Jindal Saw Limited (JINDALSAW) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Jindal Soh Ltd's Q2FY27 Earnings Conference Call hosted by ICICI Securities Ltd. Please note, this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Vikas Singh from ICICI Security Ltd. Thank you and over to you, sir.

Thank you, Rilla. Good afternoon, everyone.

A wild and welcome to the Q2F527 conference call. On behalf of ICICI Securities, I would like to thank management for giving us the opportunity. From the management side, we have with us Mr. Narendra Mantri, Chief Operating and Financial Officer, Mr. Vinay Kumar Gupta, President and Head Treasury, and Mr. Rajiv Gupta, CDI Vice President and Corporate General. Now, speaking very much, I'll hand over the call to the management for their opening room now. Over to you.

Good afternoon, everyone. I am Vinay Gupta, representing Jindal School Limited. On behalf of our management team, including Mr. Narendra Mantri, Mr. Rajiv Goyal, I am delighted to welcome you all to our Q2-2027 Armin's conference call. Our sincere thanks goes to the team of ITAT Direct for facilitating this call also. Now, let me now take you through the operation and financial performance of Jindal SAW and its key major subsidiaries for the second quarter of February 27. With a focus on the key developments that are shaping our business performance and future growth process. In today's presentation, we will cover three key areas. First, the financial performance, which the board has approved on last Friday. This is for Q2 to FI27 and H1 of FI27. Second, the business scenario and outlook, and the third update on the new project in MENA region. And through this discussion, we aim to provide you with a clear perspective on our performance, business priorities, and growth opportunities going forward. Now, let us first, let me first present the high-level summary for the Q2 FI27, comparing it with the Q1 FI27 and the corresponding quarter in the previous year. During Q2 FI27, the company delivered improved top line with gross mark revenue hitting Rs. 3870 crore, which is up by 3% on quarter-to-quarter basis and 14% year-on-year basis. However, operational had been compared to Rs. 254 crore, down from Rs. 341 crore in Q1 of FI 27, and Rs. 334 crore, which was in Q2 of FI 26. Below the operating line, finance expenses rose to 92 crores, which includes rupees 15 crores, negative current impact, normalized finance cost to debt at more or less of 77 crores, and finally the profit after tax pay came in at rupees 63 crores, compared to rupees 110 crores in Q1 of F827, and 80 crores in Q2 of F826. This is net of a 30 crore tax credit received in the department. Financial performance on a standalone basis for H-1 27 and H-1 of FY26, the company delivered improved top line momentum in the first half of FY27 with gross revenues rising 13% year on year to Rs.7627 crore up from 6,736 crore. In H1 of the previous year, which is FY26. However, operating profitability phase pressure as EBITDA contracted to Rs. 595 crore from Rs. 894 crore in the similar period last year. On a positive note, finance costs fell to Rs. 163 crore from Rs. 239 crore in H1 of FY26. Thank you. We will now discuss Q2 versus Q1 of F527 with Q2 of F526. On a conservative basis, gross income increased by, by FI, by, just a second, okay. On a conservative basis, our top line expended by 0.8 percent, sequentially to rupees 451812 crores from 4476 crore in Q1, FI27, and gross 5.8 percent year-on-replaced from rupees 4264 crores in Q2. The EBITDA slipped to rupees 312 crores from rupees 420 crores in Q1 of FI27 and 482 crore fuel in FI26. Finance expenses rose 15.7 percent sequentially of rupees 17 crore to rupee 125 crore from 108 crore in Q1 of FI27. Thank you. Good morning, everyone. Good morning, everyone. Good morning, everyone. Our top line is reported at 35 crores from 91 crores in Q1 FY27 and 139 crores in Q2 FY26. Notably, rupees 24 crore tax credit caused due to stress pvt by debt amount. On consolidation basis, our top line continued. Our top line continued on a higher side with gross income expanding by 7.4% to Rs.8988 crores. However, severe operating margin pressures impacted overall profitability. Finally, the operational slowdown combined with higher tech provision resulted in its 78.7% Now, in terms of our loan profile, indebted net, as of 30th September 26, the company's standalone net debt narrowed to Rs. 2,245 crore versus Rs. 2,245 crore on 30th June 26. This includes long-term debt of 522 crore, which is the NCD subscribed by LIC, and it is repayable in year 20, 8, 20 and 30. The net institutional debt on console basis has reduced to Rs. 274 crore as compared to Rs. 2473 crore as at 30 June 2026, and the long term as at 30 June 2026, the long term debt was Rs. 532 crore only, including Abu Dhabi, U.S. and all. Further, in June 26, CARE Ratings has affirmed CARE A1 plus for short-term debt necessities, including commercial papers, and CARE AA with outlook is stable for long-term debt necessities. Now, what are the promises for these results? Overall, while our revenue increased, profitability got impacted, and the major reasons for this