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Maharashtra Seamless Ltd
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Ladies and gentlemen, welcome to Q4 FY '24 Earnings Conference Call of Maharashtra Seamless Limited, hosted by PhillipCapital (India) Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I would now like to hand the conference over to Mr. Vikash Singh from PhillipCapital (India). Thank you, and over to you, sir.
Thank you, Manav. A warm welcome to everybody on Maharashtra Seamless Q4 FY '24 con call. From the management side, we have with us today Mr. Kaushal Bengani, Deputy General Manager, Investor Relations and Finance. Without taking any much time, I'll give the call to Kaushal for his opening remarks. Over to you, Kaushal.
Thank you, Vikash. Good afternoon, and thank you, shareholders, for joining our earnings call. In FY '24, we have achieved highest saver EBITDA, highest profit after tax, highest EPS and highest margins. This performance only reiterates the strength of our core operations as we've been able to achieve all of this despite lower production and sales. In FY '24, our order execution was strong, and we continue to improve upon our marketing initiatives so as to secure high-value orders. I will briefly summarize key financial indicators.
In FY '24, our revenue declined by 4%. However, EBITDA increased by 18% to INR 1,223 crores, PAT increased by 23% to INR 975 crores, and EPS increased by 23% to INR 73 per share. Our performance in terms of tonnage, revenue and profitability was lower in Q4 FY '24 versus Q3 FY '24 on account of a large size order, which was expected in Q4, but was delayed and received in second week of Q1 FY '25.
This led to lower tonnage being manufactured in Q4, which consequently led to lower revenue and profit. This timing mismatch should not have any longer-term impact as what could not be manufactured in the last financial year would now be made up in the current financial year FY '25. We have also actively taken steps in the previous quarter to ensure that our margin was not impacted despite lower production. We've been able to control costs despite volatile macroeconomic environment and inflationary pressures.
Apart from financials, there are 5 key points which we would like to draw attention to. The first is the treasury. Our treasury is at INR 1,859 crores as on 31st March '24. The treasury level has almost doubled over the last financial year, even after large utilizations towards prepayment of debt and dividends were made. We are conserving this liquidity and will utilize the same judiciously.
Second, we've been included in various NSE indices from 28th March 2024, namely NIFTY500, NIFTY Small cap 250 and NIFTY mid small cap 400. Our FII and DII holding together has also gone up to 16% from 7% at the start of the year.
The third point is regarding ICDs and corporate guarantee. In line with the commitments made to shareholders 2 years ago, there are no ICDs to unrelated parties or corporate guarantees outstanding as on 31st March '24. We have come a long way from the time when this used to be the main cause of concern, and that has now been fully and completely resolved.
The fourth point is regarding dividend. The dividend amount paid for FY '22 was doubled for FY '23. Thereafter, the dividend paid for FY '24 was doubled again as dividend of INR 10 per share has been announced, subject to approval of shareholders against INR 5 per share for the previous financial year.
The final point is regarding market demand. I wish to reiterate that capital goods and infrastructure in general and oil and gas specifically continue to witness strong demand for the medium term. This directly impacts the seamless pipes market.
Our seamless pipes market remained strong, driven by capital expenditure and spending in oil and gas sector as we are seeing our order book being replenished and maintained at good level. Currently, our order book is at INR 1,753 crores, of which 60% is on account of ONGC and Oil India.
I would now like to take you through the presentation very quickly. The first few slides of the presentation talk about the company. The revenue for Q4 FY '24 was INR 1,259 crores. EBITDA was INR 276 crores with a margin of 23%. PAT was INR 223 crores with a margin of 18%. EPS was at INR 17 per share. On an annual level, we can see how the company has improved upon its performance from FY '21 to FY '24, and we keep going from strength to strength, subject to conditions of the market.
The operational and financial indicators segment-wise primarily Seamless and ERW are given on Slide 8. The EBITDA per tonne for the Seamless segment was INR 21,619 and for the ERW segment was INR 11,803.
