Welspun Corp Ltd

NSE:WELCORP

Earnings Call Analysis

Revenue and Earnings Surge with Debt Reduction

In Q2 FY '24, the company reported revenue of INR 4,059 crores, with a notable 6x jump in EBITDA at INR 501 crores and a significant rise in PAT to INR 550 crores. Sales volumes grew nearly 40% to 28,000 tonnes, benefiting from increased TMT sales and strategic disposals of non-profitable assets like metal scrap. Debt reduction was a priority, with the company slashing its net debt by over INR 500 crores, bringing it down to INR 315 crores. The company's risk management is robust, hedging 80%-90% of their raw materials to mitigate volatility. Despite expansion in the DI Pipe segment, there are no plans for substantial capital investments this fiscal year.

Progressive Growth and Loyalty Programs Fuel Sales and Brand Presence

The company's transformative journey is on course, promising continued evolution through the second half of the fiscal year, spurred by the recent launch of the Retailer's Loyalty Program and a well-received new product, Sintex Hero. The company acknowledges these factors as contributors to its growth trajectory and plans to review its product portfolio consequently.

Strategic Asset Monetization of Nauyaan Shipyard Ensures Solid Balance

The disposal of metal and scrap from the formerly known ABG Shipyard has created a consistent cash flow for the company. With a strategic focus on keeping fixed costs minimal and avoiding capital-intensive investments for the time being, the entity expresses confidence in the full monetization of this asset, thereby preserving a healthy balance sheet devoid of undue stress.

Commitment to ESG and Carbon Neutrality by 2040

Ranked in the top 7 percentile globally within the steel sector, the company places significant emphasis on Environmental, Social, and Governance (ESG) initiatives. The company aims to reach carbon neutrality by 2040, and to drive towards this goal, they plan to install renewable energy resources across multiple sites and have formed a partnership with MRPL for the provision of round-the-clock renewable power. This will augment the company's use of renewable energy power to 55% by the fiscal year 2026 and contribute to a significant reduction in power costs.

Expansion Projects and Market Penetration

A notable expansion of the DI facility is underway to tackle mismatches between hot metal and DI pipes capacity, with the latter being a more valuable product segment. The company also reports a strong growth path for Sintex's water storage tank business and envisages an expansion of its market and distribution network.

Growth in TMT Bar Segment and Advancements in ESG

The TMT Bar segment has registered steady growth, suggesting an effective strategy is in place and positively impacting the company's bottom line. Alongside, considerable efforts in ESG aspects are now yielding observable results, underscoring the company's commitment to sustainable operations.

Financial Prudence and Hedging Strategies

The company has outlined a conservative CapEx plan with maintenance expenditure pegged at around INR 200 crores. With a robust order book extending over two years, especially from the Saudi Arabian market, the company has mitigated raw material volatility risk effectively by hedging almost 80-90% of its raw material needs, thereby showcasing a strong risk management practice.

Leadership in North American Markets with Future Opportunities

Welspun Corp, as a major player in the North American market, has delivered almost three pipelines to the Permian Basin projects and anticipates involvement in upcoming developments. Additional lateral pipelines offer further business opportunities, although these projects are subject to the bidding process. The management remains optimistic about its abilities to secure a fair share of this market given its existing standing.

Future CapEx Plans and Strategic Investments

While the company holds off on providing concrete CapEx numbers until H2 of the fiscal year, one major investment area highlighted is the DI Pipe expansion project. Additionally, the ABG Shipyard remains a key strategic asset, with plans indicating its complete monetization by the end of the current year, potentially offering increased financial flexibility for the company.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Welspun Corp Limited Q2 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.

[Vikash Singh, analyst]

Good morning, everyone. On behalf of PhillipCapital, I welcome you all on Welspun Corp Q2 FY '24 con call.

Now I hand over the call to Mr. Salil Bawa, Group Head IR of Welspun Group. Over to you, Salil.

[Salil Bawa, executive]

Thank you, Vikash. And good morning to all of you. I welcome all of you to the Q2 FY '24 earnings call of Welspun Corp. Present along with me today are on the forum are: Mr. Vipul Mathur, Managing Director and CEO of Welspun Corp Limited; Mr. Percy Birdy, Chief Financial Officer of Welspun Corp Limited; and also along with me, I have Goutham Chakraborty, who leads IR for Welspun Corp.

You must have received the results and investor presentation of the company, which are available on the BSE and NSE as well as on the company's website.

As usual, we will start the forum with some opening remarks by our leadership team. We'll then open the floor for your questions.

Please note, during the discussion, we may be making references to the presentation, which has been shared earlier. Please do take a moment to review the safe harbor statement in our presentation.

Should you have any queries that remain unanswered after this earnings call, you can reach out to any one of us.

With that, let me hand over the floor over to Mr. Vipul Shiv Mathur, MD and CEO, Welspun Corp. Over to you, sir.

[Vipul Mathur, executive]

Thank you, Salil. Thank you very much, and good morning to all of you. Let me welcome all of you for our Q2 and H1 FY '24 earnings conference call. I greatly appreciate you attending this call today. I hope you all have been keeping well.

I would now like to start the discussion with the key operational and financial highlights of the Q2 and H1 FY '24, followed by business updates, and then we will have an interactive session.

Some of the key highlights are that Welspun Corp demonstrated a very strong performance in Q2 and including HY FY '24 and some of the salient things are: the sales volume for our line pipe business in India and U.S.A. for H1 FY '24 rose by 57% on Y-on-Y basis. Our associated company, EPIC in Saudi Arabia, as you know, has a confirmed order book exceeding 2 years. Also, you would have -- also I am pleased to inform that the execution of the recent Aramco order, which was valued at SAR 1.8 billion has also started.

We are seeing a very steady improvement in our DIP production and sales. And in FY '24, sales volume grew by 24x on Y-o-Y basis to 73,000 metric tons. During H1, our stainless steel bar sales volume rose by more than 3x on a Y-o-Y basis, and we did almost close to 8,400 metric tons, while stainless steel pipes and tubes sales volume grew by 46% on Y-on-Y basis, and we did close to 2,500 metric tons.

On the building materials side, we are seeing a very steady improvement in our market penetration, both for our Sintex and TMT Bar segments. In Sintex, the water storage tank sales volume for H1 FY '24 rose almost 16% and we did close to 7,100 metric ton. And our TMT bar sales volume also rose significantly, and we have close to 50,000 tonnes of TMT business in H1.

As regards financials, our consolidated revenue from operations for Q2 FY '24 and H1 FY '24 stood at INR 4,059 crores and INR 8,129 crores, respectively. Q2 was INR 4,059 crores.

EBITDA for Q2 FY '24 jumped more than 6x, and it is at INR 501 crore for this particular quarter. PAT for Q2 FY '24 significantly rose to INR 550 crores, and I will explain a little more in detail about this in our subsequent conversation.

As we have indicated, the company is absolutely focused in terms of financial prudence and diligence and as in line with our guidance, the net debt got reduced by INR 520 crores in this particular quarter. And currently, our net debt stands at INR 315 crores.

As you know, our focus -- we have a very strong focus on ESG. There are certain key initiatives which we have taken on the ESG and which I'm pleased to report. We are increasing -- our focus has been on increasing our share of renewable energy across all the segments, across all the businesses. We are completely aligned with the UN Sustainable Development Goals through various social initiatives and programs. We have a very strong focus on governance. Almost all -- or 55% of our directors on the Board are independent directors with a very illustrious and diverse track record, background. The female directors on our Board are almost close to 38%.

Now let me give you the key drivers and the outlook for our 2 business verticals, the pipes and the building materials. In the pipes, let me first talk about the line pipes. For the quarter, the line pipe sales volume for our India and U.S. operations stood at 202,000 tonnes against 148,000 tonnes in the corresponding quarter of the previous year, registering a Y-on-Y growth of 36%. For H1 FY '24, line pipe sales volume for India and U.S.A. was at 387,000 tonnes as against 247,000 tonnes of the previous year, registering a growth of almost 57% on a Y-o-Y basis.

