SG Mart Limited (SGMART) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to SGMART Limited Q4FI26 Earnings Conference Call hosted by AMBIT Capital Private Limited. As a reminder, all participant lines will be in the lesson 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, representing star than zero on your national page. Please note that this conference is being recorded. I now have the conference for Mr. Kumar Song from Ambeck Capital. Thank you, and over to Mr. Song.

Thank you, Nirav. Good evening, everyone. Welcome to the 4Q and FY26 post-result conference call of SGMart. From the management we have with us, Mr. Amit Thakur, Director B2B Metal Trading. Mr. Suraj Kumar, Chief Financial Officer. Mr. Naman Rastogi, General Manager, Strategy. Mr. Archit Arora, Vice President, Service Center and Distribution Business. Mrs. Anamika Gulati, Senior General Manager, Renewable Business. And Mr. Anwar Gupta, Group Chief Strategy Officer. I will now hand over the call to management for an opening remark, post which will open the floor for a Q&A. Over to you, sir. Thank you.

Thanks, Kumar, and thanks to MBIT for hosting SG Mart for its Quota 4FA26 earnings call. Good evening, everyone. I welcome all of you on our earnings call. Despite a very challenging nine months for HG Mart, we closed the financial year with very solid performance, with Waterfall being the best quarter in terms of revenue upwards of 1,800 crores and EBITDA of 56 crore rupees. This performance comes in the backdrop of very challenging month of March because of the onset of Middle East crisis, and despite that, we could pull off these numbers. So, if you look at the full year performance with EBITDA growth of 35% to 137 crore for FY26 with 15% ROC, On reported numbers, and if we analyze quota for performance, then ROC will be around 25%, which is a true reflection of our business model. We brought down the working capital days to 20 with inventory and debtor rationalization. This resulted in operating cash flow generation of 300 crores for the full year, which funded the large capex upward of 250 crores, and there was small free cash flow generation as well on full year basis. And we closed our balance sheet with net cash of 750 crore rupees. Now, the reason for this performance was that SG Mart has now four running verticals which have completely streamlined and we are ramping up these verticals pretty well. Obviously, there will be short-term challenges coming in because of Middle East crisis, but the quarterly performance should be Better than the previous quarters as new businesses, new verticals keep on ramping up. So vertical number one is B2B sales, which saw like if you look at the quarter four results, the B2B. Our volume is lower than quarter three because of shortage of steel supply, which got triggered in month of January, and then by the time war started, it further aggregated. And the situation remains slow in terms of B2B business. But because it doesn't contribute too much to our earnings, it's not hurting the overall performance too much. Service centers, if you see our volume was 190,000 ton for the quarter four versus 163,000 ton, so this 10 percent increase, more than 10 percent increase is because of the addition of new service centers, and we continue to invest heavily in new service centers, which will keep on pushing the volumes upward and higher. Our renewable structures saw slight dip in the volume. The reason being because we have to buy specialized coated steel, which was in shortage due to gas issues from the steel mills. So that's why the volume was a bit lower. At the same time, in the quarter four, we started selling new profiles, which we have talked We talked about multiple products being used for Construction, warehousing, multiple applications. So we started that business and did volume of around 7,000 tons with good margins as it is being sold in April Apollo brand and in the group distribution network. So all put together, these four verticals produced around... 50 crore of business EBITDA, and 6 crore was inventory gain for the quarter, because there was steep price upward movement throughout the quarter. So, the total reported EBITDA was 56 crores, out of which business EBITDA was 50, and 6 crore is the inventory gain. Now, why this 50 crore business EBITDA is important? Because, I mean, throughout the FI26 financial year, we were hoping that we will touch this 50 crore business EBITDA, maybe in second, third quarter, but obviously because of multiple reasons, we could not achieve that. So, finally, we did that in quarter four. And whatever business ramp up is taking place, we are confident that 50 crore quarter for EBITDA, I mean, it will keep on rising throughout FY27 despite the challenges which we are facing in our B2B business due to short supply of steel. And obviously, service centers in India are running pretty well, except that in Dubai which which contributes around 10% of the volume that operations are a bit disrupted. But whenever the war stops, Dubai Service Center will also start contributing significantly. I mean, as of now, it becomes very difficult to give any guidance on monthly or quarterly basis, but in our last earnings call, we did guide for 300 to 350 crore of annualized ZPitta for FY27. We are confident that we should be near to that number. Unless there is like more loss of business due to war in our B2B business or in our Middle East operations, but the India business, the renewable structures and the steel profile business, these three verticals are operationalized and throwing good profitability, volume ramp up and good return profile as well. So, with this, I will be happy to take questions. Thanks so much.