We closed the year with an average EBITDA per tonne for the Seamless segment of INR 25,793 and INR 7,315 for the ERW segment. EBITDA mix for Q4 was 76% on account of the Seamless segment. And for FY '24, 84% generated by the Seamless segment. Generally speaking, this trend will continue going forward.
Slide 10 talks about the unquoted equity and preference share investments in ICDs. You will note that there are no ICDs as on 31st March '24, 2 unrelated entities. I've already spoken about the liquid investments, which are detailed on the next couple of slides. If individuals want an additional breakup, we can provide that to them separately.
There is no corporate guarantee outstanding as on 31st March '24. The time line committed to shareholders 2 years ago for complete discharge of all corporate guarantee was September '24. However, we have achieved this milestone 6 months ahead of schedule.
Slide 14 talks about the capital expenditure plans that we have. We have commenced our capital expenditure by purchasing land at our Telangana unit and placing orders for relevant machinery. The same is in process, and we expect to complete that within this financial year. We do not require any debt to fund any capital expenditure or working capital requirements as we have a treasury of INR 1,859 crores.
Details of order book are given on the next slide. Our order book is supported by back-to-back booking of raw materials, leading to locking of margins and minimizing impact of fluctuating raw material prices. We have also been able to dispatch some quantity of drill pipe in the fourth quarter of last year, and we continue to manufacture and dispatch drill pipe in current quarter as well.
The next 3 slides talk about the government policies in place and the sales and marketing update along with market trends, which I would request interested shareholders to kindly familiarize themselves with as that will give you an idea of where the demand is originating and how we are placed for the same.
Slide 19 talks about the shareholding structure as on 31st March '24. There was some creeping acquisition in the fourth quarter of FY '24 with Promoter Holding increasing to 68%. Number of FIIs and mutual fund schemes have also increased.
That concludes the presentation, and I would now request Vikash to open the floor for questions.
[Operator Instructions] We have our first question from the line of Tushar Raghatate from KamayaKya Wealth Management.
Yes. I just wanted to mention before that there are some higher value orders. So basically, what's the EBITDA per tonne for those?
We cannot disclose that figure. However, margins for high-value orders by definition, would be more than the mean margin.
Fair enough. And sir, what that exactly like in Q3, you had INR 30,475 of EBITDA per tonne, now it's came down to INR 21,619. So just wanted to know that.
I'm not sure how to respond to that. What is your question?
Basically, I just wanted to understand your target EBITDA per tonne margin -- EBITDA per tonne for FY '25 and '26 like how are you seeing that?
It is difficult for us to give you a figure of EBITDA margin per tonne because we operate on short-cycle order books. Currently, our order book is at INR 1,750-odd crores, which is slightly less than 4 months. So on a 4-month order book, I cannot give you margins which will fructify over next year or next couple of years. But what I can tell you is that margins are generally expected to remain above INR 15,000 per tonne.
Fair enough, sir, that was helpful. And like considering your CapEx, like 41% of your total CapEx of the value is going in hot mill upgrade. And sir, when can we expect that to commercialize? Also the Telangana facility, finishing CapEx?
Hello.
Hello.
Yes.
Should I repeat the question?
Yes, because I thought you were cut off.
Fair enough. So I just wanted to know the hot mill upgrade. So it's nearly 41% of our total CapEx outlay. So when can we expect that to commercialize? And also the Telangana facility commercialization month?
The Telangana finishing line would be the first capital -- sorry, the first item of capital expenditure, which we would complete. And once that is done, then we would consider the hot mill upgrade.
Sir, time line for the same?
Time line for the Telangana is expected -- it has already commenced, but it is expected to be completed within this financial year.
Okay. And sir, INR 800 crores of revenue potential of [indiscernible] out of that post fully utilized, right?
Yes.
The next question is from the line of Aryan Sharma from B&K Securities.