weaker performance are agenda. On the geopolitical tension in West Asia have worsened due to recent escalations in Saudi Arabia, a region where we hold significant export order exposure. The main challenge is not order cancellation, but rather delay in shipping and revenue recognition. If these projects delay persist, dedicated production facilities will remain unutilized and continue to drive up fixed-end operations costs. Then, second, the ongoing global conflict has given up international and domestic logistics costs. This directly impacts our operations, particularly because most of the sales contracts are structured on a delivered basis historically. Curzing raw material costs, particularly for cooking poles, have a steep margin in the DI5 business. This pressure was further confounded by lower capsule utilization due to lower execution of water file business as softness in domestic water business continues. This resulted in the impact on the property. The Abu Dhabi DI plant is facing a combination of cost overrun, underutilization and delivery constraints. Including difficulties serving customers who cannot be reached through stress-based transportation. This resulted in lower production, sales, and impact on profitability. In the seamless business, while the API license reinstated in June 26, for our eligibility for the key orders, though immediate financial impacts remain limited in QB. The seamless five businesses currently bidding on new orders to rebuild its order book, So, now to summarize the performance for Q2, the weaker performance appears to be the result of combination of geopolitical disruption, continued weaker demand of the optic in domestic water infra segment, increased raw metal prices, increased logistic cost, and other cost inflationary factors, and also supply chain constraints, Now, to mitigate or minimize the impact of the above risk to the businesses, company is positioning ourselves, and we are taking a couple of, we are now highlighting a couple of pointers. The company has a confirmed order book of USD 1.135 billion, which approximately 10,700 votes, and it further receives a letter of intent for approximately USD 575 million, which is a mix of export and domestic business. These alloys for USG7, 575 million. These orders are not from MENA region, and the export out of 575 contribute $425 million approximately, and this is oil and gas sector. With this, and on receipt of the order, our order book will be at approximately Rs. 16,200 crores. And the LOIs might get converted in the next couple of weeks. But the execution of these orders is likely to be from the month of February, March, before we would be receiving a receipt of order. Now, another good thing is that post the board meeting on Friday, we have received another LOI for approximately US$50 million. This is for export to South East Asia. So, if we add this 50 million further, so this will be our total of the book would be in the vicinity of 17,000 road people. Now, the existing job work order of approximately 6,000 metric tons to Saudi has been delayed significantly, primarily because of the war in Middle East, while it has not blocked our working capital because it's a jobless order, but it impacted the capitalization and revenue regulation. Now, parties, including the buyer, are engaged to work out an out-of-the-box solution for transportation or logistics services. If a solution works out, then you may see the positive impact on the capitalization revenue efficient in next few months time. Now, on the seamless right, the API license is registrated in June 2016. The company is bidding for new API orders very aggressively. API business purchase better margin. We expect the impact of the same in next quarter. The tile business The event may take some more time due to the micro and macroeconomic issues. However, we expect some export orders in DI business where we could be able to reduce concentration of business in the domestic market. Tell that business and profitability has been impacted and may remain impacted to some extent due to increase in the visual prices, low FB content in the iron ore coupled with higher stripping ratio. We have seen reduction of current assets in Q2, and we expect further reduction in the inventory and receivable amount. This helps us to improve our liquidity position and thereby reduce bank balance. We are focusing on improved capsularization in all facilities, over-absorption, cost control, and delivery. We are also keeping our eyes open on the capital allocation for capex, not only in India, but also in the main region. All these measures should start to show better results or demonstrate better volumes and thereby better margins. And we expect, as we said last time also, we expect H2 to be better than H1. Now, let us discuss about the MENA region. The company initiated these projects when the MENA region was stable. Our five manufacturing investments in U.S. and Saudi Arabia were designed from day one to serve as permanent foundation for the region's essential energy and water ecosystem. The economic fundamentals underpinning these projects remain entirely unchanged. Today, the project