Earnings Call Transcript - XNSE:STEAMHOUSE 2026-10-30

Operator

Ladies and gentlemen, good day and welcome to Steamhouse India Ltd. Q2 FY27 earnings call. As a reminder, all participant 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 the conference call, please click on an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sharma from AdFactors PR. Thank you, and over to you, sir.

Amit Sharma, Analyst — AdFactors PR

Good afternoon, everyone. Welcome to the Q2 and H1 FY27 Earnings Conference Call of Steamhouse India Limited. Today, from the management side, we have with us Mr. Vishal S. Budhya, Chairman and Managing Director, Mr. Vaibhav Gattani, Chief Financial Officer of Steamhouse India Limited. We also have the AdFactors PR team on the call today. We will begin the call with the opening remarks from the management, after which we shall open the forum for the Q&A session. I must remind you that this conference may include forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the management as on the date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference to Mr. Vishal Esbudia for his opening remarks. Thank you, and over to you, sir.

Vishal S. Budhya, Chairman

Thank you, Amitji, for the introduction. Good afternoon, everyone, and a warm welcome to Steamhouse India Limited Q2 and H1 FY27 Earnings Conference Call. Thank you for taking out the time to join us today. I would also like to extend my sincere thanks to our investors, analysts, and stakeholders for their continued interest, trust, and confidence in the company. Let me begin by sharing our perspective on the progress we have made, our key business development, and the opportunities ahead as we continue to build Steamhouse into a scalable industrial team and infrastructure platform. As you know, the community boiler concept is still a relatively nascent stage in India. However, we believe it has significant potential as industries increasingly look for reliable, cost-efficient, and environmentally responsible energy solutions. Under this model, steam is generated centrally and distributed to multiple industrial customers through a common pipeline network. This can help customers reduce the need for individual boiler infrastructure while supporting more efficient use of resources. We believe that the combination of industrial growth, increasing focus on energy efficiency, and development of organized industrial parks can create a favorable environment for the adoption of this model. Government initiatives to promote industrial infrastructure, sustainability, and more efficient energy solutions could further support this opportunity. Team House is well-positioned to participate in transition, given our operating experience, established customer relationship and expertise in developing and managing stream infrastructure. We are encouraged by the traction we are seeing. The Community Boiler Project at Balgrac Park, Oona, in Marshall Pradesh, represents an important milestone for us. It provides an opportunity to demonstrate our capabilities beyond our established markets in Gujarat and to build a presence in a new industrial geography. More recently, we signed an MOU with the Haryana Enterprise Promotion Center, Government of Haryana, to explore the industrial infrastructure opportunity in the state involving a proposed investment of Rs. 500 crore. The MOU establishes a framework for cooperation and government facilitation to evaluate potential opportunities, including common border infrastructure or industrial clusters. We view this as an encouraging step towards exploring new markets. Despite geopolitical uncertainties, including tensions in the Middle East, we believe India's continued economic and industrial development provides a supportive long-term backdrop for our business. The development of industrial parks and manufacturing clusters can create opportunities for centralized steam infrastructure, and we intend to pursue these opportunities in a disciplined manner. Now, coming to Q2 and H1 business performance, the second quarter for Steamhouse is a part of seasonal industrial cyclical phase, particularly the monsoon period, where the industrial demand uptake tends to be on the lower side. Despite these conditions, we are very happy to have the best Q2 in our history. We delivered year-on-year growth in steam volumes during Q2, reflecting continuous strength of our business for the first half of FY27. Steam volume grew by 14.35% year-on-year. The continued progress we are making in expanding our customer base and infrastructure