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 the touchstone 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 your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and 1 to ask the question.

Ladies and gentlemen, you may press star and one to ask the question.

The first question is from the line of Rahul Kumar from Vakaria. Please, go ahead.

Yeah, hi. Just two line items. Can you explain your interest cost and other income? Both have a sort of decline in this quarter versus Q3. Can you explain that?

So, see, I mean, the interest cost is declining because of the working capital rationalization. We closed the year with 20 days of working capital cycle. So, our overall capital employed in the business reduced significantly towards the end of the year. And this resulted in...

This resulted in like surplus cash

being like which on the books and lower interest costs.

How much of this trade payables is the acceptances?

Zero. They're all non-acceptance payments.

Okay. Okay. Okay. But in case we have generated more cash, then why is our, you know, other income has also declined?

Because, like, the operating cash flow generation was around 300 crores. At the same time, we did a capex of 250 crore rupees. Okay. So net cash generation was like very minimal.

Okay. So because our cash balance has actually also increased, I think, versus quarter three, it's increased, I think, almost 100 crores. So I'm just wondering, I mean, what led to then the decline in the income?

Net cash was around 740 crore and quarter core is 750 crore, so only 10 crore increase.

Okay. And this CAPEX which you have done, which particular area which we have done the CAPEX? And for FY27, what is the CAPEX plans and which area which we are planning to do the CAPEX?

So, if you look at like in FI26 full year, we did around 525 crore rupees of capex, okay. This includes capital work in progress and advances to suppliers and contractors, right. In nine months, this figure was 400 crore rupees. So, in quarter four, we did around 125 crore additional. Now, now capex, so multiple capex, so. I mean, most of the KPEGs went towards service centers, okay, and acquisition of new land parcels, because now that this business is running very smooth, so we have become aggressive like we were before to acquire new land parcels and set up new service centers. Going forward, I think we already have... We have taken approval of around 600 crores of CAPEX for two years. So this is what we will be including CAPEX over the next two years.

So for FY27 and FY28, you are applying to do 600.

That's a minimum. If we need to add more lines for renewable structures and profile structures, then it could increase.

Okay, okay. And this 600 is distributed in Southern Center, and can you just break up? Yeah, so can you just break up?

To break up, we must acquire at least four or five new land parcels incrementally. We must do KPX to set up new service centers of three to four numbers. Then setting up profile machines, right? So you can assume like one third will go for building of service centers, half could be for acquisition of new land parcels and And the balance, 15%, 20% would be for profiled machines.

Okay. Okay. Okay. This last question, this is on the ESOP plan, which, you know, you sort of announced. So what is the price at which the ESOP will be granted? I mean, it's not very clear from the, you know, the announcement which we have.

So this is a central discount.

So this ESOP price was locked

one and a half years ago, okay, and at that point of time the current price which was around 367 rupees, this is what will be the exercise price.

This is for the ESOP approval which you are sort of planning to take in the EZM.

This was in future research plans, right?

So, this approval is for the balanced

ESOPs, okay, which were not utilized, and if we have to give those ESOPs to new employees, then we can use from the previous pool. It's not to issue any new ESOPs.