I have a couple of questions. So in the PPT, since sir, you have mentioned INR 852 crores of CapEx for FY '24 to FY '26, just wanted to get an understanding of a breakup of this CapEx. So how much has been spent in FY '24? And how much are we expecting to spend in FY '25 and '26?
Not much has been spent in FY '24 because the initial portion required acquisition of plants, which we have done, which was time-consuming, but did not require a significant amount. The second stage for the Telangana finishing line facility was identification of machinery, which took a longer period than we had anticipated.
We've placed orders for those machinery, but payment has not yet been due. So in FY '24, a significant amount has not yet been spent. I think for the Telangana facility, all of the expenditure will happen in FY '25 as we expect to complete it within this financial year.
Okay, sir. And could you just quantify the total CapEx you're planning to spend in FY '25 and remaining in FY '26 outside Telangana, if you are planning [indiscernible]?
The Telangana facility is for INR 184 crores. So you can -- and some portion of that has already been spent in FY '24. So I think if you are modeling, then you can consider INR 200 crores CapEx for now. However, if that changes, we will update you.
Okay. Sir, what is the export mix in the INR 700 crore order which we have received? And a couple of questions about export as well, why both have come down? And when are we expecting it to recover?
In the total dispatches in FY '24, exports were around 5% to 6% and exports have not yet revived. Whenever that revival happens, we'll immediately see an impact of that. However, in the last financial year, even though exports were at 5% to 6% of total dispatches, it did not impact upon our margins as domestic demand is very good, as is evident from our existing order book.
Okay. Sir, also, since we have a new treasury amount, like you were mentioning the beginning of the con call and so we technically have a lot of liquid cash in hand. So what is the future capital allocation policy that we are maintaining and are any inorganic opportunities being evaluated right now?
We are utilizing the liquid investments judiciously. We've improved upon our dividend. We have doubled the dividend that we are going to pay for FY '24, subject to approval of shareholders. Apart from that, we are always on the lookout for inorganic opportunities in core business. However, none of that is available in India. Should a suitable opportunity come up overseas, we'll immediately capitalize upon that. Apart from these 2 points, the cash could be utilized towards capital expenditure.
Okay. Sir, one more question about the margins. Sir, what we have seen that in FY '24 the overall margin we have earned around INR 24 per kg in EBITDA -- EBITDA per kg is around INR 24. But we have guided that the future EBITDA per kg will be lower than this, at around INR 18 to INR 20. So why are we expecting a lower EBITDA margin?
The EBITDA margin that we earned in quarter 3 of FY '24, was an exception of INR 30,000 per tonne, which has happened maybe only once or twice in the past before Q3 FY '24, which led to an upward rise in the margin levels that we have earned in total in FY '24.
In Q4, our EBITDA margin was at INR 21,000 per tonne. What we are guiding is that margins will remain above INR 15,000. We are not saying that there will be a decline, but what we are saying is it is early for us to comment on long-term margins because we always work on short-cycle order books.
Okay. Sir, one final question. Actually, in PPT, you have mentioned that the domestic market size for drill pipes is around INR 10,000, and for subsea sour service seamless pipes to be at INR 35,000. So how much of this market size are we targeting or to capture? And currently, in this scenario, how much is being supplied to import? What is the import market share in these 2 products?
We will target as much as is reasonably possible, but we already have a majority market share in both these segments.
And how much is import currently [indiscernible]?
There are no imports. These are import substitution products.
We have our next question from the line of Dhananjai Bagrodia from ASK Investments.
Sir, just a couple of questions. How is the end demand market playing out right now? I know elections are done with. But overall, how are we seeing maybe focus how are we seeing in terms of inquiry going ahead?
There is no significant impact of elections for us, because the general elections were announced, and thereafter, we received a large order from ONGC of INR 674 crores. So we've not seen any impact of the elections on our business.
Okay. And -- so how are we seeing it now in terms of going ahead, maybe by end product -- end demand market by segment, how is that coming along?
