Maharashtra Seamless Ltd
NSE:MAHSEAMLES
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
568.4699
1 064.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Maharashtra Seamless Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Maharashtra Seamless Limited Q1 FY '24 Earnings Conference Call hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Vikash Singh from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Good evening, everyone. Welcome to Maharashtra Seamless Q1 FY '24 Earnings Con Call. From the management side today, we have with us Mr. D.P. Jindal, Chairman; and Mr. Kaushal Bengani, Deputy General Manager, Investor Relationship and Finance. Without taking any more time, I would hand over the call to Mr. Kaushal Bengani for the opening remarks. Over to you, Kaushal.
Thank you, Vikash. Good afternoon, and thank you for joining our earnings call. We are pleased to let you know that we have been able to continue our strong performance going into the new financial year. In Q1 FY '24, we have been able to improve upon our margins despite lower production on account of preventive maintenance and seasonal factors.I will briefly summarize key financial indicators. In Q1 FY '24, our revenue decreased by 7% from Q1 FY '23. However, our EBITDA increased by 6%, PAT and EPS increased by 48% and 45% respectively, from corresponding quarter of last year. This was achieved despite lower production and dispatches and only indicates strength of our operations and business.Apart from financials, there are 3 key points which we would like to draw attention to. Firstly, we've become 100% debt-free in quarter 1 FY '24. We were always net debt-free and now we have become 100% gross debt-free with cash reserves in excess of INR 1,000 crores. We had informed shareholders regarding prepayment of debt around a year ago and we have been able to complete that timely.Secondly, we have commenced the capital expenditure schedule, which we had given out. Our plans of capital expenditure by acquisition of land was started in Q1 FY '24 and we'll use this land for installation of finishing facilities at our Telangana unit. We are in the process of placing orders for relevant machinery and will try to complete as early as possible.Another key point to note in Q1 FY '24 was inclusion of Maharashtra Seamless in MSCI. We were made part of the Morgan Stanley Capital Invest India domestic small-cap index from the 1st of June. This type of recognition reaffirms that our journey is on the right path. The consequent doubling of foreign institutional investor holding from 2.84% to 5.96% within a span of a quarter is another feather in our cap.I would now like to take you through the presentation. In the quarterly highlights, you will note that our EBITDA margin has improved and our PAT margin has remained the same despite lower sales. This is on account of execution of good orders and our ability to control costs.On the next slide, I've given a quarterly comparison and you will note that our strong performance is clearly reflected. We have a revenue figure of INR 1,256 crores with profit of INR 216 crores. In Q1 FY '24, some portion of the accumulated losses and unabsorbed depreciation which we had was also utilized.The next slide talks about the annual highlights of Maharashtra Seamless, which was given earlier as well. Slide 8 talks about operational and financial performance. Our EBITDA in quarter 1 FY '24 is at INR 204 crores from Seamless division and INR 11 crores from ERW division. This level of EBITDA is almost the same as it was in Q1 FY '23 despite lower sales. Our EBITDA per tonne in the Seamless segment has improved and the lower production was on account of preventive maintenance shutdown that we have taken in our Telangana unit.The next slide is about the EBITDA mix. In Q1 FY '24, 83% of EBITDA was generated from the Seamless segment with the balance 17% coming from ERW Renewable and the rig segment. Going forward, we expect this to be the segmentation between each of the divisions and their contribution towards overall EBITDA should be along same lines.Our uncoated equity preference share investments and ICDs are detailed on the next slide. You will note that ICDs have continued to decline and we expect them to be fully realized by March 2024. Our liquid investments, both long-term and short-term have increased. We are now sitting on cash reserves in excess of INR 1,000 crores and we are pleased to be in this position.After adjusting for ICD given we are closer to INR 1,100 crores of net cash. There were 2 long-term loans, which were availed a few years ago in Maharashtra Seamless, both of which have been prepaid in full in October 2022 and June 2023 in view of sufficient internal accruals and rising interest rates. Corporate guarantee continues to reduce as per the schedule committed.Our order book as on 25th July stands at INR 1,725 crores with 71% of the order book coming in from the