Okay, okay. And on this also, the strike price, exercise price is the 367 rupees.

Yeah, it will remain same, no, because the pool is like previous one only.

Okay, okay. Because in the announcement, it has been mentioned that it will be at a discount to market price, but it is not clearly specified at what price actually.

Yeah, so it is 367, which we have taken approval for the last ESO plan.

Okay. Thank you.

Thank you. Next question is from the man of Vishal Mehta from Oakland Capital Management. Please go ahead.

Yeah, please go ahead.

Hello. Vishal, go ahead, you're audible. Yeah, I just wanted to check that in your opening remarks, you mentioned that the 15-odd percent quarter-on-quarter volume growth in the service center business has come from increment in service centers. The presentation shows that we still have seven service centers. So, is there something we're missing?

No, so Vishal, I meant that volume from new service centers came up, basically.

Got it. Got it. And for 20s, so basically what you're saying is that the new service center which we have opened, all of them have given better volumes.

That's right.

Okay. And also, if you could just give some clarity on what is your expectation for the profile business and the renewable business for FY27 and FY28? I mean, in terms of volume, how do you see that panning out?

So Vishal, see, I mean, if you look at our quarter forward, we did around the 5,000 ton monthly average in renewable structures. Okay. Full year, it gives around 60,000 tons of the run rate. For like, as of now, there is a shortage of coated steel in the industry because of gas issues. Okay, which we believe will improve in next one to two months. So, we will come to 8,000 ton of monthly volume. So, we may remain at 5,000 ton for 2 months and then it will ramp up to 8,000, say for 7, 8 months. So, put together, we should be around 130,000 to 150,000 ton for the full year in terms of renewable structures. As far as the other profile structures, that business is ramping up pretty well. In Q4, the number looks very small, which is like 7,000 tons. But April month has gone pretty good, which is like 5-6,000 tons rounded. We have already... Achieve and more and more products and machines are getting started in next one to two months. So this also with 5,000 ton of monthly volume for next two, three months, this will ramp up to eight to 10,000 ton for say eight to nine months for the full year. So here also we can expect like 100,000 ton plus annual volume. Be sure.

Got it. And that 15% CAPEX, which you mentioned about profiles, that includes RE business or it's just for profiles?

Yeah, joint. For RE business, we have sufficient capacity as of now. Okay, we can do volume of 150,000 tons for the full year. So, it will be mainly for profiles, additional profiles.

Great, sir. Thank you so much. I'll get back in the queue and all the rest for the future.

Thank you. Next question is from the man of Nikhil Porwal from Perpetual Capital. Please go ahead.

Yeah. Good evening, Anubha. My first question is on, so the subsidiary revenue more or less sequentially is flat at around 230, 240 odd crores. But the profitability has taken a big hit despite, you know, prices moving up for steel. So any color on this?

For which business?

For the Dubai operation.

Profitability has?

Yes, go ahead.

So, see, I mean, Dubai, I mean, in month of March, there was hardly any business, okay, because of, like, what happened there. So, that fixed cost, etc. led to, like, you know, profitability hit. But, things are becoming better. Okay, teams have started traveling there. Okay, so, you will see this getting recovered in a month or so.

I meant about the gross margin. If I just look at the consolidated minus times alone. The gross margin has come down significantly that I understand the volume drop because of the conflict in Middle East.

Okay, we'll revert to this later. My team is working on it. Maybe in 10-15 minutes, we'll answer this question. Okay, okay.

And next is on, are you investing further for capacity at the Dubai Center as well? Because the net block, again, the difference between console and standalone has moved up.

Well, no, there is no... I mean, there would be some new machinery which would have come like cut-to-length machinery in Dubai. So, this entered. Suresh, how much increase is there in net block from December to March in Dubai?

In Dubai?

So, I think it's how much increase you are looking? 510 crore rupees, right?

