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Maharashtra Seamless Ltd
Earnings Call Analysis
Q1-2025 Analysis
Maharashtra Seamless Ltd
Maharashtra Seamless Limited experienced a challenging first quarter of fiscal year 2025, characterized by a 4% revenue decline from the previous quarter. The company reported stark declines across key financial metrics due to three primary factors: falling sales realizations linked to intensified competition and reduced raw material prices, a planned preventive maintenance shutdown in one of its mills that limited production, and lower dispatch volumes of high-value orders, resulting in necessary inventory markdowns. Specifically, EBITDA plummeted by 54% to INR 126 crores, with Profit After Tax (PAT) and Earnings Per Share (EPS) also down by 40%, both reflecting the pressures from these operational setbacks.
Despite the negative impact on immediate earnings, Maharashtra Seamless ended the quarter with a healthy treasury balance of INR 2,203 crores, which helped cushion the blow. Interestingly, this treasury segment contributed over one-third of the company's total earnings during the quarter, underscoring its strategic value. The current order book painted a more positive outlook, increasing from INR 1,754 crores to INR 1,812 crores, demonstrating good demand in the manufacturing and oil and gas sectors.
Management expressed confidence that the operational issues hindering the first quarter are largely temporary. With the resumption of production following the maintenance shutdown and a return to normalized dispatches expected in the second quarter, there is optimism for a rebound. Moreover, as higher-value orders begin to dispatch in upcoming periods, the previously marked-down inventory is anticipated to be reversed, potentially restoring margins. Guidance points towards a recovery in EBITDA per tonne, with management hopeful that improvements can occur as early as the second quarter.
The company reported a significant decline in EBITDA per tonne from INR 22,000 to INR 9,000, primarily due to the fall in raw material prices. However, management does not expect realizations to fall further materially, which could suggest a stabilization in raw material costs moving forward. The impact of Chinese dumping on their market share was acknowledged, with ongoing discussions to address these concerns, but it remains a longer-term challenge.
Despite the ongoing challenges, Maharashtra Seamless has shown commitment to its shareholders by quadrupling its dividend from FY 2022 levels in FY 2024. While no specific announcements regarding additional buybacks or dividends were made for the current fiscal year, the management's history of enhancing shareholder returns remains a positive highlight.
Looking ahead, the company reiterated that the demand in capital goods and specifically in the oil and gas sector remains strong, which is expected to buoy the seamless pipes market. However, the company has announced a capital expenditure plan of INR 852 crores primarily focused on strategic expansions, with most spending likely to occur in FY 2026, reflecting a cautious yet planned approach to growth.
In summary, while the first quarter of FY 2025 proved challenging for Maharashtra Seamless, the outlook suggests a potential recovery as operational issues normalize and the market remains conducive to growth. The company's solid treasury position, commitment to shareholder returns, and an improving order book provide a framework for optimism. Investors are encouraged to watch for recovery indicators in the second quarter and beyond.
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Ladies and gentlemen, good day, and welcome to the Maharashtra Seamless Limited, Q1 FY '25 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, Mr. Singh.
Good afternoon, everyone. Welcome to Maharashtra Seamless 1Q FY '25 con call. From management side, we have with us Mr. Kaushal Bengani, Deputy General Manager, Investor Relationship and Finance. Without taking much time, I give the dais to Kaushal for the -- his opening remarks. Kaushal, over to you.
Thank you, Vikash. Good afternoon, shareholders, and thank you for joining our earnings call. In Q1, FY '25, whilst dispatches were slightly lower than previous quarter, our earnings was significantly impacted both on quarter-on-quarter and year-on-year basis. This is attributed to 3 key reasons: The first reason is a fall in sales realization, which has been on account of increased competition, lower raw material prices and some dumping from Chinese manufacturers in certain segments. We are in discussion with relevant authorities to address the issue of Chinese dumping, but that is a long drawn process.
