Hariom Pipe Industries Ltd

It is quite difficult for us to classify this way, unless and until segmental reporting.

Thank you. The next question is from the line of Nitesh Dutt from Berman Capital. Please go ahead.

So, you want to segregate asking me the individual product wise EBITDA?

Yes, EBITDA per tonne, just a broad range would also be okay, I just wanted to get an idea.

For MS tubes you can take it up around Rs. 8,600 to Rs. 8,650. All the figures I am telling you, exact figures I cannot say because it is not audited. It's a limited report, but the figure is almost similar range, Rs. 8,600 you can take from MS tubes, scaffolding you can take Rs. 11,500. And GP pipe is again Rs. 6,500 to Rs. 6,800, for this quarter.

Okay. Sir, GP pipes, my understanding is you are not as backward integrated as you are in MS tubes, because you have to buy HR coils and then make pipe from GP coil. So how are you making such high EBITDA per tonne there as well because I think I believe converters in the industry typically make Rs. 3,000 in MS tubes, if I am not wrong.

Yes, in MS tubes converter is generating Rs. 3,000 as we are in MS tubes, as we have the backward integration so in furnace also we are having certain EBITDA, in rolling mills also we are having certain EBITDA. And in iron ore to sponge iron manufacturing also we are having certain EBITDA. So altogether we are getting Rs. 8,500 plus EBITDA in MS pipes, despite this market scenario. And as far as GP pipe and GP coil question, if you check that the figure is Rs. 6,500 to Rs. 8,500 means almost Rs. 2,000 lower than the MS tubes. That is why, as our raw material source we are purchasing from the outside, therefore our Rs. 2,000 is lesser than the MS tubes. And from the market why we are getting better margin because of we are producing 0.4 mm thickness coil also from our tandem mill. And as I said earlier also that our coil product and other product also, apart from GP pipe, that is used for specialized steel engineering sector

Page 13 of 19 where we are getting better margin in terms of realization. So that allows us blended to come this much.

Got it, thanks for that. Just one more question, sir. In the industry, primary players, right, people who purchase HR coils directly from steel producers and then make MS pipes, do you price your products slightly lower than those people or is your pricing independent of their pricing?

So, adding on to your question, Mr. Nitesh, basically our performance is based on to dealer networking and all, it's not the distributors. So the pricing part, we get a better realization, that's the whole thing what we do. Got it. Thanks.

Thank you. The next question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital. Please go ahead.

Good afternoon, sir. And first of all, congratulations on maintaining the volume growth even in such difficult times. I wanted to understand your progress on the -- Sorry to interrupt, Mr. Sahil, I would request you to please use your handset. Yes, is this better? Yes, sir.

Yes. Thank you for the opportunity and congratulations for maintaining a strong volume growth in difficult times. My first question is, can you help us understand the progress on some of your B2B side contracts? I mean, you were working on signing a few new customers and contracts, any progress on that front, especially on the few other government side also, any progress on that front?

So basically, for B2B, GP coils and others, during the quarter and the last nine months our total volume was 10% you can say directly GP coils, in terms of volume almost 17,260 metric tonnes directly sold to B2B.

Okay. And on the total volumes, we are still at 15% of sales to B2B? Yes.

Page 14 of 19 Okay, okay. Secondly, would you be able to help us understand how the working capital cycle will be reduced, especially on the inventory days and on the payable days, please?

So basically, sir, in terms of raw material, if you check with the raw material, so last year versus this year almost September '24 or you can say last nine months, automatically it is coming down, overall raw material cycle days, it is coming down, the consumable days is coming down to almost four to five days. And similarly, finished goods is also coming down. And raw material segment also remains one to two days difference. Overall, net working capital days to sales if you are taking, it is coming down from the last financial year to this financial year last nine months, it's coming down to almost 12 to 14 days. And we are managing this cycle continuously.

In terms of receivables we are approaching dealer finance very much through very much PSU banks, private banks to onboard our dealer where we are getting our data holding days is coming down, and it is our volume of sales. And at the same time, we are taking credit from the manufacturer, direct suppliers, primary steel producers so that our working capital holding operating cash flow becomes strengthened.

Got it, sir. Thank you so much and all the best.

Thank you. The next question is from the line of Richa Chaudhry from Electrum PMS. Please go ahead.

Sir, in the last call we had given a guidance of roughly 2,70,000 tonnes of volume, so do we see that happening considering the run rate is roughly around 55,000 to 60,000 per like quarter? So do we see quarter four to be very strong?