No, it's a bigger number. If I take a look at the year-end standalone and console network, the difference is 108 crore rupees.

No, no, I think they could be.

We are checking on this. I will revert during this call.

Okay, and so next is on the capacity for the current service centers, so the seven that you have operational. The annualized utilization is already above 90%. So will you need more capacity at the existing centers going forward?

So, we are going to add three more during this year. Okay. I mean, 3 as in like the exit service center, number of service centers should be around 11 to 12 for FI 27.

Okay, and even within the existing seven centers, would there be further capacity addition?

So we are going to add new products here. Okay, right now we are selling HR-related products. We will also start selling coated products through these service centers.

Okay, so this would be in the profiling business?

No, in service center business.

And is it possible to provide a split of volumes between India and Dubai?

Yeah, for quarter four. For quarter four, right?

Yes.

Yes.

So, in service center, we did around 191,000 tons, right, for the full water from service center. Dubai was 37,000 tons.

Okay, and one last question from me is, so, you are also setting up capacity for pub panels. And in presentation, you mentioned the market, we had around 150,000 tons, and we all are setting up capacity for 80,000 tons. So that's literally almost more than half of the market. So what gives you the confidence for this?

For renewable, right?

For pop-panel.

Puff panels, see, I mean, it's a highly fragmented industry as of now, and as more and more, what we are seeing trend is that there is a very strong demand, which is going to come up over the next five years. All the new factories, warehouses, which are getting built up, okay, they are all moving from standard sheets to puff panels, okay, because it provides better insulation.

So, it is not very expensive compared to standard sheets.

All the developers who are building factories or who are building warehouses, they do prefer hub panels now. So, size may look smaller today for the industry, but in the next three four years, it can actually double or triple from here.

So, basically, you are expecting a shift in the market from steel roofing sheets to probably top panel. Yeah. Okay. And the margins, would it be similar or would it be slightly higher in top panels?

As of now, we do expect like 5 to 8 percent margins.

That's it from me.

Thank you. Participants, you may press star and want to ask a question. Next question is from the land of Vikas Mishni from Moonshot Ventures. Please go ahead.

Hi, Albu. A couple of questions here. So, in solar structures, we have roughly 50 to 60 gigawatts of installation of solar is happening, and from that perspective, our market time should be pretty high, and our capacity is 150k. So, are we ready for further expansion as this supply-side scenario is normalized, and how much we are targeting for the next couple of years?

So definitely Vikas, see I mean this 150,000 ton capacity which we built, it took us like what, six to eight months, okay, to build this capacity and officialize it. So once we hit like 10,000 ton per month or 4-5 months, then we will order more capacity, and since we already have space, right, at our service center, so the only lead time is the plant and machinery, which is like 3-4 months procedure.

But in the central business, we see that land acquisition is delaying some of the rally centers. So, can't we be preparing slightly ahead of the schedule for the late time?

Now, we are in terms of renewable capacity. Like I said, we already have land, right? Infrastructure is already there. So, ordering machine and installing machine is only three to four months procedure.

Okay, fine, fine. Got it. So, my last question is on tech side. So, we have good relations with B2B customers, but what is the progress on tech where we can tackle smaller MSMV and such that we can also take that part of the pie that other platforms are enjoying like inframarct and our business?

Now, for which business B2B.

Yeah, so let me rephrase the question. So we have good market share, at least on terms of B2B side, because we are tackling large customers. But at least on smaller SME side, where other platforms like JSW, NEO, or business and income market has slightly better market share. So what is our strategy in order to tackle that? And what is the technological progress in terms of application building in terms of retention of new smaller SME clients?

So, see, right now, I mean, B2B business is a bit soft because of shortage of steel, okay, I mean, once the steel supply streamlines, once the steel supply streamlines, then we will become more aggressive in terms of reaching out to small MSMV customers. Right now, whatever supply we get, it gets absorbed within our larger customers.