As you know, globally, oil and gas industry outlook has been very positive with rise of demand in foreseeable future but significant CapEx and strategic investment supply is also getting aligned. According to IEA, the investment in oil and gas is set to reach to the level of around $800 billion and will likely to remain at a similar level until at least 2030. While the IEA in its latest World Energy Outlook 2023 estimated that global oil demand to see a steady growth, reaching to 101.5 million barrels per day by 2030, but OPEC has shown a very strong outlook and expects global oil demand to reach 112 million barrels per day. Both IEA and OPEC, if you analyze, are showing a very strong traction and growth in the oil and gas sector until 2030.

According to the IEA, starting from 2025, a huge surge in LNG project is set to start off with addition of 200 billion (sic) [ 250 billion ] cubic meters per year liquefaction capacity by 2030 which is almost -- which is equal to almost 1/2 of today's global LNG supply. Most of these capacities will come between 2025 to 2030 (sic) [ 2027].

As per IEA in the "Stated Policy" scenario, around $190 billion is expected to be invested each year to develop upstream gas between 2022 to 2030 and a further $40 billion is expected to be spent each year on LNG infrastructure; while the clean energy is also going to be in focus, as per IEA, under the Net Zero Emissions scenario, the projected spending will be around $100 billion each year in hydrogen transportation infrastructure by 2050.

For -- the key drivers in outlook for our business in India, despite global macroeconomic challenges, Indian economy, as you know, remained absolutely resilient. As per IMF Latest World Economic Outlook, India GDP is likely to grow at 6.2% in 2023 and 2024 as well. India's oil demand is expected to rise from 4.7 million barrels per day to 7.4 million barrels per day by 2040. With -- India's natural gas demand is also likely to -- is also likely to almost quadruple to 4.1 million barrels equivalent per day. India also targets to reach its refining capacity of 9 million barrels per day by 2030.

The government targets to increase natural gas pipeline coverage by 54% by '24, '25 and to connect all the states with the trunk natural gas pipeline by 2027.

Recently, if you have noticed, the Government of India has concluded the 11th CGD round of bidding increasing the potential to cover almost 98% of the population and 88% of the geographical area under the CGD, which is the City Gas Distribution. Around 12,000 kilometers of pipeline is approved and currently under construction. Current share of the gas in the country's energy mix is slated to increase from 5.8% to 15% by 2030.

If you would have noticed, CGD today when they have -- we have concluded the 11th round of the bidding, the work which are currently getting executed are of the fifth and the sixth round of bidding at this point in time, which means it gives a very, very clear headspace for the CGD expansion to grow in times to come.

Both central and state governments have strong focus on aviation projects and water transport to line pipes. Thus, has a huge potential.

Export markets are looking extremely promising, especially the Southeast Asian market, the Australasian market and the Middle East market, where Welspun has a significant dominance and presence. As you would have noticed, Welspun Corp recently received one of a very prestigious order for almost 61,000 tonnes for supply of pipes for one offshore production and transportation in the Middle East. It is one of the most stringent orders, which have ever been placed and which will be executed by Welspun, positioning Welspun Corp. as the leader in the oil and gas pipe -- line pipe industry.

Let me now give you an outlook on the U.S.A. The outlook in the U.S.A. stays very, very strong with the rise in natural gas production. Natural gas exports from U.S.A. is at 20.4 billion cubic feet per day in H1 of calendar year 2023 and has been the highest when compared to the same corresponding period last year.

The LNG export rose by 4% to 11.6 billion cubic feet per day, which makes U.S.A. the world's largest LNG exporting country. During the same time, natural gas pipeline exports to Mexico and Canada increased by 4% to almost 8.8 billion cubic per day.

As regards to outlook, as I mentioned, that U.S.A. will now become the largest LNG exporter. They have completed 5 new natural gas pipeline projects, which are bringing the gas from the Permian Basin to the Gulf Coast, taking the takeaway capacity to almost 4.18 billion cubic feet per day.

This capacity will be doubled over the next few years' time, which -- this results in at least multiple Permian gas pipelines going to come up in the near future. Thus, we see -- Thus, we continue to see a very strong demand for our HSAW pipes in the U.S. market.

Our total order book remains strong at 240,000 tonnes at this point in time, and we are very confident on booking new orders to ensure continuity of our business. We are seeing clear business opportunities, and those opportunities now would need to be converted into business. Then us being in one of the leading -- we've been the leading player in America, in the U.S. market, I am sure that our track record suggests that we should be able to capitalize upon these emerging opportunities.

Let me also tell you -- brief you about Saudi Arabia. As you know, the Kingdom of Saudi Arabia has brought in a very strong focus on increasing their oil production, transportation of gas, water desalination and other projects like oil to chemicals. Thus, the outlook for the line pipes, which will be used across all the segments, as I have mentioned, remains very strong.

As for Saudi Aramco, they expect to award contracts for at least 14 more new pipeline projects between 2023 to 2025.

This might be a business opportunity of close to 12,000 kilometers that might get potentially -- that has the potential to be awarded between 2020 to 2030.

The country is also heavily investing in their water desalination projects, which are close to approximately $14.85 billion. The government of - the Kingdom of Saudi Arabia had announced an $80 billion investment in their water infrastructure, which comprises of desalination plant and the corresponding infrastructure. The corresponding infrastructure entails line pipes as well, a significant portion of pipes.

So there are substantial pipeline of large-scale projects, both in oil and gas sector and water sectors in the Kingdom of Saudi Arabia presents a remarkable prospect for associated company, EPIC.

As you are aware, EPIC is the largest pipe producer at this point in time and one of the most respected pipe manufacturing company. Today, it is clearly getting reflected that they have a clear order backlog of more than 2 years, and they are also in contention for a few more orders which are currently being discussed and which gives us a very clear -- which possibly will give us a clear visibility of 3 years -- 3 years or more.

The vision of the government of Kingdom of Saudi Arabia, which is called Vision 2030, is very clearly articulated. And I'm sure if you would have seen through it, it clearly highlights the potential the Kingdom offers to the local manufacturers. EPIC being one of the key local manufacturers is likely to benefit the most out of it.

The long-standing and strategic relationship with our key business partners, resulting into better positioning both in the local and the regional market, is considered an integrated component of EPIC's growth and development.

As I said that we have a confirmed order book of almost more than 2 years, and we are favorably placed in few businesses which will get converted into orders in due course of time, we are seeing a clear business visibility of more than 3 years.

And at this point in time, we have just started the execution of the Aramco order, which we have announced a couple of months back, which was valued at SAR 1.8 billion.

Let me now shift my focus to the DI pipes. As you are aware, DI pipes is our key focus area of growth. The DI pipe segment ramp-up has -- our ramp-up has been on the expected lines with Q2 sales volume growing by 15x on Y-on-Y basis and 68% on a quarter-on-quarter basis. The government's strong focus on improving water infrastructure in the country through initiatives like Jal Jeevan Mission and Nal se Jal has only created a very strong demand for DI pipes in the country and this demand is likely to stay there for the next couple of years.

Additionally, with the progress of Amrut 2, which is the urban infrastructure development, and other such initiatives, DI pipes demand is expected to remain strong for the next 5 to 7 years.

On the back of this positive strong demand outlook, and significant demand-supply mismatch in the smaller diameter, we have decided to slightly expand our DI capacity by additional 100,000 tonnes in order to take Anjar DIP capacity at 500,000 tonnes.