implementation is progressing then. By manufacturing locally, we are mitigating international logistic risk, improving local content integration, which is IPV in Dubai and IPV in Saudi, and ensuring that critical utility infrastructure continue to build without disruption. Now, let's talk a bit about our progress of our seamless pipe plant in Abu Dhabi. Jindasaw's proposed seamless pipe construction project in Kijaj, industry area, Abu Dhabi, is progressing through the initial development construction industry. The project with a proposed capacity of 300,000 tons per annum and an estimated investment The procurement of approximately U.S.D. $330 million is intended to strengthen the company's presence in the Middle East oil and gas market. By securing a developed leasehold land with existing civil infrastructure, we have accelerated our construction timeline. Procurement of critical long-lead equipment is underway, supported by active lack of credit and initial cash revances. With financial closure projected in coming months, the project remains firmly on track to commence commercial operations in FY2029. Jindal Shah's Abu Dhabi strategy reflects a deliberate move to establish a strong regional manufacturing hub by combining cleanliness E5s for the oil and gas sector and ductile iron type of water sector infrastructure. This dual-platform approach is strategically aimed at capitalizing on the Middle East long-term investment in energy security, hydrocarbon development, and water infrastructure, while strengthening customer proximity, enhancing regional market access, and creating a diversified platform for sustainable growth across the energy and water sector. Regarding our saa pipe plants in South Europe, we communicated earlier also that we have established a strategic joint venture in South Arabia, where Jindal Sao will hold 51% equity stake and Buhur of Kingdom of South Arabia will hold 49%. The joint venture energy phase is setting up two advanced pipe manufacturing facilities, helical pipe and longitudinal pipe with a cap speed of 300,000 metric ton each, catering to the region's growing water infrastructure and energy requirements. The project is progressing well, land has been secured, LCs for long lead items have been established. We remain focused on accelerating project execution with incurring financial closure expected over the next few months. We recognize the prevailing geopolitical environment and highlighted regional security concerns may create some near-term uncertainties around project execution, logistics, and investment planning. Nevertheless, our approach remains guided by the long-term fundamentals of Saudi Arabia's energy and water infrastructure economy. Beyond serving domestic demand, the facilities are steadily positioned to capitalize on emerging regional opportunities, including the potential for alternative energy transportation and export routes that reduce dependence on the state of commerce. They remain committed to a disciplined approach to project implementation while closely monitoring the evolving situation in energy. The General South Middle East strategy leverages a dual-platform approach to target critical investment in energy security, hydrocarbon development, and water infrastructure. The company Abu Dhabi have served as a controlled high-end base for seamless pipe and the current pipe, optimizing customer access. Meanwhile, a Saudi Arab government focuses on localized, longitudinal helical pipes, creating a balanced, diversified corridor position for the sustainable regional world. Now, let's talk very quickly about our ductile arc pipe operations in Abu Dhabi. You know, like regional conflicts in MENA has disrupted operations at our Abu Dhabi facilities. The necessity remains highly impacted due to the war. Due to these circumstances and with employee safety as a top priority, operations have been reduced to meet essential demands. The sales from Abu Dhabi plans are restricted to PASMUD in the countries which are working, which are within the cutting edge. In this backdrop, Q2 of FI27 for Abu Dhabi, we delivered 29,000 metrics and pipes as compared to 34,000 metrics and pipes in Q1 of FI27 for the DI5. As of September 26, the subsidiary holds order book valued approximately USB 195 million for corresponding U177,0105, ensuring operational visibility for next 9 to 12 months. This backlog is independent of Jindal for India's standard order book of low to 17,000, including orders plus L1. Now about Jindal Hunting, a joint venture with Hunting Energy Service Private in Singapore in which Jindal Soha holds controlling interest of 51%. It generated revenue of 9.70 crore and in loss of 1.5 crore in Q2 of 5.27. This visible performance is a result of suspension of API license, which is likely to improve in coming quarters with API license as the API license has been reinstated. Now, the last about the litigation in Jindal IKF versus NTPC. In this legal conflict, a division bench of Delhi High Court delivered a split verdict. Consequently, Chief Justice has referred the method to a surger who has now been appointed. The next hearing is scheduled for January 2047. Thank you very much.