is reflective of the inherent strength. While volumes moderated marginally on a quarter-on-quarter basis in Q2, our focus remains on maintaining operational reliability, improving efficiency, and strengthening profitability as the business scales. We are also seeing progress in our operating performance. EBITDA per ton has improved significantly compared with the corresponding period last year, reflecting our ongoing focus on operational efficiency, cost management, and better utilization of infrastructure. We continue to evaluate alternative fuels that are economically viable and environmentally responsible. Our objective is to manage operating costs while maintaining reliable service for our customers. Let me now take you through our key expansion and project execution update. Our Zagadia facility is progressing towards commissioning with approximately 14.8 tons per hour of capacity already contracted out of the plant 30 tons per hour. This gives us a foundation of customer demand as we bring the facility into operation. We are also progressing with our planned expansions at Nandesari and WAPI. These projects are being developed alongside customer discussion and contracting so that we can align new capacity with demand and build utilization in a measured manner. Beyond these projects, Sarapur and Piranha are currently under construction, while team purchase and distribution operations at Dehage, SEZ, and Haldia are also being planned. Additionally, the company plans to execute its IPO-funded projects at Enclature Phase 3, Panoly Phase 2, and the HGIDC Phase 2. Teamhouse continues to explore opportunities across the industrial markets to capitalize on emerging growth opportunities and further expand its geographical presence. Our approach remains disciplined. We want to add capacity where we see credible customer demand, execute projects efficiently, and build utilization progressively. We believe that this approach will help us manage capital prudently while creating a platform for sustainable growth. As our network expands, we expect the combination of customers' relationships, pipeline infrastructure, and operating expertise to remain an important competitive advantage for us. I would like to now discuss how we are building complementary growth values for Steamhouse. Alongside our core steam business, we are exploring opportunities in industrial gases. At our existing enclosure facility, an additional 750 Nmq per hour PFA nitrogen plant is planned. With commissioning expected by the end of calendar year 2026, our existing industrial customer relationships and infrastructure provide a foundation for exploring complementary opportunities in nitrogen and other industrial gases as well. However, steam will remain our core business, and we will approach these additional opportunities with the same emphasis on commercial viability, operational execution, and capital basically. As far as expanding beyond our established markets is concerned, I would like to highlight the significance of the Oona project in Himachal Pradesh. The project involves a 300 tons per hour community boiler facility with an EPC mandate of approximately 311 crore rupees, inclusive of GST, along with the long-term operations and maintenance responsibilities. The project cost is to be funded by Himachal Pradesh Balgrac Park Infrastructure Limited. For Steam House, This is an important opportunity to apply our technical and operating capabilities in a new geography. It also allows us to build experience in delivering and operating large scale centralized steam infrastructure beyond our existing market. Our priority will be to execute the project responsibly, meet the required milestones, and establish a strong operating track record. To conclude, let me share the outlook and priorities going forward. First, our priorities are clear. First, we will continue to grow steam volumes and improve utilization across the existing network. Second, we will focus on timely and efficient execution of our expansion projects with an emphasis on customer contracting, commissioning, and operational reliability. Third, we will evaluate opportunities in new industrial clusters and geographies, including those where government initiatives and industrial park development could support the community boiler model. Finally, we will continue to explore industrial gases and alternative fuel solutions as complementary opportunities while maintaining financial discipline and keeping our core steam business at the center of our strategy. We believe Steamhouse is Thank you.