What do you mean?
Like how is the end demand right now, in terms of which segment are you seeing good growth in? And how is that coming? Any particular customers or anything along those lines?
We have an order book of INR 1,750 crores. We are quite comfortable with that level order book.
Okay. And that's executable in less than a year?
I'm sorry.
That's executable over less than a year.
3 to 4 months. That is the level of order book that we like to maintain and we have that right now.
Sure. And maybe I missed this but sir, why is depreciation been going down in terms of our expenses, is it on WDV or how is that?
Certain assets have been fully depreciated. And the amount of depreciation charge that is required has been fully expensed out. Therefore, depreciation has reduced.
The next question is from the line of Riya from Aequitas.
My first question is in regards to the maintenance shutdown, which we will take next year. So how long that would be? And when will we take it?
Most likely, we'll be taking a maintenance shutdown towards last week of May or first week of June. And it will be for [Technical Difficulty].
Sorry, sir. We got the participant disconnected. Sorry, sir. Sorry about that. We have our next question from the line of Nikhil Agrawal from Vt Capital.
I just wanted to understand, billet prices are at a 1-year high. So how will it impact your margins in maybe Q1, Q2?
No. Billet prices are not at a 1-year high.
They have increased significantly over the last 2 months.
Maybe that's a different kind of billet because the kind of billet that we use are round steel billets and the billets that you may be referring to are square billets, which we do not use.
Okay. So how has been -- what has been the price trend in those type of billets?
There has been no significant move upwards in the price of round steel billets. And our order book is supported by back-to-back booking of raw materials. So that our margins are locked and we are not impacted by fluctuating raw material prices.
Okay. No, sir, because last year, our margins had gone up, I suppose, because billet prices had fallen down during the 45-day period between all the booking and the execution. So that's why I was -- that was the question.
No, not between order booking and execution.
Between placing the order and the order booking, I guess, the 45 days.
No. Actually, the time period between submission of a tender and awarding of a tender.
Yes, I meant that only.
In that period, that happens, so that is a very small component of everything. But whenever that happens, the impact will be seen.
Okay. So that's not a concern for us right now, since the prices you're seeing.
No, no, no.
Okay. Okay. Got it. And sir, U.S. rig counts, they have gone down, but I can see that international rig counts have gone up as a whole. So like, are we looking to supply to countries other than U.S.? I mean, Canada has gone up, but are we looking to supply to countries other than U.S.?
We will only do that if we are able to get good margins in those orders because U.S. and Canada are our target export markets. We want to explore other markets but not at the cost of margin. Our objective is not maintaining presence in various markets. Our objective is to maximize profit per tonne.
All right. Got it. And sir, you said the maintenance shutdown will be during the last week of May or first week of June. But how long will that be?
1 month.
We have the previous participant connected with us again. The next question is from the line of Riya from Aequitas.
Also the large order, which we were talking about, what would be the volumes for these large orders, which are shifted to the next year?
The large order was the order from ONGC, which we received in the second week of April of INR 674 crores.
Okay. I assume that was for the 11 months, right, that order?
Delivery is over a period of 44 weeks, so staggered, yes.
Yes. Okay. And did it reduce for this particular order or the production was also less then it could be shifted to the next -- from April onwards?
We only manufacture once we get an order because only after we get an order is the order for raw material place and thereafter manufacturing starts.
Got it, sir. Also in terms of CapEx, we are saying that when will the CapEx be online? And how long do we think that time it will take for it to ramp up, the finishing line?
The Telangana finishing line has started and -- the CapEx for the Telangana finishing line has started, and we expect to complete that within this financial year. Once the installation of the line is completed, we can immediately ramp up production. So we expect volume growth to take place in FY '26.
Okay. So next year, there will be no addition from the CapEx side.
Not on the Telangana finishing line, because that would have been completed.
The next question is from the line of Simarjeet from Almondz Financial Services.