This is -- this, I need to clarify. When we have set up this DI project, we had a hot metal capacity of 400,000 tonnes. And correspondingly, we have put the DI capacity at 400,000 tonnes. Fortunately, by our technological initiatives, and our operating process and parameters, we have been able to significantly improve our hot metal production to 500,000 tonnes. Now this is a positive change which has happened. From the setup of 400,000 tonnes, we are now producing 500,000 tonnes. That is leaving a little bit of a mismatch. And to that extent, we are increasing the capacity of DI pipe by additional 100,000 tonnes as this being a value-added product.

Based on the quality and serviceability established with our customers in our existing DI pipe capacity, we have established ourselves as one of the most credible DI pipe manufacturer in the country. We are also now seriously exploring export markets in the Middle East and Africa, where we see great opportunities. Our order backlog at this point in time stands close to 250,000 tonnes, valued at approximately INR 2,000 crores. This gives us a very clear visibility of at least 1 year, if not more.

Let me also brief about our stainless steel business, which is our joint venture company, Welspun Specialty Steel Limited. WSSL has witnessed a clear turnaround in the last couple of quarters. Backed by integrated manufacturing process and diverse product offerings, the company has a unique presence in its addressable market segment. The company has successfully developed super authentic 904 L bars as well as pipes, nickel alloy, 800 bar as well as pipes, critical heat exchanger tubes ultra-low cobalt stainless steel bars for nuclear power application. We are clearly focused on the value-added segment in this company.

Also, we have made our foray in the U.S. market and the first shipment has already reached. As you are aware that we have a dominant -- we have a significant presence in the Indian market, a dominant presence in the European market and now with our foray into the U.S. market, we are only broadening our spectrum.

I am happy to share that the greenhouse emission footprints are available to all products at WSSL. This is going to be a game changer. As you are aware that with our presence in EU market and the U.S. market, we are pioneering this initiative.

Currently, the WSSL order backlog stands at almost 4,500 metric tons for the steel, valued at INR 170 crores. We are confident that the business performance shall further improve on the back of several new customer approvals, accreditations, development of new products and penetrating new markets.

Also, I must highlight that the policies, the Make in India initiative, the government [ act ] and the labor policies are also dissuading the key imports coming from other countries. And also, the investment which government is making in terms of the power plants, thermal power plants, the nuclear power plant and in the defense, where these pipes found significant importance and play is further going to boost and -- boost our growth.

Until now I have covered about our pipe vertical. Now let me draw your attention to the building materials, Sintex. Let me now cover -- talk about the Sintex. Our existing business has been ramping up very steadily with Q2 FY '24 growing on 25% on Y-o-Y basis and 10% on a quarter-on-quarter basis. Our growth is faster than the market growth as we are in the middle of changes that we are making in our ecosystem so that our growth rate increases further. Some of them have already been rolled out, while the others are in pipeline.

We are also augmenting our talent pool to meet this challenge. Our entire focus is on water storage tanks and on reenergizing our retailers, distributers, plumbers and customer segment. Our journey of changes shall continue through Q3 and Q4, which means the H2 of this year.

The Retailer's Loyalty Program launched in Q2 is already showing significant traction in the very first few months of being rolled out. This is also being enhanced by making the brand presence significantly in the market through product, communication as well as important needs. The new product launch in Q1, Sintex Hero, has been accepted very well by the market. Considering its success, we are looking at reviewing our product portfolio to increase our [indiscernible] to our customer. In summary, our growth journey is continuing as planned and shall continue to garner more momentum, speed and share in times to come.

TMT Bars. We have seen a consistent improvement in our sales of our Welspun Shield TMT Bar with Q2 FY '24 sales volume at 28,000 tonnes, registering a sequential growth of almost 40%. Higher TMT sales, as you would notice, is directly resulting in a reduction of our intermediary products, which is billets, which was a nonprofitable segment.

Market penetration has been progressing well with 98% districts are now being covered in Gujarat with 213 dealers connected. Our marketing approach to our innovative digital channel to address B2C segment has been paying off.

The Nauyaan Shipyard, the erstwhile ABG. We have been disposing of the metals and the metal scrap, which is resulting into a steady cash flow. We have been -- as I have told earlier, we are keeping our fixed cost at a very, very low level. We are not exploring any capital-intensive investment at this point in time. We are confident of fully monetizing this asset, thus having no stress whatsoever in our balance sheet. This is our -- this was our earlier stated position. It remains the same.

I would also like to draw that your attention to the ESG initiatives, which are very critical and core to Welspun growth journey. You all know that we are very focused on our ESG intervention across all the 3 areas, that is environment, social and governance. We are currently ranked in the top 7 percentile of the companies in the steel sector globally.

As far as environment is concerned, our long-term sustainability goal is to achieve carbon neutrality gradually from 10% to 100% by 2040. And to that extent, we have been taking various initiatives for that. Number one, we are going ahead with the installation of renewable energy at Anjar, Bhopal and Mandya. We have also recently signed up an understanding with MRPL, which is a subsidiary of Welspun New Energy, wherein they will provide round-the-clock renewable power, they will be generating from wind and solar and which will be used for our operations, making our Anjar facility coming to utilizing 55% power as RE power by the fiscal year 2026.

It will not -- it will result -- not only will -- it is a momentum towards achieving our goal of carbon neutrality of 2040, but also it will be significantly saving us the per unit cost of the power. Welspun will hold almost 22% in this joint venture, in this entity, MRPL, and our investment is not -- is capped at INR 44 crores.

At the WSSL level, where also we are very focused on exposed in the European and the American market, we have tied up for RE power through a third-party agency. And currently, we are getting 3 megawatt wind and 2.5 megawatts solar. The share of renewable energy has already reached 30% of our total energy consumed in the month of September. And this journey will continue.

We are also focused as a group at the company level on 0 waste to landfill and water neutrality by 2040.

In case of our social initiatives, we are aligned with the UN Sustainable Development Goals through various social initiatives and programs.

As far as governance is concerned, where we pay a very strong emphasis, we have seen a very strong compliance with all statutory requirements and policy.

Here, I would like to highlight that there is no pledging of any share at the promoter's level. It's all of the companies in the Welspun Corp are professionally managed under a very defined structure under the supervision of the Board. There is no cross-holding, which is there between any of these companies. The Board itself comprises of persons with illustrious and diverse backgrounds and with 55% of them being independent directors, out of which almost 38% being female directors. All the key committees are led by the independent directors.

Coming to the financial highlights. One of the significant achievements was that during this quarter, we have reduced our net debt by more than INR 500 crores, and it currently stands at INR 315 crores on September 30, 2023. If you see, we are close to achieving our target or the guidance what we have given for FY 2024. We have also reduced our gross debt by INR 855 crore during the quarter. You will appreciate that we have been walking the talk as far as the guidance is concerned.

With this, I would like to summarize by highlighting that both our business verticals, which is the pipes and the building materials, are performing in line with our expectations. We continue to explore options in Sintex and DI Pipe segment in existing and new locations for our growth.

We see a strong business outlook for our line pipe business in all 3 geographies, which is India, U.S.A. and Saudi Arabia. Also, as I mentioned, it is already backed by a committed strong order book at this point in time.

We are expanding the DI facility, as I told earlier, to bridge the mismatch between the hot metal and the DI making -- DI pipes capacity, this -- only -- this being the value-added product.

Sintex, as you are aware, is absolutely on a growth path at this point in time with their water storage tank businesses taking the lead. Our emphasis has been on expanding our market and realizing our distribution network.

The TMT Bar segment is also steadily growing.

And also on the ESG side, we have made significant efforts where the needles are moving. It is -- we are doing actions, which the impact of it is now being seen on the ground.

With this, I would like to thank for your patient listening and hearing. And I open the floor for any questions, whatsoever you may have, please. Thank you very much.

[Operator]

[Operator Instructions] The first question is from the line of Darshit from RoboCapital.