Vaibhav Gattani, CFO

Thank you, Vishal, sir. Good afternoon, everyone. I'll take you through Steamhouse India Limited's operating and financial performance for quarter 2 and H1 FY27. I'll begin with our operating performance, followed by the financial results for the quarter and the first half, and then briefly cover customer retention, our balance sheet, and capital allocation priorities. During Q2 April 2027, steam house sold 3,1642 tons of steam, representing year-on-year growth of 12.06%. On a sequential basis, steam volumes declined by approximately 1.36% during the quarter. In addition to the seasonal impact of the monsoon, our steam purchase and distribution volumes were affected by the temporary shutdown of one of the facilities from which we procured steam for a few days due to scheduled maintenance. This temporarily impacted supply and distribution volumes during the quarter. The facility resumed operations following the maintenance period, and we continue to focus on maintaining steam supply, reliability, and minimizing the impact of such plant shutdowns on our operation. For H1 F5 2027, the total steam sales reached 6,07,459 tons compared with 5,31,240 tons in H1 F5 2026, representing growth of 14.35% year-on-year. This performance reflects the continued contribution of our existing customer base, new customer additions, and sustained demand from our industrial customers. In terms of capacity utilization, we achieved 42.41% in Q2 FY27 compared with 35.28% in Q2 FY26 and 41.40% in Q1 FY2027. For H1 FY2027, capacity utilization improved to 41.91% compared with 37.03% in the corresponding period of last year. Although utilization has improved, we continue to see opportunities to increase it further. As volumes grow across our existing facilities, we can spread fixed infrastructure and operating costs over a larger volume of steam. This operating leverage is an important contributor to improving profitability. Coming to our financial performance, revenue from operations from quarter to FY27 stood at Rs. 128 crore, Compared with approximately Rs. 124.94 crore in quarter to FI26, representing year-on-year growth of 2.45%. Within this, revenue from steam generation and distribution was Rs. 96.97 crore, while steam distribution contributed Rs. 25.56 crore. The balance came from the other activities including nitrogen and other reported items. EBITDA for the quarter increased to Rs.24.68 crore compared with Rs.14.24 crore in quarter to FY2026, registering growth of 73.38% year-on-year. EBITDA margin improved to 19.28% compared with 13 EBITDA increases to view of underlying operating performance stood at Rs. 22.50 crore, an increase of 79.15% from Rs. 12.56 crore in Q2 FY2026. Profit after tax for quarter 2 FY2027 stood at Rs. 7.77 crore compared with Rs. 2.91 crore in the corresponding period last year, representing growth of 167.14%. Pat margin improved to 6.07% compared with 2.33% a year earlier. These year-on-year improvements reflect the progress we have made in strengthening operating profitability and managing costs as our business grows. On a sequential basis, however, EBITDA moderated from Rs. 30.93 crore in quarter 1 FI27 to Rs. 24.68 crore in quarter 2 FI27. PAT also moderated from Rs. 18.34 crore to 7.77 crore, while EBITDA pertain decline compared with the previous quarter. This moderation needs to be viewed in the context of monsoon-related operating challenges and movements in operating costs during the quarter. We remain focused on improving fuel utilization, operating efficiency, and the performance of individual facilities to support more consistent margins. Turning to our first half performance, revenue from operations increased to Rs.256.62 crores in H1 F527 compared with Rs.238.42 crores in H1 F526, representing growth of 7.63% year-on-year. EBITDA increased to Rs. 55.62 crore compared with Rs. 33.56 crore in the previous year period, registering growth of 65.72%. EBITDA margin expanded to 21.67% compared with 14.08% in H1 F526, an improvement of approximately 759 basis points. Profit after tax increased to Rs.26.11 crore compared with Rs.13.09 crore in H1 F526 representing growth of 99.56%. BAT margin improved to 10.18% compared with 5.49% in the corresponding period last year. Clean EBITDA for H1FY27 stood at Rs.51.72 crores, up 71.13% from Rs.30.22 crores in H1FY2026. Another important indicator is EBITDA PURTUR. For H1 F5 2027, EBITDA Pertur increased to approximately Rs.916 compared with Rs.632 in H1 F5 2026, representing growth of 44.93% year-on-year. Overall, profitability has grown faster than revenue during the first half. Improved capacity utilization, higher scheme volumes, and operating efficiencies have contributed to this performance. Our focus is to sustain these improvements as we expand our network and bring additional capacity into operation. An important strength of our business is the continuity of our customer relationships. Approximately 99.48% of H1FI27 revenue came from repeat customers, highlighting the recurring nature of demand for our services. Our scheme supply agreements also generally include mechanisms to pass through change in coal prices. These arrangements help us in managing fuel price volatility, although the specific mechanisms and timing can vary customer to customer. Let me turn now to our balance sheet and capital position. At the end of H1 F527, our net debt-to-equity ratio stood at 0.16 times compared with 1.57 times in F526. This improvement reflects the reduction in debt following our capital raise and resulting strengthening of our balance sheet. Our priority remains to maintain a prudent capital structure while ensuring that we have the resources required to execute our growth plans. Following the IPO and the resulting increase in shareholders' equity, our return ratios have moderated. Our reported ROCE was 12.97% while ROE was 4.53%. These figures are not annualized. As the capital raise is deployed in growth projects and as new facilities are commissioned and utilization improves, we expect these investments to contribute to the business over time. The pace and extent of any improvement in return ratios will depend on project execution, customer ramp-up, and operating performance. We are therefore maintaining a disciplined approach to capital allocation. Our priorities include funding committed projects, managing debt and borrowing costs, and retaining sufficient liquidity for day-to-day operations. We shall continue to assess new investments against customer demand, expected utilization, and their potential contribution to long-term profitability. To conclude, Q2 FI27 delivered year-on-year growth in steady volumes EBITDA and PAT, although profitability moderated sequentially compared with Q1. For H1 F527, we have achieved healthy growth in revenue and a stronger improvement in profitability, supported by better utilization and operating efficiencies. For the remainder of F527, our priorities are to increase utilization across our existing network, maintain operating efficiency, execute our expansion pipeline in a disciplined manner, and continue strengthening our balance sheet. We believe that these priorities will be important in converting our growth opportunities into sustainable financial performance and creating long-term value for our shareholders. Thank you for your time and attention. We'll be now happy to take questions from the participants.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

The first question is from the line of Krisha Kansara from Boring AMC. Please go ahead. Am I audible?