Secondly, we have taken preventive maintenance shutdown in one of our mills. Based on the prevailing order book, most of the manufacturing of existing high-value orders and oil and gas sector orders were to be manufactured in this particular mill. However, due to the preventive maintenance shutdown, these orders were not executed, thereby impacting the earnings profile for the quarter. This mill has since resumed production at the start of Q2 FY '25 and normalization of dispatches is expected in the second quarter.
The third reason was the dispatch of high-value orders, which was in limited quantity. As fewer high-value orders were dispatched in Q1, entire high-value inventory, which was purchased against the remaining high-value orders had to be marked down when raw material prices fell during the quarter. This was done in order to comply with accounting standards. When these high-value orders are dispatched in subsequent quarters, the impact of marking down inventory will be nullified.
I will now briefly summarize key financial indicators. On reviewing our Q1 FY '25 performance versus Q4 FY '24, despite a revenue decline of only 4%, EBITDA fell by 54% to INR 126 crores. PAT and EPS fell by 40% to INR 136 crores and INR 10 per share, respectively. A comparison of Q1 FY '25 performance with Q1 FY '24 gives similar percentages for all parameters. The reason for the percentages being where they are has already been explained earlier.
Apart from financials, there are 5 key points, which I would like to draw attention to. The first is our treasury. The treasury is at INR 2,203 crores as on 30th June, 2024. It has improved more than anticipated and is generating good returns for us. In fact, in Q1 FY '25, more than 1/3 of total earnings was from Treasury segment. The second point is the order book. Our order book has increased from INR 1,754 crores to INR 1,812 crores. The order book remains good as demand environment is conducive for manufacturing industry and oil and gas sector.
The third point is regarding ICDs and corporate guarantees. In line with the commitment made to shareholders 2 years ago, there are no ICDs to unrelated entities or corporate guarantees outstanding. We have come a long way from the time when this used to be the main cause of concern, and that has been fully and completely resolved. The fourth point is regarding dividend. Dividend for FY '24 has been quadrupled from what was distributed for FY '22. Whilst the specific dividend distribution plan has not been announced yet. We remain mindful to the points raised by shareholders.
Finally, I wish to reiterate that capital goods and infrastructure in general and oil and gas, specifically continue to witness strong demand for medium term. This directly impacts the seamless pipes market, which remains buoyant, driven by capital expenditure and spending in oil and gas sector, as we are seeing our order book being replenished and improved at good levels.
I would now request Vikash to kindly open for questions.
[Operator Instructions] The first question is from the line of [Pratika] from Aequitas Investments.
I just wanted to understand what is the markdown on inventory that you mentioned. Can you just elaborate on that a little bit? I didn't understand why was there a markdown.
At the start of the quarter, we had high-value orders, which was backed by inventory purchased for those high-value orders. During the quarter, raw material prices fell. At the end of the quarter, the inventory which was not dispatched, which primarily comprised inventory, which was purchased for high-value orders because of the specific mill in which these high-value orders were to be manufactured. That mill was under preventive maintenance shutdown and so those orders could not be dispatched. The inventory that we had for those orders that had to be marked down. And that is the main reason why the performance is where it is right now.
Okay. So this is basically inventory loss in the quarter because of raw material price that fell down -- fell. So how -- would this quarter, we would have similar situation of inventory loss?
So it is not inventory loss in the sense that people perceive it because when you say inventory loss, one imagines a speculative position, which has been taken and loss has been incurred on account of that speculative activity. In our case, we had earmarked the order with inventory. However, raw material prices fell against that order. And that order was not dispatched in that quarter because the mill was under shutdown. So when these orders -- now when the mill has resumed operations in the first week of July and when these orders will be dispatched during the current quarter and the next quarter, the inventory markdown will be nullified.
Okay. And would we have a similar situation for the raw material that must be procured for the current order book?
It depends. If raw material prices fall further, then we will have same situation. If they don't, then we'll have the reverse situation.
So that was -- so while there is a possibility of reversal for the existing dispatches that were delayed, we could also have a situation on the current order book where a similar situation of raw material price can come across, right?
I don't know because it depends on whether raw material prices will fall or not because all of our orders are backed by raw material purchases.
