the margins there.

46:28 As far as EC is concerned, we have... The application has already been made, and we are discussing with the MOEF for getting their final approvals on whatever application which we have made. The EC enhancement, technically, it is not there because the ROM will remain at the same level because of high shipping ratio of our total overall mining. Quantity has include... Increased, including the OD.

47:14 But, otherwise, ROM or the iron ore quantum will remain same, but whatever we were doing this thing last year. Sir, because what we Sorry to interrupt you, mister. I will only conclude... Ma'am, I will only conclude to what was with reference, if you may allow. Sir, if I may conclude. Yeah, please continue. Yeah, sir. Sir, sir, in terms of the pallet volume, that that are on the higher side and what we understood that pellet being a commodity, the prices are also trended up. So the contribution margins have also been lowered for the first half or what is the color on that?

48:01 Okay. As far as the selling price is concerned, it is linked to the market conditions and other things. When I say that the there is a higher shipping ratio or low grade ROM. That means the yield of yield from the iron ore is lower. So that resulting to the higher operating costs. And that is why there is a low margins. But by making the other sources of our acquisition of similar kind of nuclear, we are trying to reach to the level of talent generation, whatever we did in the last year.

48:58 Thank you. The next question is from the line of Pat Bhavar from Investec India. Yes. Hi, sir. Yes, sir. Are good. Yes. So I had a couple of question on demand. One is you highlighted in the exports market, you are looking at good demand undercurrents. Wanted to know like which are these countries where excess MENA where you are getting a good response. So we have already highlighted the LOIs that we have received from CIS contained South Asian countries. So please allow us to give some space in the time we see this and from PO, but these are the LOIs not from INR.

49:56 Okay. So CIS and Southeast Asia, right. $430,000,000 CIS, Southeast Asia of $50,000,000 Got it. Perfect. And sir, just on the domestic front, we've been hearing that there are fund releases in JJM, right, as you mentioned, where 7,000 crores has been released. What is happening on the ground? Are you hearing about these releases? Or are there any new workflows that are new orders that are being placed? Okay. So funds release is happening in a gradual manner. And that is why in our presentation, we have said release or reduction in the levels of receiver and as well as inventory.

50:42 So we have seen funds getting released, but yes, the it's slower. It's not like playing of the existing people by the government. That's one. Second thing is that for some time, the orders would not be issued under general emission scheme. It would be from the state government side. So state will raise the funds. They are issuing the orders. They will issue the orders. So orders are coming, but, yes, it is through the state. Okay. Got it. And how positive are you on on these orders? Like, do you think this can, you know, maybe a good chunk of your order book over the next maybe six to one year or two year periods?

51:30 Okay. See, execution is the key at at this point of time. For example, you would still have all our ductile facilities fully booked for almost one year. The challenge is not the order. The challenge is that the execution of the project on ground. So because we supply majority of our pipes to EPC contractors. And EPC contractors will be doing work across the country. So maybe they are receiving money in one or two states. They are getting the money getting elected in two states. So if you see at this point of time, they are the business is not being fully implemented. So that is where some lag impact has come and the value chain has, let's say, got impacted. It is it's likely to be reversed, likely to get improved gradually.

52:24 It doesn't it will not happen overnight. But orders are there. We are fully booked for all facilities. Got it. That is very helpful. Thank you so much. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir. Yes. Thank you very much for all the participants and hope that we could clarify, provide our perspective on the business and scenario in India overseas. We are happy... We'll be happy to take the questions. Our team is there. Mister Raji Goel is there. You can approach to them one to one. And thank you all... Thank thank you very much once again for joining this call.

53:14 Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.