Sir, I just want to understand one thing. What can be the peak revenue one can expect from the Telangana unit once it will be fully positioned in FY '26 or by FY '27? And will this Telangana unit be margin accretive? Or you will have that sort of similar margins which we are having from others?
Right now, we are generating between INR 800 crores to INR 900 crores of revenue from the Telangana unit, but it is operating at 50% of its capacity because the remaining 50% is not being used as there is a bottleneck on the finishing front.
Once the finishing line has been installed, then we can expect revenue to go up to INR 1,600 crores, INR 1,700 crores on an annual basis from the Telangana unit. Subject to selling price being maintained and sufficient market demand being in place and all of those other factors.
Okay. Sir, are we having any plans for the pipes for the hydrogen market, something like that in our mindset or no?
We are discussing that, but it is too early to make any definitive comment on that, but that has been discussed. That's all that I can say right now.
We have our next question from the line of [indiscernible] from Edelweiss Alternative Asset Advisors.
So I have a couple of questions, right. One is, again, as you mentioned that INR 15,000 could be the floor in terms of EBITDA per tonne when it comes to seamless pipe and there was a one-off or one type of product in Q3. Now if we talk about the mix, right, I mean you have a few types of pipe, there is subsea pipe, there is drilling pipe, there is CNG pipe. So what is the range of EBITDA per tonne for these different types of pipes that we have? And how much of a mix change going forward in FY '25, FY '26 can lead to the upward movement in EBITDA per tonne? And will this, again, EBITDA per tonne change significantly once most of our CapEx has been done?
I cannot give you product-wise EBITDA per tonne. Once all CapEx is done, there will be higher profit and higher value addition products being manufactured. That is the whole purpose of doing CapEx.
But if you can at least rank which would be the highest EBITDA per tonne category within these 3, 4 categories that we supply. I don't want the absolute number. The ranking will also help me to understand how our EBITDA per tonne will move going forward.
I cannot do that. We have disclosed more than what our competitors do. I think you should refer to our presentation.
We have our next question from the line of Pradeep Rawat from Yogya Capital.
So sir, do you see any new CapEx being announced in the seamless tube market?
I'm given to believe that one of our competitors has announced CapEx, how much that would be and what impact it will have on the tonnage front, I don't have that information.
Okay. Okay. And with respect to the ISMT turnaround as well as increasing our own utilization at United Seamless, sir do you see these ramp-ups to create a situation of oversupply in the industry?
No, no, no.
Okay. So my next question is regarding the dumping. So sir, with respect to dumping, do you see any kind of dumping in any of the product lines related to seamless pipes?
In a few segments, which are not covered by the antidumping duty in place.
Okay. And if ever these antidumping duties are lifted, so the Indian producers are competitive enough to compete against the foreign producers?
Yes. We are one of the lowest cost manufacturer. But unfortunately, Chinese dumping exist, and we have to fight that.
Yes. So we were lowest cost producer earlier also, or we just became right now?
No, earlier as well because of inherent advantages that are present with Indian manufacturers in terms of access to cheap labor and access to plant and equipment, which are not purchased at full price. All of those benefits of depreciation and interest and human capital do add up.
Yes, Understandable. And my last question was regarding the cash that we have. So we have a planned CapEx of around INR 800 crores, and we have in treasury around INR 1,800 crores -- INR 1,900 crores. So what are we planning to do with the rest of the amount?
We are conserving cash, and we will use it judiciously. As I mentioned earlier, if there are any inorganic opportunities available, which there are not right now, if they do come up, then we will capitalize immediately.
So sir, if we do spot any inorganic opportunity, so where are we planning to spend those cash in organic front? Like can you give a broad sense of idea?
So we've already announced capital expenditure. We have doubled the dividend that we were being last year and then yesterday, Board has announced that it will double the dividend which it paid last year. So essentially, over the past 2 years, we have quadrupled the dividend amount, which would be paid out subject to approval of shareholders.