upstream segment and the balance coming in from the exports, downstream and other segments. We expect margins to remain steady based on current trend of seamless sites. This is because our order book is supported by back-to-back booking of raw material, leading to locking of margins and negative impact of fluctuating raw material prices.The capital allocation schedule, which we had given earlier, which is primarily about capital expenditure is detailed on the next slide. We have commenced installation of the finishing facility at our Telangana unit and we will try to complete this as soon as possible. There will be no requirement of any debt of any kind for going ahead with this capital expenditure plan.The next few slides talk about the government policies, sales and marketing update and the market trends, which are currently in place. A key point to note in terms of domestic demand is that India's oil demand is projected to rise 50% to 7.2 million barrels per day in 2030 from 4.8 million barrels per day in 2019. Our natural gas demand is also projected to double to 133 bcm in 2030 from 64 bcm in 2019. India also plans to double its oil refining capacity to 450 metric tonnes -- sorry, 450 million tonnes in the next 10 years to meet rising domestic fuel demand as well as to cater to the export market.There are other factors which are prevailing in the market right now. And we would appreciate if you can take some time out to go through Slide 17 and 18, so that there will be a better understanding of the demand drivers, which we are experiencing. The shareholding structure is detailed on the next slide. FIA Holding has doubled, more than doubled, in fact, from 2.84% to 5.96%. DIA holding has also increased. Number of FIIs have also increased significantly.Promoters continue to hold 67.8% of the total equity.That concludes the presentation, and I would now request Vikash to take it forward from here.
[Operator Instructions] The first question is from the line of [ Samrad Yadav ] from Prosperity Wealth Advisors.
Yes. So my question is on the raw material prices, whether you see an upside into the raw material prices or on a lower side? And what is the view on your export orders?
Well, I'm D.P. Jindal here. Raw metal prices -- steel price in general is going down. And how much, I'll say 10% already reduced and we are hoping that it will establish at these prices. Regarding export, last 2, 3 months, there was a slackness in the export market, particularly in U.S.A. And now we are hoping that it will go up because the rig count is also going up in U.S.A. Yes.
Right. So recently, when U.K. has announced some oil explorations also across -- so do we have any opportunities there?
Yes, we do export to U.K. also and mainly Canada and U.S.A.
Okay. And this raw material prices, if it comes down, will it have a beneficial on our EBITDA margin?
Yes. This like question was saying, our EBITDA margin was better in last quarter. So one of the factors was that the steel price has gone down and our order booking was at a higher price.
The next question is from the line of Pritesh Chheda from Lucky Investments.
Sir, could you give some volume outlook in ERW and Seamless for FY '24? And I see that we have capacity available in Seamless. So wondering this INR 850 crores of expansion that we have lined up, is it expanding any capacity?
Actually, we have shown in Telangana plant 2 lakh tonne. Actually, we can finish -- our plant is 2 lakh tonne, but we can finish [indiscernible] only 1 lakh tonne. So we are adding only finishing facilities to finish another 1 lakh tonne so that we can utilize 2 lakh tonne plant there.
So for this finishing facility, INR 850 crores investment.
No, no.
No, finishing facilities is INR 184 crores. There are other aspects of capital expenditure, which we have detailed on one of the slides in our presentation.
No, I am seeing that slide. So that is Slide #14, but is it expanding any capacity?
Not the INR 184 crores capital expenditure.
Sorry?
The INR 184 crores capital -- INR 184 crores capital expenditure will be for finishing facilities only. We already have capacity in United Seamless of production of 2 lakh tonnes, out of which we are currently able to finish only 1 lakh tonnes.
Total capacity is 6 lakh tonne.
6 lakh 50,000.
6 lakh 50,000, so that will remain there. It will not expand.
So I understood the first 2 line items, U.S. TPL, solar plant and heat treatment in which 100,000 finishing line, which was not the capacity instead of utilize -- able to utilize 100,000 will be able to utilize 200,000, I understand that. But other than that, whatever is mentioned down with INR 350 crore hot mill upgrade, OCTG line INR 95 crores, all this will any of it expand any capacity?
Not in tonnage, it will expand in the value addition and maintenance of the plant and upgradation of the plant.
Okay. My second question was if you could share the volume outlook for Seamless tubes and ERW?