Totally buying your point, but for that, whatever the tech intervention we need to push in, so that has to be done today itself.

Yep, so we do have everything on our SAP systems, right? We do have visibility of what our customers buy from us, what SKUs they buy. So we try to rationalize all the inventory back end. But honestly, I mean, till the time we have confidence on the steel supply and availability. We don't want to invest too much into TechStack because, again, that's like three to four months process. Whenever we want to push for it, we can do it.

Okay. Okay. So I was coming to the fact that we are building SAP, that is, from the perspective of our side, are we solving smaller SME customers' problems from their perspective, from their vantage point to give them better services like other platforms are doing?

Now, currently, currently, like I said, because of shortage of steel, I mean, you can't, there is no material, how can you service, right? Tech wires material to move from my go down to my customers go down. If I don't have steel, right, what will tech do?

That's totally understood, but I think building this model, clients take its own time, and if some ex-client is already doing business with another platform, why would they switch to you in a short span of two, three months? So that is the point I'm trying to make.

Also, because now our focus is on more value-added business verticals, okay, which are service centers and renewable structures and... And these new set of profiles, what we have launched. Okay, so since B2B business is more of like higher revenue generation and low profit margin, so as a company, the strategy is to focus more on value-added products.

Okay, okay, that's all for myself.

Thank you. Next question is from the line of Darshal Zaveri from Crown Capital. Please go ahead.

Hello.

Good evening. Thank you so much for taking my question. Certainly, congratulations on a great set of results. Sir, just wanted to harp a bit about margin. So, we've delivered quite good margins in Q4, but due to the war, do we see like a temporary dip in Q1? How do we see the margin profile right now? Because, you know, some of our segments will get impacted because of the war. So, how do we see that? Good morning, everyone.

So see, margins, if you look at the EBITDA pattern for all the verticals, it will mirror what we did in quota 4. We don't see any deterioration in EBITDA spread in quota 1.

Okay, so we don't see any kind of interdiction here. And so just wanted to know, like, we have given, like, in the PPD have mentioned business growth visibility of, like, you know, 50% CAGR over the next three years. So that's going to be linear, right? Like, every year we can expect kind of level of growth, or how do you see that stuff? Like, will it be back in there, or how would the growth be yourself?

I think it wouldn't be back-ended. You will see performance getting better and better every quarter, okay, from here on.

Okay, so basically every quarter and quarter we have some level of growth. Because I was asking that in terms of revenue, FI26 has been kind of flattish to FI25, right? So just wanted to ask with regards to that, right? So FI25, we can see a much higher level of growth.

So revenue was flat, right? But EBITDA grew by 30% plus. Okay, because in FI25, more volume came from B2B business. In effect 1 is fixed, we scale down B2B business and focus more on value added vertical. Again, I am naming those three verticals, service centers, renewable structures, and steel profile business. Okay. So even if there is no 50% growth in revenue, my EBITDA can still grow more than 50%. Because whatever new business vertical I am adding, it is more profitable.

Oh, fair enough. So, overall, we should see 50% growth in terms more of like bottom line rather than top line, right? Because that would be the main point.

I mean, this is the last three years of our existence that we need to focus heavily on bottom line. We just don't want to do businesses for revenue generation.

Fair enough. That's it from my perspective. Thank you so much.

Thank you. Next question is from the line of Aegis Lakhani from Unify AMC. Please, go ahead.

Yeah, hi. Abhinav, I wanted to understand that is there any, you know, inventory loss or gain in the EBITDA number that you've reported for the quarter?

I did mention that there was inventory gain of 6 crore rupees in quarter for FY26.

Understood. And for full year 26, the margins that we had, you know, because deal prices have gone through a challenging year, how much has been, you know, in the total EBITDA that you've reported of about 137 crores, how much has been the variation due to inventory? Could you just give that number for 26?

So, in first half, there was not much swings in steel prices. In quarter three, there was inventory loss of around 15-20 crores, if I remember correctly. And in quarter four, there is a gain of 6 crore rupees.