And we want to invest in coal business only, where that will be and when that will be and how much that will be would be communicated in due course when all of that materializes. But as of now, we've told you all that we know.
We have our next question from the line of Chetan Doshi from Tulsi Capital.
I have a couple of questions. One is in the presentation, you have mentioned that we have successfully dispatched the entire order of subsea sour service seamless pipes. Can you just tell me what quantity in value -- in terms of value, how much we have dispatched and when it was dispatched? So customer is satisfied with the performance of this particular product. And I suppose it is an import substitute. So what future you've foreseen particularly in this segment in coming days?
I cannot tell you the quantity, and I cannot tell you the amount. I can tell you that the customer is satisfied and we are getting regular orders.
Repeat order has already been placed for this particular product?
Yes, yes, yes.
And so in current financial year, what is your target for this particular segment?
Getting as much orders as possible, but we already have majority in this segment.
Okay. You have no competition as far as this product goes in as far as India is concerned?
No, we have competition, but we already have majority.
Major stake is with you?
Yes. This is an import substitution product, sir.
Yes, that is true. Are you planning to -- the capacity is sufficient or you're planning to invest something in particular this product line?
Sir, we don't have to necessarily invest in the product line, but the capacity expenditure -- sorry, the capital expenditure plans that we have announced they will cover all sorts of value addition products.
So a specific plant is not required to manufacture this particular product?
No, no. Because even in our current facilities, we are manufacturing this.
The next question is from the line of Rakesh Roy from Boring AMC.
My first question, can you share the realization part for Seamless and ERW for this quarter and last quarter, same to last year?
We do not share realization figures.
Okay. And any broadly idea how much is there nearby?
No.
Okay. And sir, just you said you have the INR 1,800-plus crores cash and you have INR 800 crores CapEx plus dividend increase. And you said you are looking for inorganic growth acquisition. In which geography you're looking for acquisition or any company that -- which geography you are mostly focused?
Earlier, we were looking within India. We were looking to acquire one of our competitors, but that did not happen. We were looking at United Seamless, and that happened successfully. We can look at any geography as long as the equipment is as per our requirement and the cost of the equipment is also as per our requirement. Geography is not so important for us because we have the ability to dismantle equipment overseas, pack them into boxes, ship them to India and assemble them and commission them within India.
We have our next question from the line of Afzal -- is from the line of Richa from EquityMaster.
My question is...
Sorry to interrupt, Ms. Richa, we are unable to hear you. Can you please use your handset.
Is this better?
No. You're sounding very low.
Actually, I think this is a...
Ms. Richa, I would request you to rejoin the queue as we are unable to hear you. We have our next question from the line of Aashav Patel from Molecule Ventures.
Congratulations to the entire team for successfully turning around the balance sheet on all the corporate governance targets which we have given in the past. Sir, my question -- first question is that our Seamless EBITDA per tonne is down from close to INR 30,000 range to INR 22,000 range. I understand you can't give the specifics. But can you please guide us whether this was due to RM, raw material cost push which we had to take an expense in this quarter? Or was it really due to realization softening?
In Q3, there was a slight timing mismatch between the time the tender was submitted and the time at which the order was awarded. During that time, prices of raw material fell, which meant that we were able to generate higher margins. The margins that we generated in Q3 FY '24, they were on a higher side. And in Q4, we have corrected and come down to INR 21,000 per tonne.
Going forward, we expect margins to stay upwards of INR 15,000 per tonne. The reason why I cannot give you specific guidance is because we have short cycle order book of 3 to 4 months, and we expect margins for the entire year to stay above INR 15,000.
Fair enough. Fair enough. And sir, second question would be that given that coking coal has corrected meaningfully in the last 6 months, it is down from close to above INR 325 levels to INR 235 levels. So do we expect some -- given the lower price procurement, do you expect margin improvement a couple of quarters down the line?