[Darshit Vora, analyst]

Congratulations on excellent results. So my question was that say, in the coming 2 to 3 years, where do you see Sintex business going in the form of, say, revenue impact? I mean, any internal targets or general overview will be fine.

[Vipul Mathur, executive]

I can understand your excitement about Sintex and very well so. As you know that we are now in -- we have now been into the seat for almost, let's say, 7, 8 months, 2 quarters effectively. And we have now the chance of deep diving into the business, the models and everything. What it is very clearly reflecting that this company offers a huge potential to us, both in the water segment business -- or the water storage tank business and other allied businesses as well.

At this point in time, we have -- we are working on 2 strategies: number one, to, first and foremost, consolidate our position and to get back our market share. So that is one part of the strategy we are working on.

The second part of our strategy is to keep exploring what are the new growth options, new growth locations where we should be focusing on. And we will crystallize that. I think so by -- in the next 2 quarters, we will be able to crystallize our future growth strategy as well, which we will roll out sometimes later in the next financial year.

So these are the 2 parallel initiatives we are driving at this point in time. But in next 2 to 3 years, I can assure you, this company will get back to its peak glory, and it will have multiple product offerings, and it will have a pan-India presence, and it will also be one of the most revered company into the B2C segment. That much, I can assure you, please.

[Darshit Vora, analyst]

Okay. Okay. Great. Great to hear that. And you specified that you're only going to do maintenance CapEx. So what amount would that be?

[Vipul Mathur, executive]

You're talking with respect to Sintex or you're talking with respect to other company?

[Darshit Vora, analyst]

No, in general, for the whole firm.

[Vipul Mathur, executive]

So right now, our intent is that -- is all about the maintenance CapEx, what we have given the guidance. Only one thing which has changed since our last conversation is that we are doing a big expansion of capacity in our DIP. To that extent, the CapEx will be there.

And I will -- I hope you will understand that there is no point producing 500,000 tonnes of hot metal and producing 400,000 tonnes of DIP because that loss of 100,000 tonnes, if it can be productively used for a value-added product like DIP, I think so that will bring much more revenue and earnings in our -- for it. So other than that, I think so we are very conservative in terms of our CapEx. This all is going to be a maintenance CapEx as what we have given the guidance.

[Darshit Vora, analyst]

Okay. Okay. But what would that amount be just a range?

[Vipul Mathur, executive]

In the maintenance?

[Darshit Vora, analyst]

Yes, maintenance.

[Vipul Mathur, executive]

So maintenance is close to what, INR 200-odd crores. That's what we are looking at.

[Operator]

The next question is from the line of Miraj from Arihant Capital.

[Miraj Shah, analyst]

Great.

[Operator]

Miraj, your voice is breaking. Could you switch to the handset mode?

[Miraj Shah, analyst]

Is it better?

[Vipul Mathur, executive]

You are breaking. Gentleman, you're cracking. So can you be...

[Miraj Shah, analyst]

Yes. Is this better?

[Operator]

Yes, please go ahead.

[Miraj Shah, analyst]

Okay. Congratulations on a great set of numbers, sir. I have a few questions. Starting with first one, the Saudi Arabia, that our order book has gone beyond 2 years now. I just wanted to understand that booking orders in -- it is obviously a positive thing, but the tenure of delivery is stretched beyond 2 years now. Does that involve a lot of raw material the volatility risk. I wanted to understand how our strategy over here was to minimize the raw material volatility risk.

[Vipul Mathur, executive]

So Miraj, as you very rightly said, that with our 2 years of an order book, as you know, as a policy, the raw material is completely hedged and is only a pass-through for us. Whatever confirmed orders we have at this point in time, we have already covered the raw material. We have a backup for the raw material. It will -- and we have -- you must understand, we are one of the largest buyers of the steel in the world for the API grades. We have absolutely robust understanding with all the key steel suppliers with whom we buy this. So at this point in time, which -- whatever order we have, we are almost covered. I would say almost 80%, 90% of our raw material is completely hedged.

[Miraj Shah, analyst]

Great. And like you were explaining for the Permian basin, that 5 new projects have been completed right now. So what is the opportunity in terms of new orders coming from there? So if I'm not wrong, there were 4 more orders to be announced in Permian Basin, taking a total to 9 orders. If you could just highlight if we are in [ late ] position in any of the orders in Permian Basin right now and what would be the size in terms of volume?

[Vipul Mathur, executive]

So if you see, the Permian Basin continues to grow, and it is very clearly getting reflected by the LNG share which the U.S. is gaining in the international market. At this point in time, there are 3 operational lines. Fourth is getting into operations and fifth is under construction. That's the way it is currently standing. The way they are looking -- the way the things are looking at in terms of drilling and in terms of gas exploration, there are at least 4 more lines, if not more, which are going to come up in Permian Basin in subsequent years.

We are expecting the next Permian line to come sometime around the first quarter -- calendar year quarter of the next year. And out of the 4 pipelines, what have been constructed, we have supplied almost 3 pipelines. As you all know, Welspun Corp is the leading player in the North American market. And I think that we would have a play in that Permian -- upcoming Permian projects as well.

Apart from that, we should also be mindful that along with these pipelines, there are multiple lateral pipelines which do come up along with that. And those business opportunities are also up there on the table. However, these are all projects. These are all opportunities. We will have to bid, and we will have to secure them. So that part of the work is pending.

But considering that we have been doing fairly okay, and we have been getting a percentage share of that particular market, we are very optimistic and confident that we should be able to maintain that.

[Miraj Shah, analyst]

Understood, sir. And sir...

[Operator]

Miraj, can you get back in the queue for the follow-up question.

[Miraj Shah, analyst]

Sure. Okay. I'll get back in the queue.

[Operator]

[Operator Instructions] The next question is from the line of Siddharth Shah from MK Ventures.

[Siddharth Shah, analyst]

Congratulations for a good set of numbers. Am I audible, sir?

[Vipul Mathur, executive]

Yes, Siddharth. You are.

[Siddharth Shah, analyst]

And, sir, my first question is on Sintex again. You kind of highlighted your plants and everything. But can you crystallize the CapEx plan for next 2 or 3 years in Sintex? A broad range also would be very helpful?

[Vipul Mathur, executive]

Siddharth, at this point, as I said, our -- right now, our focus more is on expanding our base, right? Also in tandem, we are also exploring what are the other projects which we should be bringing in that Sintex fold. Now that discussion, that market study, that outlook is all being currently studied at this point in time. Now, that we will be able to crystallize this road map in Q3 and Q4 of this year. That mean in the H2 part of this year, we will be able to completely crystalize that. And based on that, we will be able to roll out our CapEx plan.

It will be slightly early to roll out -- throw a number. And without knowing as to what we intend to do and where do we intend to and how do we intend to do, I think it's early. Kindly be a little patient and give us, in the next subsequent call, as we will crystalize the CapEx, we will completely come and share that with you.

But having said that, I wanted to assure you that as a brand, it still stays an iconic brand. In terms of its market reach, it has a great market reach. It has a great product recall. And there are multiple growth opportunities which can be embedded into the system and which is what we are very, very minutely analyzing and evaluating at this point in time.

[Siddharth Shah, analyst]

Sure. So that's very encouraging to hear. So sir, broadly, can we say that apart from the DI Pipe expansion, majority of the CapEx will be towards Sintex only in the next 2 years?

[Vipul Mathur, executive]

DI Pipe expansion, I am sure you understood, it is a necessity and it was a special necessity. It is a good necessity to be honest. I would not like to say that as a CapEx. It is something which is good, which has happened, and it is giving us an incremental opportunity to capitalize upon it. So I think for DI Pipe expansion, you will understand that. But in this financial year, apart from this, I don't think so that we are going to do any major capital investment anywhere.