So, I guess the full year EBITDA could have been more than 150 crores

if we adjust the steel price swings.

Understood. And just so that I understand your business model, the upswings or downswings in steel prices that may happen could happen because of the lead and lag that is there, you know, as products come in and go out. And barring that, you're not intending to take any inventory risk on books. Is that broadly correct?

That is right. Just to add to it that as our EBITDA spreads will improve because of more value-added products, so that impact will also keep on reducing ages. Okay? Now, when I am doing 60, 70, 80, 90 crore of quarterly EBITDA, which is coming from more value-added products, so then that hit will also, the impact will also keep on diminishing.

Understood. And broadly, Abhinav, you, I recall many calls back, you had broadly given a broad range of EBITDA margins across each of theirs. So, just could you give a, again, broad understanding. So, service centers earn between 3% to 5% EBITDA. I think the trading business was 1% to 2%. Is that understanding correct? And can you call it out for renewable and so far?

Sure. So, see, I mean, let us decode them into EBITDA per ton basis rather than percentage margin basis. So, B2B business is between 700 to 1000 rupees per ton, depending on the steel price environment in the concrete at that point of time. B2B business is pretty stable from 1800 to 2100 rupees per ton. The renewable structure business is around 3-4-5000 rupees per tonne and the steel profile

is 5-8000 rupees per tonne.

Okay, and is it fair to assume that the volume that you have done of broadly 400k tons in metal trading was also because you had the off-take agreements with your suppliers, and the entire intent even next year would be to again... Maybe keep this volume or probably reduce it. I don't know how you determine that, but the entire thing is to build the profiling products business, renewable structures business more and more, right? So effectively trading is just an, is it done with a very opportunistic sort of lens or is it just like because you need to pick up a certain, you know, You know, raw material that you have committed to your supplier. That is how you construct the business heuristic.

So see, trading for SG Mart can be infinite. Okay. So as much steel we get, we can sell that much steel, earning 700 to 1000 rupees per tonne. We did get 410,000 ton of steel in Fi26. If we get more steel in FA27, the trading, the B2B sales will be higher accordingly. But as of now, it is difficult to say because the month of April and the commitments for May so far, And it is also because even the steel mills, the volumes, the production levels are low because of overall crisis for energy, gas, etc.

Understood. And finally, just my last question is, Anubabh, even JSW, for example, is creating a platform Of course, the broad contours where they may concentrate would be different to yours, so how would you comment about this? Because, you know, you're buying from JSW and then creating this entire value-added piece. Now, JSW themselves is doing something akin. So, how would you comment on this?

Now, the products are very different ages, okay, what we are doing in SG Mart and what other platforms are doing, the businesses are very, very separate, different now.

Okay, fine. Thanks and all the best.

Thank you. Next question is from the line of Garvit Koyal from Serene Alpha. Please go ahead.

Hi, so I'm audible.

Please go ahead.

Good evening, sir. My question is on our bottom line. Since last many quarters, we are speaking about EBITDA and SPAC will go hand in hand. But I'm not seeing that in numbers, right? We laid around 137 CR EBITDA this year, which is more than 30% growth. But if you look at the bottom line, it is hardly 10%, 10-11% kind of growth we are delivering. So why this is not happening, sir?