Krisha Kansara, Analyst — Baring AMC

Yes. Okay, thank you. So, my first question is that based on the current contracts that we have with our clients, what is the kind of volume growth that we can expect for the second half of FY27 and for FY28 as well? I am completely aware that the revenue is, you know, tied to the call. So, typically, you will not be able to forecast. Hence, my question is more on the volume guidance for the next one, one and a half years, based on the contract that we have with our plans. Thank you. That is my first question. I have a second question.

Vaibhav Gattani, CFO

Vishal, sir, are you taking the questions? Yeah, I have both of you. Yeah, so, this, for the entire financial year, FY27, We are targeting a volume growth of 25% compared with FI 2026. We did 10.66 lakh tons of steam units in FI 26. So we are targeting 25% above that for current financial year. And the trajectory should improve because we have few facilities which are going live from now till the end of financial year. So those facilities will be contributing to the revenue for next full financial year. Along with it, the customers which have joined us in current financial year will also be taking steam for next full financial year. So the volume for next financial year, in terms of volume, it should be upwards of 35% for next financial year.

Operator

Thank you very much.

Operator

The next question is from the line of Rabindranath Nayyar from Nirvanbang Institutional Equities. Please go ahead.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Thank you for the opportunity, sir. Am I audible? Yes.

Vishal S. Budhya, Chairman

Yes, you are.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay, thank you. Thank you for the opportunity. Sir, I'm new to the company, so that I actually don't understand whether your capacity utilization has increased from 40%, 42%, and your realization has increased from 4,200 per ton. Realization has gone up marginally, it has gone up. But the EBITDA actually has come down. So, you can explain that, you know, on that point. So, what is the coal cost? I know it is a pass-through. So, what is the coal cost you have built in in this quarter? Whether the pass-through is expected in the coming quarters? And what is the total steam generation from your own plant and the purchased steam? So, that will tell why the EBITDA pattern has come down from 1,000 rupees to around 818 in this quarter. And secondly, about this, you know, the interest cost, because you have raised funds. So, despite that, our interest cost has gone up in this quarter, particularly from 6 crore to 9.6 crore. And also another thing, the cash generator for preparation, you have mentioned in that, we have paid the liability. So whether the further repayment of the date is expected in the coming quarters so that the interest cost will go down or how we should look at it, if you can answer those questions, that would be helpful. Thank you, sir.

Vaibhav Gattani, CFO

Yeah, so I think, sir, there were four or five questions in one question. So I'll try to address all of them. If I miss you, you may please ask the question again. So first, on the interest cost, sir, we had raised debt in the quarter ended June, which was to the tune of 130 crores, and part of which was paid off through IPO proceeds at the end of September quarter, because the IPO happened on September 17th. So, the impact, the interest cost was charged to the P&L for quarter 2, but the impact of that should be visible in quarter 3, the reduction in interest cost pertaining to those loans which were paid through IPO proceeds. I think the second question...

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Can I interrupt? Sorry. What would be the run rate for interest in the coming quarters, in the next two quarters?

Vaibhav Gattani, CFO

So, on the quarterly front basis, the interest cost which was there around 6 crore rupees, I think we should be a tad below that number. The quarter one number was around 6 crore, so we should be tad below that number.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay, okay. Can you go ahead with the EBITDA numbers and also stream your generation?

Vaibhav Gattani, CFO

So, in our case, as you rightly pointed out that the EBITDA, the coal prices are passed through. So, whatever was because it got passed on. But in these tough challenging scenarios wherein the fuel kept on increasing, we were able to increase the RGP along with the EBITDA per ton. And there is no lag as such. The lag would be of 15 days time in consumer, mostly at the time.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Your voice got disconnected. Sorry. Am I audible? It is still breaking. Can you please?

Vaibhav Gattani, CFO

Hello, am I audible?

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Yes, yes, now it is. Okay.

Vaibhav Gattani, CFO

Yeah, so I'll start again. Yeah, so EBITDA per ton improved year-on-year significantly. GP per ton, gross profit per ton improved significantly year-on-year due to two reasons. First, we shifted from credit purchases of call to cash purchases. So that helped us in improving that number.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Second, the voice is not clear.