Understood, this shutdown that we had, what was the production loss because of the shutdown?
Production loss in terms of production facility would be around 15,000 tonnes. However, what we had done was, there was quite a bit of WIP, which was with us, which we managed to finish in dispatch.
All right. And in terms of order book, what would be the execution period for the drilling pipe that we have, order book of drilling pipes?
Very long execution period.
Okay. And when it comes to cylinder pipes, the order book has risen significantly. Is the margin profile any better for this segment relative to the other products...
The margin profile for all high-value addition pipes are better than regular pipes. So cylinder pipes are a high-value addition product that we manufacture. We are the -- we are one of 2 manufacturers of cylinder size. And we want to increase the contribution of the value addition pipes as a percentage of total dispatches.
We've communicated this many times earlier as well. And it is encouraging that what has been communicated is transpiring into reality.
Okay. And in terms of the segment where you mentioned that the Chinese imports are affecting us. Can you just elaborate what are -- what areas of the business or sectors we are seeing maximum impact?
I don't want to do that right now.
The next question is from the line of Radha from B&K Securities.
Sir, my first question was, you mentioned that there is some pressure on the pricing. So how -- do you expect the pricing to remain stable for the rest half of the year? Rest part of the year? Or we expect realizations for the seamless pipe.
The raw material pricing is something which I will not be able to comment about. But I don't think selling price is expected to fall significantly from where it is right now.
Sir, you mentioned that we are seeing more imports from China, and we are taking some measures but that would take some time to pan out. So on the basis of that, could there be more fall in realizations in subsequent quarters? Considering raw material prices remain similar.
It is difficult to comment because what is under process is not controlled in a manner in which a reasonable forecast can be made. So we will just have to wait and watch as to how things pan out. Since a lot of various entities and a lot of various processes are involved.
Sir, secondly, a few quarters back when we had a discussion, at that time, it was mentioned that a percentage of order book is actually hedged. And some portion is kept open. So could you specify broadly what percentage of order book is usually hedged with raw materials?
Almost the entire order book is hedged with raw material and insignificant portion is kept open.
Okay. Sir, just last, in the export front, so U.S. and Canada remains a key market. So out of the 10 million tonne global demand, could you specify or give us some highlights as to what would be the market size in U.S. and Canada? And any increase in opportunities are we seeing in the Saudi regions as well.
We don't export to the Middle East. Exports have not revived. Exports have been slow for more than a year. Market size in U.S. and Canada is very big. But they have not revived for us.
U.S. Canada will be 20% of the global 10 million tonne demand?
I don't know. I think you had asked this question in the earlier call. And I said that you have access to more databases than I do. So exact percentages is difficult for me to communicate without having seen specific data.
Sir, last question. What is the quantum of import happening from China to India for the seamless pipe and tonnage terms?
It is impacting us, which is why our realizations have fallen. So significant.
The next question is from the line of Pradeep Rawat from Yogya Capital.
So I would like to know about like you mentioned 3 reasons why our EBITDA dropped. So can you broadly give weightage to all the 3 reasons why our EBITDA fell drastically this quarter?
Equal weightage. For all 3 factors.
Okay. And where are we in terms of making seamless pipe for hydrogen market? And how big the opportunity could be?
We are not supplying pipes for the hydrogen segment. I think those pipes are not being manufactured in the seamless segment in India.
Okay. And what was the production from the Telangana unit for this quarter?
The Telangana unit is a part of Maharashtra Seamless. Specific mill-wise production details are not given out.
And when could we expect the Telangana unit CapEx to be finished? Like when it could be commissioned and also for the hot mill upgrade in our mean facility.
The Telangana finishing line was expected to be completed by March 2025. But I don't think that will happen. In all probability, it will get deferred by at least 9 months because we've recently placed order for some equipment.
Those orders have been -- the finalized purchase order has been issued.
However, the gestation period for that order is 12 months. So I think reasonably speaking, the Telangana unit expansion should get completed by December '25. However, we will update you as and when material developments take place. So please do not consider December '25 to be a hard stop. But rather outcome of where things stand right now.