We expect a 5% to 10% in terms of tonnage. And that is the outlook which we have given earlier as well.
Okay. And my last question is, sir, it's nice to see the ICDs and the corporate guarantees continues to be reducing from our balance sheet. We have these oil rig investments, which we have done and some of the rigs are also then placed with either with sharing or given output [indiscernible]. So is the group looking at reducing those transactions or investments as well and bifurcating the businesses, let's say, rigs in Jindal mill and tubes over here? Any such thought process?
Yes. We are continuously processing that is like at one time Jindal drilling had no rig at all. All the rigs were in Singapore and investment by the group. So now Jindal drilling owns 2 rig at present. And third, in the next few months, we are buying third rig also. So we are in process that all the rigs goes to Jindal drilling. That's right. And the investments are also sped up.
That will help simplification of the structure of oil companies. And we had stated this earlier as well that we want to simplify our cost structure, which is why we have also amalgamated United Seamless with Maharashtra Seamless since both companies are in the same line of business.
Okay. So from Maharashtra Seamless, now what is the equity investment in drilling companies?
If you go to Slide 7 -- sorry, Slide 10, that has been detailed out.
Slide 10. 10. Okay. So this is the Maharashtra Seamless Singapore.
Yes. So there is equity investment of INR 39 crores in Maharashtra Seamless Singapore and Jindal Pipes Singapore combined and preference share investment of INR 215 crores in Maharashtra Seamless Singapore.
Okay. So this is the total investments and...
Total equity and preference share investment. In addition to that Maharashtra Seamless owns 1 rig.
In its own books? Okay. Now this is -- this 2, the Maharashtra Seamless, Jindal Pipes, this put together as 2 rigs, right?
No. Jindal Pipes Singapore is 1 rig. Maharashtra Seamless Singapore has equity investments in companies which own rigs.
Okay. Companies which own rig. Okay.
The next question is from the line of Bhavin Chheda from Enam Holdings.
Excellent performance also. Just a few questions. Based on present capacity and the ongoing expansion, what would be the optimum seamless pipe production and ERW pipe production you will be able to do in 3 years' time?
So last financial year, we had dispatched 436,000 tonnes of seamless pipes and 52,000 tonnes of ERW pipes. Next -- current financial year, we expect a 5% to 10% growth in our tonnage. And that is the only guidance which we are able to give right now. However, we are aware that we are sitting on substantial cash and we are interested in any opportunity where we can get IRR of more than 20%. We would want to capitalize on that.
Sure. Kaushal, I'm not asking on guidance. I'm saying based on the installed capacity, how much was...
Out of installed capacity of 650,000 tonnes, we have 550,000 tonnes active. Against 550,000, we have dispatched 456,000 tonnes.
Okay. That is including United Seamless?
Including United Seamless. So now we are installing finishing facilities, United Seamless, which will increase our active capacity from 550,000 to 650,000.
And ERW, you are not doing anything?
No.
So next year, you can see this 436,000 will become 536,000, somewhere like that.
Sure, sure, sure. Okay. And the other thing on the -- in seamless pipes regarding different grades of pipe, so what would be like current mix between 0 to 7 inch, 7 to 14 inch and typical high-value products? What exactly is the current product mix like? And how much you classified to be value-added and earning very good margins? The entire portfolio is a good margin product, but I'm saying if you want to classify...
Right. It depends on all -- size-wise, there is no difference. Only difference is whether it is alloy pipe or carbon steel pipe. Carbon steel has less price, alloy steel will be costly. So that is the difference.
Okay. Okay. And currently, what would be the export percentage in seamless pipes?
Exports percentage would be around 10% to 12% in previous quarter.
The next question is from the line of Saket Kapoor from [ Kapoor Company ].
Sir, [Foreign Language] because of the factors [Foreign Language]?
Basically, this oil sector, they place orders in bulk quantity. So last quarter, May, oil sector [Foreign Language], so which we have supplied. So [Foreign Language]. But again, next quarter when ONGC will place order, so order book will go up.
[Foreign Language]
Yes, yes, it's not very constant. [Foreign Language] export is weak this quarter.