Vaibhav Gattani, CFO

I'll log out and I'll rejoin again. Allow me.

Operator

Okay. Okay. Okay. Yes. Am I audible? Yes.

Vaibhav Gattani, CFO

Yeah, so the gross profit, I'll start again. So the EBITDA per ton and gross profit per ton increased almost by 300 rupees. In fact, more than 300 rupees per ton year on year because of two factors. One, we started procuring coal on cash basis, which we were doing on credit basis, so we were able to get that price advantage. The second one was our ways to steam facility utilization was at optimal level, and that contributed to the overall increase in GP pattern and EBITDA pattern. With regards to your question about steam generation and distribution, we sold 3,1642 tons of steam in quarter two, out of which our own generation was 2,31,775.59 tons, and the steam purchase and distribution was 69,866.67 tons. I think that answers your question. If you have any, please let me know.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay, and the call cost, what is the call cost you gave in this quarter, and what was the last quarter, and if you can give that data, your own steam realization, if this data is similar, you have blended realization as I was talking about, can you please give me your own steam realization and the purchased steam realization. Is there any difference or it is similar? Similar.

Vaibhav Gattani, CFO

Sir, that number of realization at the OR purchase or our own generation, we won't be able to give that difference due to customer sensitive information, competitive sensitive information, but you can safely assume that it is more or less in line with our blended realization. So that is point number one. And the point number two, the coal cost, which was there for two months of the last quarter, was more or less in line. So, 4,200 GCV coal was around 9,000 to 10,000 rupees per ton, which temporarily increased to around 10,500 to 11,000 rupees per ton by the end of September. It is still around 10,000 to 10,500 rupees per ton, as we speak, for 4,200 GCV coal.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay. So, you procure the coal from Indonesia, from the import market, right? Yes. Or you are using domestic coal, no?

Vaibhav Gattani, CFO

No, we are purchasing imported coal and utilizing the Indonesian imported coal only, sir, as of it.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay. Sir, is it possible to give a purchase steam cost per unit per ton? Is it possible or it is not? No, apologies, sir. Apologies. That information we won't be able to share, sir. Okay, should we calculate in this way that your purchase cost, raw material cost divided by your steam purchase, is it the right matrix to track?

Vaibhav Gattani, CFO

I won't be able to tell that. Apologies, sir. Because I think that bifurcation, this is the steam sales data which I had shared with you, but I haven't shared you the steam purchase data, what was the quantum of steam we have purchased. So, I don't know if you'll be able to make out that number or not, sir.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay, okay. So, you said this year, for 27, you will be doing the... I'm so sorry to interrupt, but can you please come back? Last question. So, what is the total number of steam sales for this year as a guiding for 27?

Vaibhav Gattani, CFO

So, we are targeting 25% plus volume growth for current financial year. So, it would be, okay, so then around we can say 13 lakh tons? Yeah, we did 10.66 lakh tons last year, so around 13 lakhs, 25,000 tons kind of number which we are targeting. Okay.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay, sir. Thank you. I will come back in quick. Thank you, sir.

Vaibhav Gattani, CFO

Thank you.

Operator

Thank you very much. The next question is from Line of Russian from Molecule Ventures. Please go ahead.

Speaker 10

What EBITDA pattern are we expecting from HEMATRAN EPC contract post 9% revenue share to government? Because as you mentioned that we use imported coal and transports from here to HEMATRAN, plants will impact our EBITDA pattern continually. So, will it be in line with our current blended EBITDA pattern or will it be lesser than this?

Vishal S. Budhya, Chairman

So, in the Himachal Pradesh tender, the agreement on exact pricing mechanism and the markup that would be passed on to us is still under negotiation, number one. So, that markup number will come, which will be not really in line with the exact numbers that we are doing right now. It will be fairly dependent on the cost of steam, as you would appreciate that, number one. Number two, we also are not looking at same margin because that's an EPC project where we do not have to invest. We are going to use the assets invested by the government. And the government's idea is again to have a reasonable cost of steam for the industries there. And that's the reason the government has invested there too.

Speaker 10

Will we majorly get operating partners post construction of the plant?

Speaker 11

Yes.

Speaker 10

So, we will ideally be generating slightly lower capita on that, as we have not done the capex from our books.

Vishal S. Budhya, Chairman

Yes, but not exactly, it's going to be not as good as that we...