It can also be sooner. It depends on how the suppliers act because we also -- we've incentivized at least 1 supplier to deliver quickly.
Yes. Understood. And for the hot mill upgrade?
Hot mill upgrade will only happen once the Telangana finishing line is in place because we will have a loss of production whenever we take the hot mill upgrade. So in order to compensate that loss, we need the Telangana unit to be active in full capacity.
Yes. And my last question...
The sense which I'm getting from your question is when will volume growth come in. So I don't think there'll be volume growth in FY '25. And in FY '26, volume growth will only happen once the Telangana finishing line has been completed and is open for commercial production.
The next question is from the line of Jatin Damania from Swan Investments.
Sir, carrying on the further participant questions in terms of the CapEx. So as you indicated that the Telangana plant has been likely be postponed to FY '26 commencement. So is it fair to assume that of INR 852 crores of the CapEx that we are going to spend, major portion of the CapEx will be spent in FY '26 and it will be a marginal in FY'25.
Yes, that is correct.
So if you can quantify the numbers that we are likely to spend in FY '25 and FY '26?
I don't want to do that right now because quite a significant period in the year is still remaining. Maybe in the earnings call for the next quarter, I will give you a definitive figure.
Yes, because what I was -- sir, of the INR 852 crores, which as for our presentation decided from FY '24 to '26, but the CapEx in FY '24 was very minimum. So that's why I wanted to check, how the cash flow or the CWIP will flow from '25 to '26.
You are right. I will update you in the next earnings call.
Sure. And secondly, in your opening remarks you indicated because the inventory write-downs, there was a hit in the operating performance. So assuming that your capacity, which was under the preventive maintenance shutdown, is back into operation in the first week of July. So as soon as we start executing that order, is it possible to reverse the entire inventory write-down that we had taken?
Yes. Definitely. That is what will happen, but whether it will happen entirely in the September quarter or in the December quarter depending on when the order is executed. Some of the actions will definitely happen in September quarter, and we would want all of it to happen in September quarter. So that's a normalized level of EBITDA per tonne is reflected going forward.
That's helpful because if you look in the first quarter other than the high-value order -- execution of the high-value order, our performance got impacted because of the [execution] of the low margins, because the preventive maintenance shutdown. So I was just wondering that if this some portion of the high-value order we get in Q2, there could be a normalized margin, you can probably start getting hit in the month of September or the October onwards.
So just wanted to clarify on that.
Okay. So in my assessment of where things stand right now, as and when the high-value orders get dispatched, the impact of the inventory markdown will get nullified. I hope it happens in the second quarter itself, but we'll just have to wait and see.
The next question is from the line of Vinay Nadkarni from Hathway Investments.
Just wanted to know what is the average drop in raw material prices this quarter? If you can quantify percentage?
It is significant. So significant that our EBITDA per tonne fell from INR 22,000 a ton to INR 9,000 a ton.
Because of drop in raw material prices because your top line would have gone at the lower raw material prices. Is it?
No, no, no.
Because of pass-through?
No, no, absolutely not. There were 3 factors which impacted EBITDA per tonne, which I have already communicated earlier. One of those factors was the write-down in the inventory that we had taken in order to comply with the accounting standards.
I understand that.
I don't want to clarify a number. It is irrelevant to what you want to calculate. What is relevant is that the entire inventory write-down will get reversed when this order is dispatched.
Then my worry that 1,500 tonnes loss that you are saying you have incurred because of the shutdown, that will impact the quarter 2 performance because your WIP carried you in the quarter 1. In quarter 2, will it be impacting? Because I don't see any impact on quarter 1.
Mill has started in first week of operation -- first week of July.
So where does that INR 1,500 go, because your production in quarter 1 has not been impacted at all because of the shutdown.
No, no, one second. We would earlier manufacture -- for [ INR 110,000 ] we would have earlier manufactured and dispatched anywhere between 100,000 tonnes to 115,000 tonnes per quarter. In March quarter, we dispatched around 95,000 tonnes. The reason for lower dispatches in the March quarter was the delay in an order which was expected in the month of March, but it was received in the second week of April.