As most of our orders are backed by raw material purchases, we don't expect significant impact of changes in raw material prices but if there is a timing difference like that happened in Q3, we will be beneficiaries of that.
Got it, sir. Sir, last question, what is -- why our ERW segment EBITDA per tonne increased meaningfully by 85% quarter-on-quarter?
The ERW segment is actually a blend of 2 subsegments. ERW pipe are supplied to the oil sector and to the water sector. Oil sector orders are more margin accretive than water sector orders. In any given quarter, the margin that is reported for the ERW segment is a blend of these 2 segments, whichever type of segment is serviced more in that quarter will determine how the margin plays out. Generally speaking, ERW margins are expected to be between INR 6,000 to INR 11,000 per tonne, depending on the kind of product that has been dispatched in the given quarter.
We have our next question from the line of Saket Kapoor from Kapoor & Co.
Sir, do we have Mr. Jindal also on the call? I joined very late, so I missed your opening remarks.
No.
Okay. So sir, you were talking about this preventive shutdown in our mills for -- happening for 1 month. So how will this asset our volume for the year? I think during an earlier conversation you were mentioning about that impact be negated, if you could just complete that part of the answer.
So in Q1 FY '25, we will be taking preventive maintenance shutdown in one of our mills. It will most likely be either in last week of May or first week of June. It will be for a period of 1 month. That is one aspect, which will lead to lower production in the first quarter of FY '25. We are also parallelly working on capital expenditure for our Telangana facility and installation of the finishing line.
If the installation of the finishing line is completed before the end of this financial year -- the current financial year, then we can see higher production in the Telangana unit. If that happens, then the loss in production in the first quarter will be negated by the increase in production at the Telangana unit towards the end of FY '25, that is the option which I was proposing. If that does not happen, then there will be loss of production in FY '25 compared to the production in FY '24.
And what should be the percentage that we should book in loss of tonnage on a ballpark number, if we do around 1 lakh tonne in a 3-month basis, so INR 35,000 to INR 40,000 or should be a good number we should work out?
You're talking about the loss of production? So I think the loss of production in the June quarter -- the current quarter would be around 15,000 tonnes.
Okay. Sir, as you mentioned about the demand outlook, you mentioned that there is the impact of elections. These are not the factors that will drive the prices and the demand. That is the understanding that since we are -- why I'm putting this question is that we are sir, today, 45 days into this quarter, we are in 22nd May and as you have given us the order book as on 15th May, that stands closer to INR 1,750 crores -- INR 1,770 crores. So if you could give us some more color how has the dispatches or the ballpark number being when we compare March quarter exit run rate to our 45 days into this quarter?
I don't think that would be appropriate because we have never done that in the past. We've never given guidance of dispatches completed within 45 days. We do not share monthly operational update. But the only thing that I can tell you for this quarter, which is the most material and most relevant since we are halfway into the quarter is that there will be a preventive maintenance shutdown, which will lead to loss of production of at least 15,000 tonnes.
Right. Sir, now a point about this ONGC order part, which our earlier participant Riya ma'am also spoke. In the press release part, it was mentioned that the deliverables will be dispatched over a period of 44 weeks. That works out to around 11 months. Wherein you alluded to the point that [Foreign Language], so if you could explain sir, what are you trying to?
So it's a good point that you have raised. So order book as such is for a period of 4 months. If you consider that everything is manufactured within a period of 3 to 4 months by prorating the sales that you do over the year over a period of -- over the value of the order.
In this particular case, the order from ONGC was split into 2 segments. So the initial segment is what we would have received in the fourth quarter of last financial year, which would have led to higher production and the balance portion would then be manufactured in FY '25. However, that did not actually happen. The entire order was received in FY '25.
Sir, I still did not get -- if we take INR 674 crores as the size and the execution period of 44 weeks, will this order get executed within the coming 4 months? Or will it percolate to the entire financial year, because 11 months from April, means [Foreign Language].