Quarter four is strong, and we are expecting, as I earlier also clarified that 20% growth in volume is there, and from last financial year to this financial year our total volume of growth will be 20%. And it is along with the proportionate increase in PAT volume also in terms. And moreover, in terms of absolute figure in volume, so 2,70,000 whatever you said, it is little bit difficult but somewhere around 2,38,000 to 2,40,000 will be reached.

Okay. And also sir, could you just mention how much is the debt levels and cash on the balance sheet as of like the last quarter?

Debt level already I have clarified that the total debt, long term and short term, is Rs. 409 crores and total outside liability is Rs. 516 crores, and TOL versus TNW is almost 0.9, it is below 1.

And one last clarification, do we see any capacity expansion happening on the GP side for the next like two years?

In GP side, no. First of all, we are using our existing capacity to exhaust our existing capacity, and then execute it in phased basis. We align capacity increase with the market demand and capital availability. We have the long term plans for utilizing this land and scalable capacity expansion.

Page 15 of 19 Sir, right now the GP capacity is 3 lakh tonnes, right? Yes. Okay, thank you.

Thank you. The next question is from the line of Rahil Shah from Crown Capital. Please go ahead. Mr. Rahil, I would request you to please use your handset. Am I audible? I am on my handset.

Yes, sir. I would request you to please speak a little louder. Thank you.

Okay. Yes, sir, just one question. I believe it's the same on the volume front. So you said you expect to close the year with 2.38 lakh tonnes, correct? Yes.

Can we cover the gap which we are missing out this year in the next financially year '26 and reach 3 lakh tonnes, is that our target aspiration?

For the next financial year you are talking about 3 lakh metric tonnes, right?

Yes, which we were kind of targeting for FY '25 but we have fallen short.

For FY '26 we can take this target for 3 lakh metric tonnes. So here and there, 10% plus or minus will be there because in the last financial year we can only see the volume only we can work on that and definitely we will be targeting and we will be achieving.

And the average selling price which is now gradually moving upwards and expected to continue ahead as well, what sort of bracket one can assume for the whole year? I mean, of course you cannot predict prices, but like where do you expect them to be?

At least if it is coming to the line of FY '22 performance then the price was almost 62,000 overall, all the value-added products together. Then you can say it is nothing like it. We are always expecting that kind of value again we will be getting, but let's see what market will give.

Okay, okay. Fair enough. Thank you and all the best.

Thank you. The next question is from the line of Pankaj Motvani from Equirus Wealth. Please go ahead.

Page 16 of 19 Thank you for the opportunity. My question was on the inventory part, so I feel like there is a significant amount of inventory in your books, and with the decline in the steel prices what is the quantum of inventory losses you have booked in this quarter?

And also like despite these losses, like the gross margins of the company appears to be stable, if I see gross margins it is in the range of 24%, and sequentially in the September quarter it will also be in the same range, like 24%. So, I also want to understand like despite this decline in steep prices how are we able to maintain the gross margin?

So basically, raw material price fluctuations are a common challenge in the industry. However, we have effectively mitigated their impact through strategic procurement, bulk purchasing efficiencies and continuous process optimization. Our diversified product mix and agile pricing strategy have enabled us to maintain stable margins while staying competitive in a volatile market. Because of this strategy we have successfully maintained our EBITA margin which is almost 13.1% in Q3 FY '25 comparatively to 11.64% in the Q3 FY '24. So, our EBITDA for Q3 FY '25 was Rs. 39.63 crores, reflecting a 22% year-on-year growth. While for nine months FY '25 it reached Rs. 126.58 crores, making a 31% year-on-year increase. This demonstrates our ability to sustain profitability despite external cost pressure, reinforcing the strength of our operational efficiencies and strategic cost management. Apart from that, I would like to add that power cost, the power cost after the raw material is a major factor for any steel industries where we are able to manage the power cost in terms of almost of 32% reducing power cost. So which altogether allows us to maintain our margins.

So, a follow-up question on this, I just want to understand like do you have booked inventory losses in this quarter because of the decline in steel prices?

No, nothing is coming, because as we have purchased, we have entered into the steel business from past more than two decades. The inventory loss we are not holding any stocks via purchasing. Therefore the steel price, whether it is coming down or coming up, especially raw material, it's not impacted to our balance sheet. We have always maintained the cycle and always our finished goods is always pre-booked, which are lying in our factory premises. So therefore so far we have not booked any sort of inventory losses.

Like as per the accounting policy we have to have inventory on cost or allow it to get lower. So like I just want to understand like even with the decline in steel prices, so like we have to evaluate inventory at lower cost because of the accounting policies. So I just wanted your view on this like why we are not booking inventory losses?