That was for the March quarter. For the June quarter, we had taken maintenance shutdown in one of our units. That maintenance shutdown caused to a loss of production of around 15,000 tonnes.
Okay. Then the only question I had was on -- but that you have answered already, the de-bottlenecking of units.
The next question is from the line of Satyan Wadhwa from Profusion Investment Advisors LLP.
Kaushal, what was the actual inventory loss or inventory markdown on the high-value order, just for -- amount in rupees if you could clarify?
There was no inventory loss in the traditional sense of the term. I will have to just reiterate what I said earlier. There has been no inventory loss as is traditionally understood. All of our orders are hedged with raw materials. Most of those orders were high-value orders that we had. And they were manufactured in a mill which was under preventive maintenance shutdown because those orders could not be dispatched. The inventory remained with us.
During this period, what also happened was that raw material prices fell. Therefore, in order to comply with accounting standards, we had to mark down the inventory to what the raw material prices were at the end of the quarter. This will reverse itself once the raw material -- sorry, once the order is executed.
Correct. That's fine. And we're still checking what is the actual mark-to-market loss. That will reverse next quarter or the quarter after once you ship anyway?
I am not quantifying that. There were 3 factors. All 3 factors had equal weightage. And that impacted our earnings profile.
The next question is from the line of [ Deepak Mandana ] from [indiscernible] Investments.
Am I audible?
Yes, sir.
One of the question has already been answered. So I have 2 more questions. One is that you have mentioned in your presentation that you're actively penetrating the newer regions in terms of export for subsea service seamless pipes. Can you tell us which countries or which regions would be these.
We are marketing our power service subsea seamless pipes in the export market. However, we have not yet been successful. We have had encouraging inquiries. But none of those inquiries have actually crystallized into orders yet.
Okay. And geographically, where are those inquiries coming from? Is it Middle East, U.S. which side.
We don't want to disclose because competition is also there in those sectors.
Okay. And secondly, in terms of the large tenders for the ERW pipes, which are for the gas and city distributions. What would be the quantum of -- the quantum of revenue that you would foresee for this in the coming year?
Generally speaking, ERW pipes would be dispatched in the range of 80,000 to 105,000 tonnes every year. And since we are not expanding any ERW pipe capacity, our dispatch would remain within this range at all times.
Okay. And the realization on the ERW pipes have also gone down or is it substantially holding up against the seamless pipes?
We have gone down to a lower extent than in the seamless pipe segment.
Okay. Okay. And do you foresee any chances of this improving in next quarter or 6 months?
The way our earnings have panned out in the June quarter, especially the impact on account of the inventory markdown, that will reverse itself. I don't think realizations are expected to fall further in a material manner, beyond what they already have.
The next question is from the line of Shruti Mulchandani from Unifi Capital.
Am I audible?
Yes, ma'am.
I wanted to know about any update on buyback.
There is no update on buyback. For shareholders, what we have done in the past 2 years was quadruple the amount of dividend that was paid out in FY '24 versus what it was announced for FY '22. As of now, there is no further update either on dividend or on buyback for the current financial year.
All right. Also if you could give me the mix of oil and gas and water in ERW pipe for this quarter, it would be great.
For the first quarter, around 20% of dispatches were in the oil and gas sector. And 80% of dispatches were in the water sector...
[Technical Difficulty]
Kaushal, you may continue.
In the first quarter, 20% of dispatches in the ERW segment were in the oil and gas sector, and balance was in the water sector, which has led to lower margins in the ERW segment.
Sir, do you see this reversing in the coming quarters?
It is a function of product mix. It is difficult to predict at the start of the quarter. The EBITDA per tonne in the ERW segment will generally be between the range of INR 6,000 to INR 11,000 per tonne plus or minus INR 1,000 or at both ends, depending on the product mix.
So is there a lower demand from the oil and gas side or any particular reason why the contribution was less.