This order will get executed in 44 weeks. A certain portion of the order was supposed to be executed in a shorter time period and not 44 weeks because 44 weeks is the entire time limit that ONGC gives us for execution of this order. When we have to execute is something which is decided by ONGC. So we were expecting this order to come in earlier in the previous financial year, that did not happen.
Sir, you mentioned about the...
Sorry to interrupt Saket sir. We would request you to rejoin the queue as there are several participants waiting. We have our next question from the line of Radha from B&K Securities.
Sir, I wanted to understand, you mentioned that U.S. and Canada are key markets for exports. So what is the market size for seamless pipes in U.S. and Canada? And also if you could tell about what is the global market size and how much is China out of it?
Market size in U.S. and Canada is very big. Almost all seamless pipe manufacturing countries want to export to U.S. and Canada because of the amount of drilling activities that take place. People also want to export to the Middle east, but we do not export to the Middle East because of presence of China.
Generally thinking, the size of the entire seamless pipe market would be around 10 million tonnes. Although it is difficult to verify this figure, because there are capacities in China, which are not documented and in other geographies, which are not documented in a concise manner by any one entity. I hope that answers your question.
Yes, sir that was very helpful. Just a ballpark number gives us a sense. And China would be 40% to 50% of this 10 million tonnes?
I don't have data on the basis of which I can make that statement. But China does have large capacities.
And sir, I believe Russia is one of the key players, and there's one large group -- Russian group making seamless pipes. So other than that, when we are exporting to U.S. and Canada, who would be our key competitors. And also, just a bit of any kind of indication of what could be the market size of U.S. and Canada?
I don't have the market size. I think you have access to more databases than I do. So maybe you will have that information if you look for it. In terms of competitors, international competitors are ArcelorMittal, JFE, Tenaris, TMK. Jindal Saw is also a competitor in the international market. Vallourec is a competitor. I've given you 6 names.
And sir, Europe has an antidumping duty from China, but not for India. So are we also exporting to Europe?
Very small quantity.
So any plans to increase or any opportunity that we can see in the near term?
Our key markets remain U.S. and Canada because we do not want to export at the cost of margins. Our objective is to increase margin per tonne, maximize it and not try to maintain presence wherever we can.
Then why do you see better margins in the U.S. market versus Europe market currently and when do you expect the exports -- sorry?
Because customers are willing to pay higher prices.
And when do we see the export market to revive, sir?
We hope it does as early as possible, but that has not happened in the last financial year.
Ladies and gentlemen, that would be the last question for today due to time constraint. And I would now like to hand the conference over to Mr. Vikash Singh for closing comments. Over to you, sir.
Thank you. On behalf of PhillipCapital, I would like to thank Maharashtra Seamless and Kaushal for giving us the opportunity to host the call. Kaushal, now is call to you for any closing remarks.
Thank you, shareholders, for joining us on this call. I can sense from the kind of conversation that took place that some disappointment is evident. But please bear in mind that we are a company that has been a market leader for the past 35 years. And one quarterly result, which is lower compared to the previous quarter should not discourage shareholders. Because if you look at our performance on an annual basis, we have improved significantly.
We have addressed numerous corporate governance issues over the past 2 to 3 years. We have remained true to our commitment of addressing at least a couple of issues within the given time period. In fact, these were the only 2 issues on which we gave specific time period, and we have been able to do that, namely the ICDs and the corporate guarantee.
On the dividend front, we have quadrupled the amount of dividend paid over the past 2 years. Finally, our cash balance is at an all-time high. Our margins are exceptionally good. We would only urge you to stay connected with us and keep tracking us because we are market leaders at the end of the day, and we will continue to be market leaders.
I thank you again for your valuable input. And I would also like to thank Vikash for covering Maharashtra Seamless for so many years and organizing these calls. Thank you, Vikash, and thank you, shareholders.
Thank you, Kaushal.
Thank you, sir. On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.