We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch phone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Shauri Shah from Aquarius Securities Private Limited. Please go ahead.

Yeah, thank you for taking my question. So, the first question I have is regarding the new LOIs, right? So, just wanted to know how firm are these LOIs and when an approximate date as to when are they expected to translate into some dispatches? And the other thing is that can these orders kind of to an extent replace the affected MENA volumes at a comparable margin?

Can you come for the second question? Then we will provide, let's say, response. Can you repeat the second question?

Yeah, the second part of the question is that the LOIs that we have received already, the 575 million of LOIs, and majority of them being outside of UAE region. So, I just wanted to know whether these will kind of replace the affected MENA volumes or the delayed MENA volumes at comparable margins.

Okay, so we will not talk about the margin at this point of time. Let me discuss two things which you rightly pointed out. One is that, first of all, we have now, after announcement of, after, let's say, receiving the additional LOI of $50 million. So, the total LOIs, other than the confirmed orders, are $625 million. That's one. Out of this, 430 plus 50, let's say, $480 million is export. And the $430 million is in CIS countries. And this $50 million is from Southeast Asia. Second point is that how confirmed we are for the sale order. So, eventually, this is a process. Every buyer has their own systems and all. So, when we receive the LOI, then from there, only two, three things remain pending. One is, let's say, conversion of this L.Y. into a firm sale order, which is a legal thing, so that you negotiate the legal thing and do, start doing the thing. But there is the possibilities of, let's say, not getting the order remain very, very low. And eventually, we have already started booking, you see, for this, these orders also. So, in terms of the production and dispatches, these production would start sometime in February, March, and because the LOI, once we get the confirmed order in the next couple of days or weeks, after that, the raw metal, which has already been blocked, we expect to receive the raw metal from January or February. So, effectively, these new orders, production would start against these new orders sometime Thank you. Thank you. Thank you. Thank you. So, if that works out or if the scenario in general improves, then our facilities would get booked very quickly.

Understood. Thank you for your response. The other thing I wanted to ask is that there is also some imposition of anti-dumping duty on DI pipe imports into Saudi Arabia. So, I just wanted to know your exposure to Saudi region specifically for DI pipes. And can you explain, like, the specific rates, if possible, as in the anti-dumping rate that would be applicable, if possible, on ADI pipes exposed to Saudi?

Yeah. So, basically, you are right that anti-dumping duty has been imposed by Saudi Arabia government on the Indian exporters. But the good thing is that since we did not export pipes from India to Saudi, so we are not into that anti-dumping duty imposition. And we are doing sale to Saudi Arabia through our Abu Dhabi Tati Utley. So, this is not impacting us. However, the other manufacturers in India, the duty is being imposed on them in the range of 16 to 25 to 30 percent based on the – we are exposed to this region and we are rising. So, that is something which is positive for us that we are not included in the anti-dumping duty liability.

Yeah, so to add one line here is that it will be good for our Abu Dhabi facility since because of the anti-dumping duty, the Indian producers, the cost of the pipe, the profitability will reduce, thereby we can sell more pipes in Saudi market from Abu Dhabi facility.

Okay, understood. Okay, and lastly, one thing I wanted to know is that we have mentioned that we have got some initial order placements from our upcoming swap-eye facility at Saudi. So, I don't know if you've already mentioned it, but if you could just assign some approximate number as to how much order filling has happened for this plant.

You're talking about Saudi facility? Yeah, correct. No, no, so this is a long process. So first of all, so as we had mentioned this call, previous call also, we have acquired land and the land development work is going on. The plant, once it gets implemented, then it will go for inspection. After that, once the approval is received, then only we can participate in the order. So, maybe 28, 29 is the time when we are targeting the commercial operation. Prior to that, we won't get orders for these subsidies. Even though what can happen that our JV partners, he can, so maybe the moment we start the operation, because they are one of the largest EPC contractor in Saudi, maybe they can take the order and they can download the order on the Saudi subsidy. But at this point of time, there is nothing, we have not secured any order. We are not, we don't have a manufacturing facility.