Speaker 10

Sorry sir, your voice is not audible.

Vishal S. Budhya, Chairman

The investment is not there, so there will not be depreciation in our books and those things. So, maybe on PBT basis, we fall in line with our current business model.

Speaker 10

Sir, what is the difference in our EBITDA pattern for coal streams, for nitrogen and waste-to-stream?

Vaibhav Gattani, CFO

So, with regards to coal and waste streams are significantly different in waste and significantly high in waste. You can understand that the coal cost is almost replaced by waste. In our coal-fired project, we are making between 800 to 1,000 rupees per ton, whereas in waste, since this cost, we are making I will not be able to exactly tell you the number, but from the commentary you can understand that the number is significantly high vis-a-vis what we are making in our coal-fired projects. And the best part is out of the three under construction facilities, once the Jaggeda facility gets live in next two to three days, The three under-destruction facilities are on waste, and the revenue visibility is there, considering the contracts are already signed with the end consumers. The EBITDA part-time should jump significantly high for next full financial year, and on Q4 also, the impact should be visible in the numbers.

Speaker 10

And for nitrogen, sir?

Vaibhav Gattani, CFO

So, Nitrogen is not measured on per ton basis. We are billing it on Nmq per hour. So, it is not getting measured on per ton basis.

Speaker 10

Is there any way to compare it on Nitro-Nitrosis, any sort of conversion?

Vaibhav Gattani, CFO

No, I think the units would remain in terms of nitrogen.

Speaker 10

Do we have any softer commitment from government from the Himachal Pradesh plant for offtake?

Operator

For Himachal Pradesh you are talking about? Yes.

Vaibhav Gattani, CFO

So, as of now, there is no commitment as such from government that what would be the quantum of offtake. It all depends upon the industries that would be setting up their facilities in Una Baldrug Park. But you can understand that Bhadi, which is there in Himachal Pradesh, houses almost all the pharmaceutical companies. So the intent or the idea of Himachal Pradesh is to pitch this idea, the idea of setting up units of pharmaceutical companies in Una We'll first go to these companies which are raised out of Bandhi, and the government department, the government officials are very gungo, that they'll be able to garner good amount of interest, considering the incentives they are planning to give to the industries.

Speaker 10

Okay, sir. Congratulations, and all those questions, please.

Vaibhav Gattani, CFO

Okay, thank you.

Operator

Thank you very much. The next question is from the line of Akash Raval from Changwee's family office. Please go ahead.

Akash Raval, Analyst — Changwee's Family Office

Thank you, sir, for the opportunity. Sir, I wanted to understand regarding the penetration on the existing cluster. So, the volume load guidance which you have given to us, so that volume load will come from new capacity addition or are you targeting any existing clusters also our penetration is going to increase? I just want to understand the break-up between those two.

Speaker 11

So, yeah, please, sir.

Vishal S. Budhya, Chairman

So, this business has a last-mile connection possibilities all the time. So, all the plans are always on a slight ramp-up mode, slight or more in various cases. For example, Panoli Commission just last year. So, the ramp-up possibilities there are much higher, and we keep getting opportunities from people who are shifting or expanding. So, same facilities are always into deeper penetration mode, number one. Number two, yes, we are also going to get good revenue and good sales from the projects that are under commissioning right now. So, as our CFO said just now, that Zagadia, we are expecting to start selling steam within this month, November. So, and the other three projects as well are expected to be commissioned in the financial year and calendar year. So, all these numbers will keep adding from both directions, one from the deeper penetration in the better utilization of the existing plant, as well as new facilities being added. And two, trading business opportunities that we have already sealed, signed, and are into construction of those pipelines. So, we are expecting the good number of revenue generation from those two projects as well, the HACZ and Haldia.

Vaibhav Gattani, CFO

Just to add to what Vishal has said, you can look at our utilization, the existing facilities in quarter two, H1, or H1. Only the older facilities were live, and the utilization has been improving. If you look at year-on-year, in H1, the utilization improved by almost 500 basis points. If you look at sequentially, quarter-on-quarter, the utilization improved by almost 100 basis points. And if you look year-on-year on quarterly basis, the utilization improved by more than 700 basis points. So, this is what we are trying to say that utilization will increase at existing locations because we have already agreements signed with a few marquee names at existing locations, but in the new capacity which is coming up will definitely add to the overall volume number.