[Foreign Language]
U.S. market, mainly...
Sir, [Foreign Language] MSL continues to focus on getting license for premium connections, which will immediately enable it to bid in premiums and excel tenders. Sir, if you could throw some light [Foreign Language] market size [Foreign Language]? What are the times like in terms of the business opportunities in this premium connection segment?
License world [Foreign Language]. So we have to take permission from them. It's a monopolistic item or patented item. So -- and requirement is at present, we can manufacture about 25,000 tonnes of premium joints, which is required in ONGC. And if the foreign party permits, we can export also. So this is the -- and the added value is quite good. So about -- you can say when we are selling 300 tonne pipe at $1,500 per tonne, these premium joints are $2,500 per tonne.
Sir, if I correctly remember, we had earlier with [ Pennington ], we had an agreement for this premium connection. So...
Yes, we have already produced these pipes and we had a collaboration with [ Tenaris ]. So -- but that joint venture was not working now. You can see one of our subsidy also there, Jindal premium. So in that company, we had a joint venture with Tenaris. But now we are talking with another Japanese company for the license.
And when will that get [indiscernible], [Foreign Language] how long will it take? Before that we won't be able to continue the same, we won't be able to say, that is what we are to expect.
Without license, we cannot.
Okay. So how long will it take there for us to get through this?
Well, we are trying maybe within this year, we can start.
Okay. Sir, Kaushalji, [Foreign Language] volume growth [Foreign Language], if we look at the EBITDA per tonne, EBITDA per tonne [Foreign Language]. So sir, [Foreign Language]. So volume [Foreign Language] EBITDA per ton trajectory be [Foreign Language] on the seamless part to the ERW [Foreign Language].
[Foreign Language] order expected [Foreign Language], [Foreign Language] basis [Foreign Language].
[Foreign Language] Margin point -- correct, EBITDA [Foreign Language] similar segment, [Foreign Language] even higher than the Q4 quarter, [Foreign Language] in terms of this [indiscernible]. [Foreign Language] higher side [Foreign Language], a ballpark number [Foreign Language].
Look, [Foreign Language] is a thumb rule, you can say...
20,000 [Foreign Language].
Yes.
Okay, sir. [Foreign Language] INR 1,000 crores, I think earlier also it was informed to us that we are contemplating ways by which you will be returning cash or increasing shareholder value, increasing -- the value will increase for the promoters also. So anything on conclusion, sir, that you have thought of? Because over the last 2 quarters, I think so will be promoted have also not bought any further stake in the company which I think the [Foreign Language] you are interested in taking your stake up to 75%. That is the limit, [Foreign Language] currently large [Foreign Language]. So [Foreign Language] shareholders [Foreign Language] reward [Foreign Language].
[Foreign Language] that is promoters' money is utilized. This cash is not utilized for that. So well, let's see, we are waiting for the opportunity and see what happens. Certainly, the money is in good hands. So either -- we have a expansion plan. And if some big opportunities there to grab some similar industry, similar plant. So we are in a lookout for that.
In any way you're not returning the capital, you are looking for growth capital, use it as a growth capital rather than returning back to the investors. This is what your thought process is?
Well, we want to watch whether if there is a growth of opportunities there or not.
The next question is from the line of Riya Mehta from Aequitas Investment.
Am I...
I'm so sorry, sir, but we are unable to hear you. No, ma'am, your audio is breaking up. Ma'am, may we request you to join the queue? We are unable to hear you.As there is no response from the current participant, we'll move on to the next. That is from the line of [ Rada ] from B&K Securities.
Congratulations on [indiscernible]. My first question was that you -- presenter said that volumes from 4.3 to 5.3, whereas you are guiding -- that is giving about 20% growth. And you also guided 5% to 10% volume growth. So just wanted more clarity on...
Yes. So the reason why it will go up by 1 lakh tonnes is because we are installing finishing facilities at our unit in Telangana.
Yes, sir, I'm talking about the sales volume.
Yes. That's right. What I said 4.3 to 5.3, it may be spread in 2 years. From today 1 year, it will be spread in 2 years.