[Siddharth Shah, analyst]

Sure, sir. Sir, my second question was on ABG Shipyard. So by -- for that [ offset ] also any -- by when can we expect some plans? And second is how much is the scrap still lying with us? If you can quantify that value or quantity, that would be very helpful.

[Vipul Mathur, executive]

So as, Siddharth, you would have -- I have already shared in the past as well, ABG is a very strategic investment for us, number one. That continues to be the case. It is a very strategic investment for us, number one. It is complete -- it will get completely monetized, let's say, by the end of this particular year. We -- all that was their scrap and everything is all getting liquidated. I think so 50% of that got already liquidated, 50% of that will happen. So the complete liquidation process should get over by the end of this particular year, which means that I would have a very high-quality strategic asset in my hand, number one, with -- at low cost or stress on my balance sheet.

What we are going to -- we are very clear that at this point in time, we are not going to do any major CapEx in ABG Shipyard for a simple reason, that we are trying to -- we are very, very mindful and cautious of our capital allocation. And we are seeing the tractions happening in the Sintex. We are seeing the tractions happening on the DI side of it, which is where we are currently primarily focusing our energies on.

[Siddharth Shah, analyst]

Sure, sir. Sir, last question is on overall debt guidance. I think we are on track to become [indiscernible] very soon now because the [ 50% of scrap ] is still there and the EBITDA position also is very strong. And we are not doing any major CapEx. So is there any guidance on the debt part or the [indiscernible] certainly significant cash flows, how will that be distributed? Any guidance on that, sir?

[Vipul Mathur, executive]

Siddharth, we have given a very clear guidance at the start of the year. All what I wanted to give the comfort that we are absolutely on track with respect to that. And the numbers are clearly reflecting that. We will stay to our guidance, and we are confident of achieving those numbers.

[Operator]

The next question is from the line of Ashutosh Somani from JM Financial.

[Ashutosh Somani, analyst]

Great set of numbers. So just a quick question on the thought process around the sale in -- stake sale in the Saudi Arabian business. Given that there's a strong order book there and the business is generally doing well, we have sold some stake. So what is the current stake and any future guidance towards that stake?

[Vipul Mathur, executive]

So Ashutosh, I think so probably it is a little bit of a lack of communication or understanding, number one. There is no stake sale, which has happened in Saudi. We have not done any stake sale there. I would -- Percy, can you just explain the whole transaction so that you can kindly bring the clarity on the subject, please?

[Percy Birdy, executive]

Sure. So Ashutosh, very quickly, our economic interest of Welspun in the Saudi entity, as we call it EPIC, it remains the same. Earlier also it was 31.5 percentage. And even after this transaction, which we have released now, it remains the same at 31.5 percentage economic interest.

The only thing that has changed is we have the holding through a Mauritius company. So India own 90% of the Mauritius company, and we had a minority investor in the Mauritius holding company. That investor has exited from the Mauritius company, okay? So now that investor is out of Mauritius and he is having a direct stake in the East Pipes Saudi company.

So very simply put, there is no economic interest change for us. It's a cash flow neutral transaction for us. However, in accounting terms, we have to follow the accounting standards. And that's why in the books of Mauritius, there is a gain that has been accounted, which you are seeing it in the P&L as well. And the share buyback has been done for that 10% minority shareholder in the Mauritius. This is all coming in our notes to accounts, which is just below the results. But suffice it to say, from an investor/analyst point of view, our economic interest remains the same at 31.5 percentage, no change.

[Operator]

Next question is from the line of Sumangal Nevatia from Kotak Securities.

[Sumangal Nevatia, analyst]

Congratulations on good set of numbers. My first question is with respect to the DI market. It's relatively a new business area for us. So I just want to understand how is the acceptance of our product? How is the competition? And are we qualifying for all the tenders? Overall, how are we placed in the market currently? And how are we looking at it over the next 2, 3 years?

[Vipul Mathur, executive]

Sumangal, I think so that's an interesting question, number one. See, DI market, as you know, is growing exponentially at this point in time. And all the indicators are very clear that this is going to be the play for the next 5 to 7 years, if not more. Right now, all what we are seeing is Nal se Jal scheme, Har Ghar Se -- Har Ghar Nal se Jal scheme. Then it is being followed by Amrut 2 where right now it is in the rural part of it, then it will be in the urban part of it and, as any matured economy, will have -- eventually it will move towards seaways, and then it should also move towards wastewater treatment.

So this is -- I think, so this is the road map where -- in which all the DI pipes are going to be utilized. And I think -- and this is our confidence that it is going to stay for the next 5 to 7, 10 years' time.

Coming back to our production, coming back to our acceptabilities, I think so it's a very clear testimony of 250,000 tonnes of an order backlog of almost INR 2,000 crores is a very clear indication that the product has been accepted well. More than the product, it is the customer service which is very well appreciated. And that comes with Welspun standards.

This industry has been fairly fragmented. The servicing in this industry has been suboptimal, at subpar level. I think so. But with Welspun facilities coming up, that things have eased out and the serviceability has improved. So we are -- and the good part is it is -- we are dealing with the same set of the customers, where our principal company, the pipe company is also dealing with.

So in terms of the regions, we are seeing a huge traction of business opportunity and potential coming up in Madhya Pradesh and Rajasthan, which are clearly the addressable markets when we are located in Gujarat. So we feel very bullish about it, and that is the reason. And our acceptance has been good. The product has been good. The service has been good and the order backlog has been good. So that is giving us a tremendous amount of confidence that we should now also bridge the mismatch of our hot metal versus DI capacity, which we just announced yesterday.

[Sumangal Nevatia, analyst]

Understood, sir. And, sir, is it possible to explain, I mean, are there very low [ actions ] in this because we've seen a few players entering and ramping up capacities because of the very strong outlook? So one is that.

And second, I understand this business requires -- the ramp-up is relatively more gradual. So is it possible to share what sort of volumes are we looking at FY '24, '25, '26? Some sort of guidance to appreciate the outlook?

[Vipul Mathur, executive]

So you're right. I mean, I think the competitive landscape has also gone intense. There's no doubt about it. New capacities are getting added. But it's very -- it's also a clear reflection between the supply and the demand mismatch. And that is where our ramp-ups are happening, number one.

Number two, in terms of the guidance, we are -- currently, our installed capacity is almost close to 400,000 tonnes. Our first endeavor -- and our endeavor is to ramp up to that particular level. So I think so we should -- in the next 3 years' time, let's say, in the next 20 -- let's say, 24 to 30 months' time, we should be there in terms of our 100% capacity, including our expanded capacity.

[Sumangal Nevatia, analyst]

Okay. And sir, last one, is it...

[Vipul Mathur, executive]

With the full impact of extended -- enhanced capacity in FY 2026.

[Sumangal Nevatia, analyst]

Got it. And sir, just last one, is it possible to share some unit metrics? I mean what sort of say, EBITDA per tonne or something do we make in this business?

[Vipul Mathur, executive]

It's -- I mean we generally don't do that. And it is -- but nevertheless, I don't -- you guys are veteran of this particular industry. You analyze all the DI manufacturers, which are stand-alone DIP manufacturers. For you to do a reversal calculation and working should not be very difficult. And whatever those numbers are, we are there, if not better from them.

[Operator]

The next question is from the line of Abhishek Ghosh from DSP Securities.

[Abhishek Ghosh, analyst]

Sir, just a couple of questions on the U.S. part of it. While you spoke about strong prospects as far as demand is concerned. But in that region, are you seeing new supply coming in? Or that is pretty much stagnant? How is the supply addition as far as the U.S. market is concerned?

[Vipul Mathur, executive]

Abhishek, that's a good question. Actually, what has happened in U.S. is that while the demand seems very consistent but there seems to be a consolidation which seems to be happening in the industry there. There were 2 large players which have now exited the business. And these are all public information, so I don't mind sharing. Number one was if you would see, there was a company called [ Stot ], which was producing large diameter spiral pipes. They have completely exited this business.