Okay, just one last question, if I could question. There was some, something mentioned about a hold-up in terms of our Saudi DIPI project in the presentation. So, just any guesstimate as to when this is expected to kind of move forward? So, it will still be within the timelines, right? Or will there be certain delays in terms of commissioning?

See that facility, in any case, initially that facility was not a complete back-to-back or integrated facility. It was like kind of taking the semi-finished pipe from UAE and finishing it and doing a couple of other processes in Saudi. Right now, considering the Saudi scenario, we have put on hold that venture, it in any case was very small, and till that time, we finalize, let's say, our thoughts again, so we would be serving that market from the Abu Dhabi, so that is not, that will, otherwise also, that was not adding to the top line or productivity. These were the semi-finished five getting finished in Saudi and being sold in the Saudi market, which we will continue to do from the Saudi or Abu Dhabi facility.

Okay, okay. Understood. Yeah, these are the questions for mine. Thank you for answering. Thank you.

Thank you. Anyone who wishes to ask a question, may press star and one now. The next question is from the line of Shailesh Daja from 361 Capital. Please go ahead.

Yeah, thanks for the opportunity, sir. Sir, gross profit per kg, it has declined over the past few quarters from 51 rupees to, you know, 41 rupees per kg in this current quarter. Reportedly, due to an unfavorable product or segment mix you were referring. So, given the current order backlog of 2.5 million tons, that includes, including as this LOI, I'm talking 0.5 million tons, with approximately 55% exports and Abu Dhabi operations, so how should we assess the quality and the profitability of the order book? And over the next 12 months, what trajectory do you expect for Ross Profit to improve and when it will return to the Rs. 51 spread, which was reported in last year?

So, Salish, you are right. Because of geopolitical situation and other domestic market situation, profit margins per kg has reduced. What we see that the new auto booking, other than the MENA region and the execution possibilities are much stronger than what we are experiencing right now in the MENA region, we are looking for better margins and our target is to, again, reach to that level. What we were in 25. So this is the endeavor of the company management and we are seeing that from Q3 onwards, we may see some upward trend in terms of margin also because new orders will change the product mix in the time to come because the majority of the orders are coming from the oil and gas sector and exports. Again, export which is executable. So, it will keep the product mix which will lead definitely to the better margins. So, we can expect Q3, Q4 onwards that the margins will be moved towards, you know, double digits and we are expecting and we expect that very soon this situation will be same what we were doing. Doing a few quarters back.

Okay, okay. Great, sir. Our effective utilization is around 67%. Our effective capacity, I am taking 2.3 million tons. So, when do you expect that utilization will reach 80% sir? Either in third quarter or fourth quarter?

No, so 80% utilization and all depends on the execution of multiple orders. So, in the best case scenario, also, our execution level was somewhere 75%, not crossing that. We achieved the highest volume somewhere in 425 when we achieved 1.8 million tons. What we feel that reaching to that level of execution will take time. However, improvement in the execution, we are expecting Q4 onwards, definitely.

Okay, okay, okay. Sir, one question. The LOI, we have received 6,000 crores from non-linear market. Is this fully SOB order?

No, so generally the trend in the export market is completely, it is not a FOB, it is generally a CIF where the freight is also included, but since the current situation is more volatile, so we have taken a sufficient cushion about the pricing of all elements which is on our part. So, we have taken care in our pricing, and it is very well taken care.

Okay. So, in the same region, do we expect, you know, in next two, three quarters, more sizable others in the same region? How strong is the current pipeline?

So, current inquiry levels are quite high, and we are participating in all large inquiries, and we are hoping, might be, things may crystallize, but as of now, inquiry levels are high everywhere, oil and gas and water sector, especially in the export market.