No, actually if you see our P&L, we have not booked any inventory losses. And as I clearly explained you that due to the cost efficiency and our raw material cost also if you checked with our raw material cost also quarter-on-quarter basis, that is also remaining constant. Because we are not purchasing in a bulk mode and not dumping the raw material. Therefore, the fluctuation of rate or change of rate or lower of rate is not impacted our financial.

Page 17 of 19 In short, basically the sense of the management, how they manage their inventories incoming and outgoing. So the price fluctuation will not impact this and we are good to investment.

And moreover, we are able to pass on the cost difference in the market itself through our integrated process.

Okay. And my second question was on the EBITDA per tonne, like if you can see sequentially like EBITDA per tonne has declined from Rs. 7,600 in quarter one to around Rs. 7,500 in quarter two, and in this quarter it has declined to Rs. 6,900, like what are the key reasons for this decline?

And also, what is like way for the guidance in FY '26?

So basically, if you check with the realization price, that is when the realization price is quarter- on-quarter basis it is coming down on an average 5% to 6%, in terms of EBITDA decline mode is not in terms of that much of percentage, okay. So due to that our efficient operational capacity and efficient management skills we are able to manage the EBITDA. It is quite common thing that when the steel price is coming down, the realization price coming down, some absolute figure value, something is lower. But not at that much as the realization price is coming down from the market.

So you just pass on the prices to the customers, so like why are we fixing a decline in EBITDA?

We have passed on whatever the additional differences we pass on to our customers, because we are not dumping the raw material in our premises as well as the finished goods. Therefore, the price fluctuation is not impacting our profitability. And as far as future questions per tonne EBITDA, yes, we are very much optimistic. And whatever our earlier FY '22 also we are earning, that much of percentage of EBITDA again we are confident it will be coming, given by the market and demand also through the demand.

Okay. So like we can expect seeing EBITDA per tonne for the coming quarters?

Exactly specific numerical figure I cannot say, but yes, we are expecting positively.

Okay. And just one more question on the sponge iron status, so like what is the status of the plant? Regarding sponge iron expansion? Yes, yes.

So presently, just 20 days back we have got the CFO renewal approval from the Andhra Pradesh Pollution Control Board, now we have applied for the EC and as well as CAP to the Pollution Control Board. As you are aware that new government has formed, so last one and a half years, all the policy of the state government was not actively doing. Now after the new government now they have started to work functioning properly and we have already filed our application

Page 18 of 19 which is into the pipeline. Recent past we have got the CFO renewal process for the 100 TPD, and now we are again applying for another 100 TPD for CAC which is in pipeline. And we are expecting within month or two it will be received from the department. As and when we will receive we will start the construction for additional 100 TPD.

Thank you. The last question is from the line of Hrishit Jhaveri from PiSquare Investments. Please go ahead.

Thank you for the opportunity again. Sir wanted to highlight that do we plan any export plans in coming year, are we planning to expand our geographical presence outside India?

Sir, as I said earlier also, SKU wise we have a lot of product baskets addition in Hariom. So therefore, yes, very true, that option is also open for us and we are closely working on that also.

But when and how much it will happen, at present I have no practical data, so therefore I cannot disclose it. Otherwise, we are working closely on export market also.

Okay, sir. And do we need any significant CAPEX for at least next two to three years to reach that 4 lakh metric tonne goal? Because I think post FY '27 our capacity would be exhausted, so any strong CAPEX plans or not, sir?

So, CAPEX investment, particularly in the high margin product categories like galvanized pipes, already I told in the first discussion also, it will take some more time but we are doing in the phased manner, and no present CAPEX we are doing. Whatever into the pipeline we complete it first and then we have to expand as per the demand and requirement basis.

Okay. So no major CAPEX planned for next year at least?

At present we do not have, only on the basis of the demand and case manner we will be doing, disciplined with the financial management.

Okay. And just the last question, can you give a revenue or volume split up between MS tubes, GP and scaffolding as percentage of total Hariom's revenue? For Q3 '24?

As well as nine months if we can, it would be great. As well as nine months? Yes.

So basically for MS tubes and scaffolding, nine months total contributed in terms of volume 77,000, near to 77,000 roughly. And galvanized product is given almost 77,000. So both together at 77,000, 77,000 majorly.

Page 19 of 19 Okay. So GP will remain the greater part, which will be more than 50% for the coming years?

Yes, you can say that way also, GP means not only pipe, in terms of pipe, coil, and apart from GP cold rolled coil, pipes are there, and other product baskets are also there.

Okay, sir. Thank you so much and all the best, sir.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Sumanth Kumar from Motilal Oswal Financial Services for closing comments.

Sir, do you want to have a closing comment? No, we do not have any closing comment.

Okay. Thank you so much, sir. Thank you, everyone. Thank you all.

On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us. And you may now disconnect your line.