Okay, sir. Okay. Sir, secondly, could you help me understand the EBITDA per tonne profile in the ERW? We are seeing a lot of volatility in this? And primarily, that is because of the mix I understand, but could you throw some more light on this?
Margins are expected to remain good. We have a good order book and the market is strong and we expect margins to remain good.
Okay. And sir, is there -- we are going to participate in upcoming projects in U.S. and Canada. So can you give some light on how the realization in EBITDA per tonne is in domestic vis-a-vis export market?
We do not share that information.
Okay, sir. And sir, as per the relative data, we are seeing that U.S. count is 664 in July as against 755 a year ago. So on what basis are we seeing an improvement in export volume?
So the rig counts which have declined, they are primarily land rigs, where consumption of pipes is lower than those rates, which operated offshore. Because the rig count currently reflects a decline in land rigs and a lot of our pipes are sold to offshore projects, wherein we get a good demand, which is why we believe that the export market is expected to revive very shortly.
Okay, sir. And sir, just lastly, a basic question. So on the export market, given that you're seeing higher traction from export, so as pipes are bulky products, so transportation and packaging costs for the pipes in the export market would be higher. So just wanted to understand what is the price difference between the landed cost of our products in the export market of ours versus the peers in those markets?
Rate costs are borne by the customer and we don't want to share specific costing.
The next question is from the line of Riya Mehta from Aequitas Investment.
My first question is, what is the loss of volume due to maintenance shutdown this quarter?
Around 10,000 tonnes.
Okay. And actually, as of 31st June, basically, for drainpipe the order book number remains same. So has the acquisition not started as you for drill as well as cylinder pipe?
So the order for drill pipe has a long delivery schedule. So we have not started execution for those pipe yet.
So when will this start? And what are the margins like for this?
Margins are good and we expect it to start in this quarter.
Okay. And what will be the capacity utilization of [indiscernible]?
With PPL capacity, utilization is almost 90% because last year, we -- against the capacity of 1 lakh tonnes, we dispatched 88,000 tonnes.
The next question is from the line of Pratiksha Daftari from Aequitas Investment.
My question was covered.
The next question is from the line of [ Mahesh Kalantra ], an individual investor.
Yes. First of all, I want to congratulate for achieving very good EBITDA margin. But the most disappointing part is the loss in sales due to shutdown in quarter 1. Now was this shutdown not -- I think it was not announced in the last conference meeting. Was it a sudden shutdown? What is the reason for that?
This was a preventive maintenance shutdown. It is taken after approval of the technical in-charge of the relevant mill. As soon as the shutdown was taken, we had informed the stock exchanges.
Okay. How long it lasted a Q? How long the shutdown lasted, sir?
15 days.
15 days. [Indiscernible] for 15 days. Right. Now coming back to the [indiscernible] forecast for the current year, which will be about 5% or 10% more in comparison to the last year. Do you think you'll be able to make up for the deficiency in the loss of production in the next 3 quarters?
We maintain that position. That is why we've given same guidance.
All right. Yes. So that is virtually will have to our dispatch should touch almost about 375,000 MT in the next 3 quarters? So that's visible.
Yes.
Okay. And at what stage has the process of installation of finished line at Telangana plant has reached now?
The installation has not started yet. We have acquired land and we are in the process of placing orders for relevant machinery.
Okay. Any likelihood of starting the additional line before the end of the current year?
No.
No. Okay. Now yes, one minute, sir. Yes. And then you have a order book position, which has come down now to INR 1,735 crores for this quarter. In spite of your lower production and dispatches in the first quarter, why the order book is below?
Order book is not low. If you look at our order book, it is at almost all-time highs. 1 year ago or 2 years ago, we used to have an order book of INR 800 crores to INR 1,000 crores. That has gone up to INR 2,000 crores in previous quarter and it is now at INR 1,725 crores. These are very high levels of order book for -- and for Maharashtra Seamless as well. It is only indicative of the strong positioning that we have in the market and the strength of the market.
So I hope now you won't have any further shutdowns in quarter 2 and loss of production.
Yes.
The next question is from the line of [ Harsh Saraswat ], an individual investor.
My first question is, can you give an outlook on interest spend in a pre-election year, what your customers are saying? How does it look?