Okay, okay. Sir, one last question. Sir, can you provide update on performance of key

So in Abu Dhabi, as Venerji mentioned in his initial remark that because of MENA region situation, the Abu Dhabi facility is operating at around 50% utilization level and we achieved 34,000 ton in a quarter. And against, I think, 43,000 trucks. So in that scenario, this, because the situation is continuously, situation is again worse in this region. So we are able to maintain that run rate. But we are hoping because of this anti-dumping duty on Indian exporters in Saudi, we may get the benefit of it and we may increase our supplies to Saudi, which will definitely improve the execution in Abu Dhabi facilities in the coming quarters. Abu Dhabi facilities contributing at EBITDA level positively, though the EBITDA margins have reduced because of the underutilization of capacity. The U.S. facilities which are under Jindal support, they are performing well. They are contributing positive. They are largely in job work areas where double jointing, porting, and some medical anchor activities we are doing in various entities in South U.S. So, these entities are contributing positive.

Okay. Now, compared to last year, is there any improvement that you see, sir?

So, their performance is quite consistent. U.S. entities' performance is quite consistent. However, there is a decline as compared to last year in Abu Dhabi's facility because of Middle East situation.

Thank you, sir.

Thank you. To ask a question, please press star and 1 now. The next question is from the line of Vipal Kumar Anupchand Shah from Sumangal Investments. Please go ahead.

So, in your presentation, you mentioned that export volume is 41% of your total order, but value-wise, it is 28%. So, are we getting a substantially reduced realization per ton in export market, or is my understanding wrong?

No, so volumes are including the job work order of roughly 6 lakh ton, where the volumes are high. However, this order is job work order, where only the job work value is included. That's why in terms of value, it is 28. However, in terms of quantities or volumes, it is high.

So, will it not be better if you put the separate slides to the presentation so that this confusion does not? So, overall, for manufacturing, export and domestic margins are almost same, or is there any difference between the two?

In general, export orders are more profitable than the domestic margin in terms of water. Oil and gas, they are pretty similar.

So, this 6 lakh tons which you are referring to is pure job work order, that's why its margin is low.

So, it's a water pipe order. Job work is generally, basically, the raw metal cost is not included. That's why the value is lower.

Okay, okay.

So, the raw metal is being supplied by the buyer free of cost work, and we are doing the value addition, making the pipe and selling them. So, it is only the conversion and the margins which are included in the order. That's why the value, in terms of value, it is low.

So, I would request if competitive pressures do not forbid you, then you make some separate disclosures like disorders in the presentation.

Okay. Well noted.

Thank you, sir.

Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.

Yeah. Namaskar, sir. And thank you for the opportunity. I hope I'm audible.

Yeah, you are audible, Saket. Yes, yes.

Thank you. So firstly, in terms of the tannages part, how are we seeing our tannages scheduled for H2, and what kind of volume growth are we expecting, comparison to what we did for FY26, in terms of the only pipe segment?

So, in terms of pipe segment, we are expecting some betterment in terms of volume in pipe segment specifically because till H1, volumes are higher than the previous H1 figures. So, we expect that the same momentum should continue in H2. So, overall volumes in FY27 should be higher than

When we look at our realizations also, since the volume was up, but the realization was not commensurate to that, and hence the margins were also lower. So, taking into account the existing order book, excluding the LOI-1 and the recently added orders, are we expecting the margin profile for the pending order book, which is to be executed for H2 also, remaining in the same vicinity as was for the quarter 2?

So, in H2, we are expecting a little bit change in terms of silt mix, because this quarter silt mix was altogether towards water sector, which is in general a lower margin, and specifically in domestic market where now oversupply situation is there, due to which margin pressures we are experiencing. However, in the coming quarters, Q3 and Q4, we are expecting some improved volumes in oil and gas sector, which will definitely lead some better margin or margin improvement as compared to H1.

Okay, and so this EBITDA margin should have bottomed out in this 6.8 percentage level. Last year, also, when we had the December quarter, we had double-digit margin, and margins were always closer to 10%. So can Q3 itself see the reversal and improvement in the margin, or how should we be functioning in the EBITDA margin profile for H2, taking into account what H1 was?

Right now, we can comment on H2 blended because things are so volatile. We are working out certain modalities to export even the job work order also. So, we cannot comment on exact numbers as of now, but H2 should be better than H1. That is something which we are sensing right now.