I don't understand why ERW segment is that much of an area of interest because it contributes only 6% to 7% of the total EBITDA that the company will generate.
Just wanted to get an idea about the demand from the oil and gas side in general.
I think a better indicator would be the position of our current order book, in which 51% of our order book is from ONGC and Oil India, and of the balance, 49%, quite a bit is from the oil and gas sector.
The next question is from the line of Pradeep Rawat from Yogya Capital.
So my first question is regarding our exports. So we don't sell to Middle East. Is that understanding right?
Yes.
So why don't we sell to Middle East. Some of our peers are selling there, and they are like benefiting from that market. So why aren't -- are we not exploring that market as of now?
Our peers are selling different products in the Middle East. They are not selling seamless pipes. Secondly, in the Middle East market, there is an absence of antidumping duties on China. China being present in a large manner in the Middle East market, means that there is no scope of super normal margins there.
Therefore, we don't divert our energies to a market where good margins are not available.
Yes. Understood. And my next question is regarding the oil and gas market. So how big this market could be for seamless pipes. And I know you have written in 100,000 tonne per annum demand from seamless pipe. But that is for exploration. So what could be the total demand for exploration as well as for drilling activity for seamless pipes?
Globally based on certain.
[Technical Difficulty]
Hello?
Yes, you are audible.
Yes.
Sorry. I didn't get the answer. Yes.
Globally, the seamless pipes market based on certain data bases is around 10 million tonnes. In India, the market is around 0.9 million tonnes.
And 100,000 tonne is for the exploration activity, right?
From ONGC and Oil India.
Okay. And with respect to our capital allocation, so we have quite good cash balance and the ERW pipe segment is quite lucrative with respect to demand. And our utilization is close to 80% annualized utilization. So why aren't we planning to expand in this segment?
No, I'm sorry, can you repeat that again, please? We've already announced a capital expenditure plan of INR 852 crores.
For ERW pipes?
Sorry, no. In the ERW pipes, we are not expanding because we are a seamless pipe manufacturer. ERW was a small segment that we had set up because when we started expanding in the seamless pipes segment, the same customers were also interested in procuring ERW pipes. So we set up ERW pipe unit in order to service those customers. But again, that is not an area of focus right now.
Yes, yes, understood. And my last question is regarding like, one of our -- one of the player in the industry have said that large diameter welded pipes in infrastructure and building is being increasingly huge against seamless pipes and in auto segment also. So are you seeing such kind of trends? Or is it like nonexisting.
Large diameter welded pipes will always be used in various segments against seamless pipes, that's a good way of presenting the data because seamless pipes are not manufactured beyond 22-inch and large diameter pipes are manufactured above 22-inch and they go up to, I think, 36 or 40 inches. So these are completely separate segments and seamless pipes are primarily used in the oil and gas sector and not in infrastructure.
And in auto segment, are we seeing such kind of trends?
No. Large diameter pipes are not used in the auto sector.
Not large diameter in auto segment, but welded pipes?
We don't supply significantly to the auto sector because the demand for auto sector is primarily for low diameter seamless pipes or cold drawn seamless pipes.
The last question is from the line of Vinay Nadkarni from Hathway Investments.
Just 2 questions more. One is on CapEx for quarter 1. What is the amount spent in quarter 1 on CapEx?
There wasn't any significant expenditure on CapEx in the first quarter. However, what we have done in the first quarter is placed orders for certain equipment, which was pending for some time.
And they were under negotiation, and those negotiations have conclude and a purchase order has been placed under [vendor].
Fine. Can you give us some data on capacity utilization in this quarter?
Capacity utilization, 1 mill was under shutdown, so capacity utilization was on the lower side.
Other than that, there is no number that you could share?
We can -- so if we -- against the annual capacity of 550,000 tonnes, we manufactured and dispatched 4 lakh tons. But in terms of capacity, what is also important in the pipe sector is the [hedges] impacting the capacity utilization figures because if you have a product mix in which large diameter pipes are in higher proportion, then you will end up with higher tonnage as compared to a product mix where large diameter pipes are not in a higher proportion. So that way, despite the mills running 24 hours a days, 365 days a year, the capacity which have actually been utilized would be different in both cases.