So it looks good because we continue to get orders from PSUs in the upstream and downstream segment. There is no slowdown on that path, something which we are also pleased to inform you that very shortly, we expect a good order in United Seamless from -- first order in United Seamless from a PSU after that unit was acquired by us in 2020. We expect that to take place in the pre-election year and therefore, we do not estimate any slowdown of orders from PSUs. This is also reflective of the fact that we got an order from ONGC of around INR 536 crores, backed by another order of around or INR 235 crores...
[Indiscernible] will increase.
Okay. So the spending is very strong.
That is they want to adjust their budget and place all the voters before election.
Okay. Okay. And the second question is on the export outlook. So what is happening on the global level? Is the dumping happening by China and other countries? And is the prices also crashing globally for seamless pipes?
Dumping in the world market or Indian market?
In the world market, in U.S., Canada.
There's no dumping. Because of slowdown in certain rigs, rig count is low. So U.S. demand is reduced. But the indication is that the U.S. -- the pipe stock is reduced, so they want to buy more pipes now. And rig count is also going up. So -- and here, Russia and Ukraine is still on the war. So either Russia cannot export and the Ukraine cannot produce these type of pipes. That's why the demand will go up again.
So no pricing pressure as of now globally?
Price has reduced. It has gone very high. So it has softened somewhat. But the demand will be there.
The next question is from the line of Mangesh Kulkarni from Almondz Global Securities.
Sir, I just wanted to know what steps management is taking to on this erratic margins in the ERW segments, like they are very erratic from INR 8,000 to INR 4,500 -- INR 4,900 and all these things. So since you are giving the stable margin guidelines, but specifically in the ERW pipe segment, what kind of margins...
Basically, we have 2 segment in ERW. One is oil sector government DSUs. So there we get a better margin. And second segment is commercial -- means dealers market or general market. So the general market, the margin is low and DSU margin is high. When we are executing the PSU order, so our margin goes high. But sometimes we stuck or we don't have orders, then we have to supply to the market.
Okay, sir. Yes.
That is very...
Understood. Understood. So this volatility will remain in the ERW pipe segment?
It will be unless we are fully booked with the PSUs. Correct.
The next question is from the line of [ Ankur ], an individual investor.
So my question is, as indicated earlier that the promoter want to increase their shareholding...
We cannot hear you.
Ankur, we are unable to hear you. As there's no response from the current participant, we'll move on to the next that is from the line of Vikash Singh.
Sir, I just need a couple of clarifications. Firstly, that the hot mill upgrade in Nagothane, I just wanted to know the time line when you would start the CapEx of hot mill and by when you plan to finish it? And would that also -- could that impact our current production lines mainly a little bit longer shutdowns for some time because of this [ PQ ] mill upgradation?
Yes, we'll take it after we complete the Telangana unit expansion. So at present, there's no action on this item.
Understood. And what is the COD target for Telangana mill?
1 year from now.
1 year from now. Understood, sir. And sir, my second question is, till what level of cash balance we have more or less would be comfortable? And over and above that, we would look for deployment in either through the dividends or by other means because we are generating huge cash flows every year. So till what level of cash balance we would be comfortable and post that, we would look to redistribute that additional cash to shareholders?
Well, it depends on how much growth we make, like, when we are growing. So we have -- we need more of cash flow in the working capital. And then -- so working capital is increasing. Telangana unit also will increase the working capital. And of course, that will generate profit also. And -- so we are looking for some opportunity if it can be there to acquire some plant. So it's difficult to answer the time line.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vikash Singh for his closing comments.
On behalf of PhillipCapital, I would like to thank Maharashtra Seamless management for giving us the opportunity to host the con call. And for the closing comment, I would request Kaushal to give his closing remarks. Kaushal, over to you.
Thank you, Vikash. Thank you, shareholders, for taking time out to join us on the call. We are pleased to update you about the company. And we are working towards enhancing shareholder value. And we are on the right track. And going forward, we hope to provide greater returns to all our investors and improve the operations of the company so that we are able to tide through situations better. Thank you again for your time, and thank you, Mr. Jindal for taking time out from a schedule and joining us on the call. Thank you.
Thank you.
Thank you, members of the management team. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.