So, see, I mean, if you look at, like, the conversion of net profit from EBITDA, there are two factors, okay, which are impacting the back growth. One is the depreciation, and the second is the interest cost. So, over the last one year, what we have done is that we have started investing heavily into Creation of network of new service centers, plus we are also going heavily on building capacities for renewable structures and other steel profiles, right? So it does require investment into fixed block, fixed gross block. That's why the depreciation levels are high and all the cash flow what we are generating internally. That is also being used for these KPIs commitments. So that's why the EBITDA growth is not matching FAT growth. When we had mentioned this, that time the business was more asset-like. It was dependent more on trading. But like I said, trading business, we realized that it is not showing too much value addition. The dependency on steel availability is pretty high. Then the steel price fluctuation also hurts the earnings. So, I mean, over the last one year, the whole business model has moved towards more value addition. And as we are investing into building that value-added business, there will be higher depreciation costs up front, and all the internal cash flow generation will be used to meet the CAPEX commitments. But what I can tell you, but what can I also tell you is that the benefits from this, okay, are going to be significant. We have already seen that how service centers are operating beautifully, the stability these service centers have brought for SGMART. Plus, the renewable structure business, again, the massive pie, not too much of competitive space. And this unique vertical which we are building up other skill profiles, okay, getting into highly fragmented market and leveraging on our brand and distribution network. It's going to give massive fruits to the company. So we are not too much worried about that my bad growth is not matching my EBITDA growth. It will start happening in a year or so. We are not bothered too much.

Of course, it means you are still like for next two years or so we are doing the KPEX. So, is it correct to understand that the EBITDA growth will still be higher than the PAD growth, right? Because of the elevated deposition will keep on coming in the PL statement, right?

Yeah, so I think the better way to look is the cash profit, right? Because deposition will remain high. So, if you look at the cash profit growth and EBITDA growth, that should not be.

Okay, and with 50 crore a Victor Profe, this quarterly a Victor Profe, that we are comfortably, like, we will be doing it, despite all these advents we are speaking about. That's right. Thank you, sir, and all the best.

Thank you. Next question is from the line of Amit, a retail investor. Please go ahead.

My question is on Q4 performance,

which is basically EBITDA, Soiton, for different businesses. So, would you be able to share what was the Soiton EBITDA that you made in solar business, profile business, and this service center business?

So we will give you the broad range, right? The B2B business is 700 to 1000 rupees per ton. The service center business is 1700 to 2000 rupees per ton. The solar business is 3000 to 5000 rupees per ton. And the profile business is 5000 to 8000 rupees per ton.

And is this expected to remain in this range in the current year, which is FI27?

That is right.

So this is it. Thanks. Thank you.

Thank you. Next question is from the line of Kunal Shah from Inam Asset Management. Please go ahead. Hello.

Hi, everyone. My question was regarding the service center business. So, you're saying we have already procured land for Japan Service Center. So, can you describe it on which, apart from the seven which we have, where else have we procured land?

Yeah, so Ahmedabad, Indore, Kolkata, these are the three cities where we have acquired land.

Okay, okay. So Ahmedabad, Indore will be just shifting from the rented premises to the new premises. And Kolkata is the one which we are adding to the electric.

Yes, and then we are actively scouting in Hyderabad, Chennai, in Punjab. So, yes, maybe in the next two, three months, we will see more land acquisition coming in our books by then.

Okay. Okay. And regarding the profile business, so what's the current capacity that we have? Because we're doing the number combined right now with renewable.

So, individually, we could share the profile business capacity. Around 120,000 ton per annum.

Okay, 100,000 ton per annum. Perfect, okay. And in the service entry volume for FI 26 or 6 lakh ton, what's the stock and sale volume approximately?

It's around 20%, 20-25%, 75% is cut to length.

Okay, got it, got it. And in terms of, you know, this... Kodak steel availability for renewables. How do you see the situation evolving? When do you see things normalizing?

I think in month of May, it should be better than June. It will further improve. So, April was better than March. Okay. And we have entered in month of May, things look better compared to April.

Thank you. So this run rate of 5,000, 6,000 tons per month, that can be maintained with whatever commitments we are getting.

That is right, Kunal.

Great. Thank you. I'll get back in. Thank you.

Next question is from the line of Rahul Kumar from Vakaria Fund. Please go ahead.

Yeah. In this strategic plan of 50% growth over the next three years, can you help us understand the split of the businesses of this among the various segments, let's say, at the end of three years?