Right, sir. And for the pellet segment, sir was commenting about some factors that have led to the decrease in the margin. So, can you elaborate what exactly are the troubles in the pellet segment? And I think, so, some AC clearance was also pending for enhancement of the capacity. So, where are we in terms of pellet performance going ahead?

So, in pellet, as Vinerji mentioned in his initial remarks, that you...

Okay, Saket, in pellet, the kind of mines which we have, we have high stripping ratio and low grade of iron ore. So, because of that, our margins are under pressure now, and the depth of the mice has gone up, and we are working on how to enhance or maintain the margins there. As far as EC is concerned, we have – the application has already been made, and we are discussing with the MOEF for getting their final approval on whatever application which we have made. The EC enhancement, technically, it is not there because the ROM will remain at the same level because of high stripping ratio of a total overall mining quantity has increased, including the OV. But otherwise, ROM or the iron ore quantum will remain same, but whatever we were doing this in last year.

Sir, because what we...

I'm sorry to interrupt you, Mr. Dapur.

Ma'am, I will only conclude to what Vanessa was addressing, if you may allow. Sir, if I may conclude. Yeah, please continue. Yes, sir. Sir, in terms of the pellet volume, that are on the higher side, and what we understood that pellet being a commodity, the prices are also trended up. So, the contribution margins have also been lowered for the first half, or what is the color on the same, sir?

Okay. As far as the selling price is concerned, it is linked to the market conditions and other things. When I say that there is a higher tripping ratio or low-grade ROM, that means the yield from the iron ore is lower. So that resulting to the higher operating costs. And that is why there is a low margin. But by making the other sources of our acquisition of similar kind of material, we are trying to reach to the level of pellet generation, whatever we did in the last year.

Thank you. Participants who wish to ask a question may press star and 1 at this time. The next question is from the line of Parth Bhavsar from Investec India. Please go ahead.

So, I had a couple of questions on demand. One is, you highlighted in the exports market, you are, you know, looking at good demand undercurrents. Wanted to know, like, which are these, you know, countries where XF MENA, where you are, you know, getting a good response?

So, we have already highlighted the LOIs that we have received from CIS contained South Asian countries. So, please allow us to give some space in the time received this, confirm PO, this bit sensitive, but these are the LOIs, not from United. Okay. So, CIS and Southeast Asia, right? No, $430 million CIS, Southeast Asia, $50 million.

Got it. Perfect. And so, just on the domestic front, we've been, you know, hearing that there are, you know, fund releases in JGM, right, where, you know, 7,000 crores has been, you know, released. So, what is happening on the ground? Are you, you know, hearing about these releases or are there any new workloads that are, new orders that are being, you know, that are being placed?

Okay. So, funds release is happening in a gradual manner, and that is why in our presentation, we have said release or reduction in the levels of receivers and as well as inventory. So, we have seen funds getting released, but yes, it's slower. It's not like a cling of the existing payable by the government. That's one. Second thing is that for some time, the orders would not be issued under general admission scheme. It would be from the state government side. So, state will raise the funds. They are issuing the orders. They will issue the orders. So, orders are coming, but yes, it is through the state.

Okay. How positive are you on these orders? Do you think this can, you know, maybe a good chunk of your order book over the next maybe six to one year or two year period?

Okay, see, execution is the key at this point of time. For example, we would still have all our ductile facilities fully booked for almost one year. The challenge is not the order. The challenge is that the execution of the project on ground. So, because we supply a majority of our price to EPC contractors, and EPC contractors will be doing work across the country. So, maybe they are receiving money in one or two states, they are getting the money getting collected in two states. So, EPC, at this point of time, the business is not being fully implemented. So, that is where some lag impact has come and the value chain has got impacted. It's likely to be reversed, likely to get improved gradually. It will not happen overnight. But orders are there. We are fully booked for all facilities.

Got it. That was very helpful. Thank you so much. Thank you.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Yeah, thank you very much for all the participants and hope that we could clarify, provide our perspective on the business and scenario in India overseas. We will be happy to take the questions. Our team is there. Mr. Raji Goyal is there. You can approach them one to one. And thank you very much once again for joining this call.

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.