Generally speaking, we remain in the range of 70% to 80%.
Okay. Just last, one bookkeeping question. On other expenses have grown significantly in this quarter, around INR 16 crores. Any particular one-off expense that has been incurred? Or is it a...
The preventive maintenance shutdown, which was there, that had some impact on the increase in other expenses.
Okay. And lastly, I know you have refused to comment on the markdown that you have taken in the mark-to-market for inventory. But your cash addition for this quarter is around INR 344 crores and your cost -- cash profit looks at around INR 150 crores, INR 152 crores. I presume that the difference would be that, right?
I'm sorry, I could not hear you very well. Could you repeat that, please?
Yes. I'm saying your cash accretion to the cash on hand is around INR 344 crores this quarter and your cash profit, that is your tax added back depreciation is around INR 150 crores INR 154 crores, so would it be fair to assume that the INR 190 crores would be your rough markdown on your inventory?
No, no. It is not.
Shlok, one request from you. Few investors have messaged that they are unable to connect. Can you please check the queue again and if there are any interested participants, maybe connect them.
Okay, sir. I'll take that questions after. So the next question is from the line of [ Pratika ] from Aequitas Investments.
Yes. Just one follow-up. Wanted to clarify when you say the 51% of our order book is from ONGC, Oil India. We are talking about the total order book and not just ERW, right?
Correct, correct. We've detailed the split in the slide of our presentation.
Got it. And just one question, any significant reason that you want to highlight for a fall in order book of the ERW segment?
There is no significant reason. It is just the time of -- the time of the order confirmations were issued. So maybe there are orders in the process of being finalized, but only order confirmations has not been issued. The way we calculate order book is those orders for which order confirmations have been issued by us, but those pipes have not been dispatched from the plant.
So maybe it's a lag issue. There is no dearth of demand or any such thing on the ERW pipe front.
Okay, sir. In case you assume that the pipeline, order pipeline for both the segment is equally strong.
That is correct. And if you take out the ERW segment and the Telangana unit, then the composition of ONGC and Oil India and other oil sector orders as a percentage of the total order book will probably shoot up to 70%, 75%.
The next question is from the line of Amit Kumar from [indiscernible] Investments.
Just a couple of questions. This maintenance shutdown, this preventive maintenance shutdown, was this planned or unplanned.
It was planned. It was communicated in the month of May when we did the earnings call for the fourth quarter of last year. And on the 12th of June, we communicated it to the stock exchange as well.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Vikash Singh from PhillipCapital (India) Private Limited for closing comments. Please go ahead, sir.
Thank you, everyone, for joining the call. On behalf of PhillipCapital, I want to thank Maharashtra Seamless management for giving us the opportunity to hold the call. For closing comments, I'll again hand it over to Kaushal for any closing remarks.
Thank you, Vikash. Thank you, shareholders for joining the earnings conference call. Our earnings profile has been impacted for the reasons which have been communicated. At least 2 of those reasons are temporary and one-off in nature and may be a function of the accounting standards that we follow, rather than a question mark on the operations of the company. Operations of the company are very good. it is also reflected by the way our order book has improved [ quarter-on-quarter ].
Domestic demand is very good. We are one of 3 manufacturers of seamless pipes in India. We are the market leaders for the past 35 years. And whilst there has been a decline in margins from the third quarter of last year, to where it is right now, I can say with the fullest of confidence that there is no problem in operations and no problem in execution. It has just been a function of quite a few things, amalgamating at the same point in time and thereby causing a disproportionate effect. I hope that quite a lot of these factors will normalize in the coming quarters, and it would be good to be vindicated later on.
Let's just wait and watch for that. And thank you for your patience. Thank you to Vikash for organizing as he does every time. And I hope to connect with you in the next quarter.
Thank you. On behalf of PhillipCapital (India) Pvt. Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.