Now, can you please repeat?

I was saying, we have given this target of 50% business growth over the next three years, right? So, if we have to think of the various segments at the end of three years, can you help us understand the split between the various segments? How much would be the service center? How much would be the service center?

Sure. So, in three years, I mean, we may have around 20 service centers. Okay, and each service center doing 8 to 10,000 ton monthly volume. So around 2 million ton of volume is coming from service centers. Okay, on analyzed basis. Then for solar business, renewable structure business, in three years, we should be doing around 250,000 ton. Okay, 15, 20, so around 300,000 tonne of annual volume from renewable structures, and similarly, 300,000 tonne of volume from the other steel profile structures. B2B is difficult to predict. I mean, it can be like a million tons, 2 million tons, 3 million tons. Tough to give guidance on B2B business.

Because, okay, fair enough. And in terms of shortage of steel also, I think you mentioned earlier, so what is the current status in terms of supply? Is it still constrained or what is the discussion happening with the suppliers now?

So, yes, see, I mean, there is overall shortage of steel as a commodity in the country. And things will improve as the gas supply to steam is improved. I mean, everyone says that in a month or so, things will get better. So we also hope that things will get better in a month or so. See, I mean, it's so unfixable, no? I mean, I mean, I mean, war goes on for 30 days, 60 days, 90 days. I mean, unless and until the fuel supply becomes streamlined, it will remain a challenge, no?

Okay.

And just to clarify, service center business, which was, I think, 600 or 1,000 tons, you're saying that in the next three years, it will go 3x to 2,000 or 2 million tons. Am I correct in assuming that?

I think the exit run rate will be that after three years. Okay.

Okay, understood. Yeah, that's all.

Thank you. Thank you. Next question is from the line of Kuranal Shah from Enam Asset Management. Please go ahead.

Hi, thanks for your presentation again. So, one just broad-level question on capital allocation. So, we are doing around 200 to 250 crore kind of cash for operation, and it seems to be sufficient enough to know the fund with the capex that we have planned of around 300 crore for next two years. So, we have around 1000 crore cash on books. So broadly, what is the plan with this cash that we have?

So Kunal, right, the cash on books is 750 crore, not 1000 crore. That is point number one. Now, uh, now... Like, whatever cash flow generation will be there, okay, for next 2-3 years, we're going to deploy that in capacity building. Plus, the existing cash on books might get utilized for incremental working capital requirement as well as the business scales up pretty quickly. So, I guess maybe after two years, when majority of the CAPEX is completed, Right. Then we have a strong pileup of cash on the books. Okay. And then we can think of dividend, etc. But for next two years, we want to focus on growth and focus on capacity building.

Got it. Got it. And also one thought which I had was that, you know, in terms of inorganic. Our service center is a kind of profiling and renewable business available in an inorganic manner which could help us grow faster.

I mean, we keep on evaluating such assets, okay, but then the quality of such assets also should match SGMAT profile, okay, so we come across any such asset where we can go and actually finish the transaction. I mean, we are evaluating day in, day out, but nothing where we could have said, okay, yes, I want to acquire this asset.

So, I mean, by quality would mean the kind of equipment they've deployed or kind of business they're doing. That's it?

That's right.

Okay. Okay. Great.

Thank you so much. Thank you. Ladies and gentlemen, that will be the last question. I will now have the conference over to the management for closing comments.

I guess, I mean, just to reply to that earlier question regarding Dubai operations from the gentleman, I think there is some calculation error what he is doing. I mean, as per our calculation, there is no increase in net block at Dubai level. And similarly, there is no deterioration in the gross margin. But still, if that gentleman has, I mean, further question, he can reach out to Our team, we have given contact details of our CFO and general manager strategy in the presentation. He can reach out to them. Thanks so much, everyone. I look forward to see you again in our Quota 1 FI 27-19 school. Thank you.

Thank you very much. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the lines. Thank you.