Number two, we have a company called Evraz, which was a Russian-owned entity in Canada, and they have a great influence in the North American market, including U.S. So for the reasons, they are completely become dormant. So there is a little -- there is a significant consolidation which is happening there. Two of the established players have walked away.

And on the growth side of it, the growth's still there. So I think so it is a great situation to be in U.S. There are great prospects around that. But as you also know, Abhishek, that it's a project business, right? Project business acquired bidding, competitiveness, all that, and then securing that business, that element of work is yet to be done for our new business and our business continuity out there.

But I'm sure that we have a track record. You have seen our performance out there. We have done some very signature projects out there in comfort and the confidence of all the E&P players or the midstream players on what does Welspun Corp brings on the table. So I'm sure though all those things are extremely positive. And we are very optimistic that we will continue to see a growth in the U.S. market, both in the U.S. market as well as in Welspun Corp.

[Abhishek Ghosh, analyst]

That's helpful. Sir, just coming to the Saudi part of the -- sorry, not Saudi, but the recent export orders that you have announced, that you have won off almost about 61,000 tonnes on the Middle East. I just wanted to get some clarity around it in terms of is it for oil and gas or water? And is it also emanating from the fact that there is a very strong demand that you're seeing in the export side of it, and that's why beyond EPIC in the Middle East, you will cater to that market through the Indian operations? Is that the way you're looking at it? Some thoughts there will be helpful, sir.

[Vipul Mathur, executive]

So Abhishek, first and foremost, I would like to correct you. This 61,000 tonnes of an order is not for our Saudi entity. This is not for EPIC. This order...

[Abhishek Ghosh, analyst]

No, I understand. Yes, sir. That's what I said, it is from the Indian operations. So that's what I said, yes.

[Vipul Mathur, executive]

Yes. This is for our Indian operations, number one.

[Abhishek Ghosh, analyst]

Correct.

[Vipul Mathur, executive]

Number two, this is for oil and gas application. This is destined for a country in Middle East and it is for gas application. What I'm trying to say, well, this project is a very unique project in itself. It is one of the most stringent specifications under which this project has been awarded to us. That if -- until yesterday, Welspun was one of the top 3 mills in the world. Post execution of this order, I will not be hesitant to say that Welspun would be the #1 mill in the world. So that is the criticality of this particular order and that is the trust the customer and the client have in terms of our capability to execute this particular order. So it's a very landmark signature order what we have. Of course, when it will come to execution, we will talk about that a lot more there.

From a demand perspective, I think so we are seeing great demand at this point in time in exports for the simple reason that, a, you see the prices of the oil are pretty much range bound. They are all between -- anything between $80 to $100, number one. If you analyze any report, they are all suggesting that this price is going to be a range bound for a foreseeable future.

Number three, the demand for the gas is going to only grow from here. So these 2 factors put together are clearly indicating that both oil demand and gas demand and correspondingly the pipelines for these is going to stay strong. And that is what is getting clearly reflected in the bid book and the projects what we are seeing, which are coming up on the table.

As I mentioned, we are seeing a great demand coming up in Middle East at this point in time, Southeast Asia and Australasia region. And these are the regions where India has a dominant position and Welspun has a dominant position. So we are trying to -- we will -- we have been successful in capitalizing on those opportunities. And looking at this new demand, which is going to come up, I'm sure we will get our share out of that as well.

[Abhishek Ghosh, analyst]

Okay. Sir, just 2 other questions. In terms of oil and gas demand is very strong. But like for Saudi, you mentioned there is a lot of thrust on water desalination and other things also. Are you also seeing that kind of order inflow for export markets for the Indian operations at least beyond oil and gas or water also coming through? Or any thoughts there, sir?

[Vipul Mathur, executive]

I don't think so. I do not think that there will be a great potential for any export of pipes for water application anywhere because water business is purely a domesticated business. It has to be addressed domestically. Saudi also, if you see, they're -- bearing 1 or 2 projects in which the pipes have been exported and that too by default, almost 95% of the demand which is being catered within Saudi Arabia is through our domestic producer only. So that is the case everywhere. So I do not answer your question that do we see any demand that the pipes will get export for water? The answer is no.

However, for the oil and gas, as I said earlier, the demand stays very, very strong in all the 3 regions Australasia, Southeast Asia and Middle East. There, we will see multiple opportunities coming up. And as an industry, everyone seems to be -- we'll get benefited out of that.

[Abhishek Ghosh, analyst]

Great, sir. Sir, just one last question in terms of given the demand buoyancy that one is seeing around oil and gas globally. India also, you have good oil and gas, water projects coming through. Would you need one more carbon steel kind of capacity addition? Any thoughts on that? Or it's still some time away?

[Vipul Mathur, executive]

Addition of what?

[Abhishek Ghosh, analyst]

Carbon steel capacity, sir?

[Vipul Mathur, executive]

No, no, I don't think so. There is sufficient capacity which is available at this point in time. I don't see that there would be any need for any capacity addition. Some relocation of capacity here and there can happen. But addition is not -- definitely not something which is going to help or is the need of the hour, rather.

[Operator]

Next question is from the line of Sailesh Raja from B&K Securities.

[Sailesh Raja, analyst]

My question is on both DI and [ Pipe Solutions ]. We'll start with DI. Sir, we are the only DI player having manufacturing facility in the western market. And our target market is not central region. So could you please talk about demand/supply dynamic specific to these 2 regions? Every year, on an average, how much investment is happening from government side? And what are the key upcoming projects we are getting on to get more orders? Also, how competitive we are in terms of pricing over somebody bringing products from the Eastern region? So basically, want to know what is our right to win more deals.

[Vipul Mathur, executive]

Thanks, Sailesh. Sailesh, your first question with respect to demand. As I mentioned, we are seeing demand across pan-India. Let's say there is a huge demand in the West Central in the northern part of India, which is our addressable market. There is a huge demand, which is there is also in the South, which is not our primary area of focus at this point in time and also the East, which we are right now overlooking. For a simple reason that when the demand in our addressable area is so very significant, why should I be cannibalizing on that trade and taking a punt on my net sales realization? So we are very clear and very focused in our area of influence, number one.

As regards to the numbers, just to give you an example, in Madhya Pradesh itself, at this point in time, there is a crystallized demand of more than -- almost close to 2 million tonnes, right? As against that, only 1/2 of the pipes have been procured at this point or, let's say, awarded. Out of that 1/2, only 30% of them are converted into an order and are under the execution phase. So you can well imagine, there is a 2 million tonnes of demand in Madhya Pradesh, only 1/2 of them or let's say, 1 million tonne is being awarded. Out of that 1 million tonne, only to the EPCs, number one. And then out of that, only -- only 600,000, 700,000 tonnes has got converted into business. Out of that, only 50%, 300,000, 400,000 tonnes has been executed.

So if you see the whole value chain you can very well imagine that what is the upside which is available and the period of that upside. Nothing more will happen. This demand will be there for the next 2, 3 years to even finish up this. This is the part one. Then there are multiple projects, again, which are going to come up. Same is the case in Rajasthan. So we are very, very optimistic and confident and the demand itself is supporting this optimism and confidence. There's Gujarat, Madhya Pradesh, Maharashtra and Rajasthan itself will be generating so much of a demand to keep us busy for a significantly long time.

Secondly, your question was with respect to the competitive landscape. Yes, the competitive landscape is getting intense. There's no doubt about it. People are adding capacities and they're adding capacities because in every -- this is the case in every region. This is also happening in East. This is also happening in the South. So everyone is seeing that capacity, everyone is basically trying to optimize their -- the maximize their production and capitalize upon this opportunity.

Now whether there would be any major transgressing which will happen. What is the interest of a company in the East or in the South to come and sell in West or in Central where he has a full market in his own region itself? So I'm not seeing that is going to happen. It could happen in a few isolated cases for some strategic reasoning. But are there -- is there going to be a major, major transgression from industries in the East and the South to come in Central or the West or the companies in the West will go in East and the South? The answer is no. I don't see that because it doesn't make any economic sense.

[Sailesh Raja, analyst]

Okay. Okay. That makes sense, sir. My second question on Sintex. So as you see, my native is down south small town near Madurai. So last month, I noticed few trucks carrying full of Sintex tanks since we are aggressively selling the volumes in every nook and corner. Great efforts to your team. So what more steps we are taking to increase the scale of this particular division? Can you explain in a little more detail? And within the existing product, so how fast we can fill at least 50% of the total capacity?

First half, we have reported West 7,100 tonnes, so how much you are targeting in the current financial year and next financial year? This is my first part of question in Sintex.

[Vipul Mathur, executive]

Okay. Sailesh, first and foremost, it's always good to hear from an outside-in perspective that you could see Sintex tanks in Madurai. So at least what we are telling you that we are making aggressive efforts on the ground, at least it's a clear testimony to that. It's very clear. It's a very concentrated effort is currently being made at this point in time to make our presence trend on a pan-India basis.

We, Sintex, as a brand, always had that presence. It was only in the last few years because of the financial scarcity, funds scarcity, this market share went down. Our strategy, our -- all the efforts at this point in time, as I have mentioned earlier as well, is now towards making our presence, reenergizing the networks and all that. And it is this exercise will continue to go, number one.

The way -- the moment -- the way this -- our expansion will happen, right? The way we will continue to do -- expand our market share, the direct resultant of that will be that our throughput will also keep on increasing. I think so. We are very clear. We have given -- we have a very clear-cut business plan for the year at this point in time. We are absolutely on track in respect of achieving our annual business plan. We want to be -- we are highly optimistic and yet cautious because we want to build this company for a long-term play. We are not a company in a hurry at this point in time. We want to build -- rebuild this company, brick by brick, block by block with very strong and sound fundamentals.

And all extra in terms of reenergizing the network, addressing everything, the plumbers or the retail network, what sort of a policy should we there? How do we -- how can we -- how can we make the consumer feel the benefit of Sintex? These are all fundamental questions, which we are trying to address at this point in time. And you will have to understand it is a journey. We have embarked on this journey. The 2 quarters have been -- it's very clear to us that it is -- there is a big pull around it. And I think so we will continue to work on that.

So kindly give us more time in terms of giving you specific that what I am going to do in the second year and the third year. Let us have some breathing space. Let us have some time. But I can assure you one thing, that all steps are now being taken to bring this company absolutely back on track. And I think to this 2-quarter performance itself is a clear testimony that we are on the right track.

[Sailesh Raja, analyst]

Okay. What is the mainly [ depreciation ] figure in Sintex and what is the current capital employed, including working capital, sir?

[Vipul Mathur, executive]

I'm sorry, come again?

[Sailesh Raja, analyst]

I just wanted to know what is the current ROCE in the division at 20% utilization level. So what is the yearly depreciation figure and current capital employed in this division, including working capital?

[Vipul Mathur, executive]

Sailesh, what we can do, we can take this a little offline. I think so I have taken a note of you. My people will reach out to you to give out these numbers. They may not be so handy available with me at this point in time.

[Operator]

The next question is from the line of Vikash Singh from PhillipCapital.

[Vikash Singh, analyst]

Sir, I just want to understand, given the Saudi outlook is very strong and many of the mills there are fully booked for a couple of years, would the new orders inflow would be serviced by India and Indian players would benefit in current scenario? Or is it there is still more capacity available in that region? So just wanted to understand that perspective.

[Vipul Mathur, executive]

Vikash, one thing you have to very clearly understand is that Saudi is a very, very mature market, number one. Now they have -- they operate within their guiding principles. One of their key guiding principle at this point in time is their domestic content, which means that any business which is going to happen in Saudi, has to happen domestically. So that is the case in this pipe business also.

So while the business are -- there are multiple opportunities and potentials there, but the business will only be meant for the established local player. It is not going to happen that it is going to get outside and people from outside that want to supply that. It will be very adventurous. It is not going to happen, number one.

And when I say that they are a mature market, they completely calibrate that what are the capacities available, when do they require their projects. So basis that they are making their award decision. There, the government or the buying authorities, which are primarily 2, which is the water is SWCC and the oil and gas is Aramco, these are organizations which completely analyze before they make any procurement decisions.

So they are -- all that, if they have given us a clear visibility of an order book for 2 to 3 years' time, it is with a broad consensus that this is how the projects are going to get executed. This is how you need to deliver the pipe. This is how things will work out. So it is not that everyone is working in isolation. That's not the case. That's the beauty of a mature economy like Saudi. It's a very synchronized and a calibrated effort which goes there.

[Vikash Singh, analyst]

Understood, sir. And sir, just one more question. What is our India order book as is as of now, out of 611 Kt, given we are heading for election year? Post-election there, usually, we have seen a little bit of dull period. So just needed your thought process on that, how we plan to utilize post-election capacity? Obviously, the DI would remain good, but what about our [indiscernible] capabilities?

[Vipul Mathur, executive]

So Vikash, our -- today, our unexecuted order book is close to 370-odd tonnes here in India, number one, which will -- which is good enough for a couple of quarters.

One thing which will not -- and I completely understand your point that there being an election year, but election year has nothing to do with exports either way. So we are seeing a significant traction on the export side of it. So that business stays completely insulated, and that will continue to grow.

All that what would have is the minor disturbance which might -- which may happen is in the domestic market and especially in the water sector because oil and gas is also agnostic to anything. It is only the water sector, which is a state subject if you see that they generally get impacted.

But if you see from a timing perspective, our presence is in Gujarat, our presence is in Madhya Pradesh, our presence is in Karnataka, only the state elections would be done by the time the national elections would come up. So we are not anticipating any major disturbance because of the national elections which are going to come, and they might impact our domestic business. That don't -- so I hope you understood what I'm saying. A, export doesn't get impacted. The oil and gas business, domestic does not get impacted. All what gets impacted, to some extent, is the water business. And national elections, by the time they will happen, all the other state elections, the disruption would have been over by that time in the states where we are active. So pretty much, I do -- we are not forcing or forecasting that things are going to go too south at this point in our domestic business.

[Operator]

The next question is from the line of Miraj from Arihant Capital.

[Miraj Shah, analyst]

Sir, I just had a couple of questions. Firstly, if you could just give us the volume breakup between India and U.S.A. for the quarter?

And second, on the same path is that have we started the carbon capture project in U.S.A.?

[Vipul Mathur, executive]

Right. So let me address the carbon capture first, while we give you the breakup of the order. As I said, the order book is close to 610,000 tonnes. We have 370,000 tonnes in India and almost 240,000-odd-tonnes unexecuted in America at this point in time. So that's the pending order book. And in terms of the -- what we would have done in this quarter, we can -- we'll just share it.

But in terms of carbon capture, I think, one, carbon capture pipeline in U.S. per se, is seeing, at this point in time, a little bit of a headwind. What is happening? Carbon capture as a project out there is -- requires a massive right-of-way acquisitions. Now the difference there is that in the oil and gas, when you do a right-of-way acquisition for the oil and gas, you are protected under an Eminent Domain Act there, which means that the government will intervene into that and will ensure that you will get a free right-of-way access. So that's the Eminent Domain Act under which it gets covered.

Carbon capture pipelines or carbon capture, when they was being discussed, I think [ predominantly ] the linkage to Eminent Domain Act is yet not established, which means all the companies which are currently in the process of executing carbon capture pipeline are seeing certain challenges in certain areas in terms of getting the ROW.

So to that extent, the carbon capture projects, existing ones and the future ones, have slowed down a bit there. But it's just a matter of time. They have understood that what is the policy into the whole system. And it is such a big thing for them, that there is such a huge incentive around that, that which the government of -- which is the U.S. government is putting around that, it is a matter of a legislation, which they have to clear it up. I think so it will be a matter of time when these things will -- this issue will get interest.

But as we speak, there is definitely a slowdown in terms of carbon capture pipeline projects, what were being discussed. But I believe that it is more of a legislative issue and it should get plugged up very soon.

[Miraj Shah, analyst]

Understood, sir. And the volumes for India, U.S. and Saudi also. Meanwhile, I had another question. This quarter, we did a sustainable DI Pipe volume of 15,000 tonnes per month. That is how you had guided earlier. So going ahead, do we still expect to maintain it at 15,000 tonnes per month for DI Pipes? Or do we think that we can ramp up further? And for the team, if you could give some highlight on what we'll do in TMT? What would be the sustainable output per quarter over there?

[Vipul Mathur, executive]

So, on the DI side of it, I think it's a journey, as I said. We are ramping up on a quarter-on-quarter basis or rather, a month-on-month basis I think. So this quarter, quarter 3, we will be at a very different level. Our endeavor is to get to our peak capacity of 30,000 tonnes per month. That's what we are aiming for. And I'm very sure that by the end of this financial year, we will be able to reach to that production capacity. So you will -- these numbers will come on a month-on-month basis, Miraj, to be very clear. And even for October, I think the month which has passed by, I think that we are seeing that type of growth which is happening. So that will happen.

On the TMT side of it, we are going to be anything between 15,000 to 20,000 tonnes a month production, that is what we are intending to do. We have only reached to around 12,000 to 13,000 tonnes. I think that we will reach toward peak capacity in the next 1 or 2 months. And that is where we would like to sustain ourselves.

[Miraj Shah, analyst]

Understood, right. Got that. And sir, my final question, as the Saudi Arabia subsidiary's also doing good, Welspun Specialty's also doing good. The outlook for them going ahead is also exceptional. So any thoughts? We are also bringing our net debt down and we also guided to bring it down. But any thoughts on increasing our stake in these entities?

[Vipul Mathur, executive]

Not really at this point in time. I mean, see, today, we are still the largest shareholder in EPIC, and we will continue to be that way, number one. And I think so Mr. Percy also clarified about that little confusion which happened that we divested. No, we are -- neither we are divesting at this point in time. We are the largest shareholder. We will continue to be the largest shareholder at this point in time, number one.

Number two, in respect of WSSL, we are still the majority shareholders. We'll continue to be the majority shareholders there. So we are neither increasing nor decreasing. Our focus is more in terms of bringing -- scaling of these companies to the next level altogether. And you'll see all the companies, WSSL, when the -- since the Welspun Corp has come in, the focus has been absolutely in terms of its growth, growth and growth, and you are seeing that in the last 6 quarters, how they have been performing. Our focus will continue to be for the growth, earnings and rewarding our people.

[Miraj Shah, analyst]

Understood. Sir, on the inventory side, we've meaningfully brought down our inventory levels to almost INR 3,700 crores from INR 5,700 crores in -- on 31st March. So right now, what would be the breakup between segments for inventory? I mean the U.S. would be a major chunk, right, the inventory? And if you could just throw some light on what is the breakdown? And going ahead, will it come down? Or will it maintain -- will it be maintained every quarter at this level for executing further orders?

[Vipul Mathur, executive]

On 31st of March, we have seen a very inflated inventory because -- and most of it was sitting in the U.S. And -- but it was a paid-up inventory. So as we are executing those orders, right, that is where the inventories are coming down. And as the orders are -- and over the next 2 quarters, they will get executed, you will see a further reduction in the inventory level in the U.S. side of it.

In terms of inventory at the India level, I think so it is very, very manageable. It is well controlled at this point in time. So in subsequent quarters, you will only see a reduction in the inventory level from what you are seeing today.

[Miraj Shah, analyst]

Understood, right. And sir, on the Sintex side, our current utilization is 20%, roughly 20% we did in the 2 quarters that went by [indiscernible] tonnes in volume. So what would we expect to be a sustainable level in terms of volume for full year?

[Vipul Mathur, executive]

Sintex, it is -- you have to -- we are restarting the whole process. We do not want -- we want to restart this process with sound fundamentals, right? So that is why, as I said earlier, that we are ramping it up very slow -- we are gradually -- not slowly, gradually, but steadily. That's what the principle we have embarked upon this exercise.

Gentlemen, you guys have to be a little patient in terms of Sintex. Everyone understands it's a great company. It has a great product offering. It is a brand. It has a product recall. And it is only going to grow from here. All what we are trying to do is to bring this growth in a very, very steady manner. And so these are a little early days in terms of capacity utilizations and all that stuff. These capacity utilizations are only going to grow and grow from here.

But correspondingly, the dealer network, the distribution network, the plumber network, the policy, the branding, the consumer mindset, these are the big last ticket areas we are emphasizing and working on. If that pull -- if that trust comes back, then ramping up this production capacity is in our hand either way. We can do it very, very quickly. But that ecosystem, which will facilitate this ramp-up and sustain this ramp-up for the longer duration of time, I think so, that is where our strong emphasis and focus at this point in time is. This is what we have been doing for the last 2 quarters. And as I said, this is what we will continue to do for next 2 quarters more. Miraj?

[Operator]

Sorry, the current participant has left the queue. The next question is from the line of Abhishek Ghosh from DSP.

[Abhishek Ghosh, analyst]

Sir, just one follow-up question. Just through your presentation, we were looking through your active bid book on the line pipes part of it, which in 2Q FY '24 has seen meaningful improvement. So is it -- you've kind of hinted at it in terms of exports being strong and other things, but any comments there, sir? Is it only export led or India oil and gas or water? Just some thoughts there will be helpful, sir.

[Vipul Mathur, executive]

It is primarily, export led. Primarily export led. India business is fairly static, Abhishek. India oil and gas business is static. India CD business will see exponential growth. India water business will grow. But India oil and gas business is pretty much static. This bid book and what you are seeing is basically export led. Huge traction we are seeing across.

[Operator]

Ladies and gentlemen, that was the last question for today. I now hand the conference over to Vikash Singh for closing comments.

[Vikash Singh, analyst]

On behalf of PhillipCapital, I would like to thank Welspun Corp for giving us the opportunity to host them.

I would hand over the call to management for any closing comments. Over to you, sir.

[Vipul Mathur, executive]

Thank you, Vikash. Thank you very much for hosting this call today, and thank you very much to all the participants who took the time out to hear to us and giving us the chance to answer all your questions.

I just want to reiterate that Welspun Corp is absolutely on a growth journey. All our entities, which are -- the pipe entities, which are in India, Saudi Arabia or the U.S. are showing very strong performances, and they will continue to show strong performance.

Our DI business is ramping up beautifully well. The market is into a tailwind at this point in time and we are trying to capitalize upon that.

Our steel business is doing phenomenally well. And more importantly, our [Foreign Language]

[Operator]

Sir, please go ahead.

[Vipul Mathur, executive]

And more importantly, our Sintex business is showing a great brand recall and a great pull. I think so with all these things right, Welspun Corp is sitting at a cusp of significant growth in future, and our results and our performance is a testimony to that.

The only caveat is that on one side, we have a B2C business, and on the other side, we still also have a B2B business, the project business. And project business has their own element of uncertainties, which you understand. But given that we are in the pull positions in most of the economies, we will be able to -- and our track record suggests that we have been able to pull up things.

So we are absolutely confident that we will be able to perform and give you very stellar results in subsequent quarters to come. And thank you very much for your interest and patience and your -- and we wish you the very best. Thank you.

Vikash?

[Operator]

Thank you. On behalf of PhillipCapital India Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.