Akash Raval, Analyst — Changwee's Family Office

Got it, sir. And, sir, which sectors or new sectors which you are adding to your client list, if you can, apart from pharma and chemicals?

Vaibhav Gattani, CFO

So, food processing is one thing which will be there in the portfolio very soon. We have already signed agreement for that. Then, apart from that, the additive units are also signed agreement. So, these are two food processing, and this, apart from that, this geography wherein we are situated is predominantly dominated by chemical, agrochemical, and pharmaceutical.

Vishal S. Budhya, Chairman

And over and about this, the Piranha project is basically predominantly targeted on the textile cluster. Piranha is in Ahmedabad. Across the road is the Naroa textile cluster, which is a major addition of textile cluster to our business.

Akash Raval, Analyst — Changwee's Family Office

Got it, sir. And, sir, on the industrial gas piece, so we'll be selling nitrogen. So, I want to understand the infrastructure and additional capex which is required. So, are we utilizing the existing pipelines or we have to lay new pipelines for the same?

Vishal S. Budhya, Chairman

For infrastructure, we are going to use the same. So, the idea is to liberate the current infrastructure. We have to keep adding new pipes for different gases. So, the current pipes that we have added are only good for steel. So, one pipe can carry one material at a time. So, the other pipe, and these pipes are much cheaper, the nitrogen pipes that we are talking about right now. So, these products are going by a PPR pipe or these pipes. So, we just have to keep adding pipes. And on the machinery side, we have just added a PSA plant in place for unit, while other projects, other gases like pure nitrogen and oxygen with finite, we are still evaluating and we are still evaluating on are we exactly going to add immediate ASU plants or are we going to build some other infrastructure by gases and supply because that can happen even that can happen even faster to start with.

Akash Raval, Analyst — Changwee's Family Office

Got it, sir. And, sir, my last question is, how are we going to...

Operator

Sir, sorry to interrupt, but can you please rejoin the queue? Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address all questions, kindly limit your questions to two per participant. Thank you. The next question is from the line of Alex Matthews from Trinity Capital. Please go ahead.

Alex Matthews, Analyst — Trinity Capital

Am I audible, sir? Yes, you are. Sir, this is our second call in the month of October, and earlier we guided that we will have EBITDA margins in the similar range or will improve. But within the span of 15 days, our EBITDA margins have quite declined. So, how realistic are we in guiding that 25% volume growth will be achieved this financial year? And secondly, what is our achievable EBITDA margin, which we really believe that we could achieve, so that the street does not get negatively surprised?

Vaibhav Gattani, CFO

Should I take that question?

Vishal S. Budhya, Chairman

Yeah, yeah, please.

Vaibhav Gattani, CFO

Yeah, so, Alexi, just to confirm from our side, sir, we have always been vocal about the quarter two softness. The quarter two would be soft. We have been vocal. I think this was also communicated in quarter one earnings call. We had mentioned that the yearly EBITDA per ton should be in the range which we have delivered in quarter 1. Because quarter 2 is a cyclical quarter. Year on year, that has been the trend. In fact, we have done significantly better this year. The EBITDA per ton increased significantly high in quarter 2 with this last year. And this is what we had guided the street on. If you refer our TV interviews or even the earnings call, we were always of the view that the quarter two would be soft in terms of EBITDA. But on the yearly basis, we would be able to deliver what we had committed. So, I think market may have rejected it or may not have understood what we tried communicating back in quarter 1 endings call, but this is the trend. Quarter 3, quarter 4 would obviously be significantly higher in terms of the season is not red. We will have the dry season, so we will be able to utilize the fuel better, the transmission losses will go down drastically. So, we are still on the same, what we had guided. In quarter two, also, we had guided very clearly and categorically that it will be soft. Yeah, so that's what we wanted to emphasize upon.

Vishal S. Budhya, Chairman

And I would just like to add one thing. Sir, we have to appreciate that this is a business model which the market is still understanding. And this business model will always have this Q2. Of course, we will try to learn and improve even better next year. As we already did last year in my speech, I said that we are actually celebrating that we did Q2 versus Q2 last year versus this year. We did it better and we are sure we will do better things even next year. But still, we have to accept that Q2 is going to be soft in the upcoming years as well.

Alex Matthews, Analyst — Trinity Capital

Very well explained, sir. Now, sir, do we still maintain the realisticness of our guidance of 25% volume growth and improvement in EBITDA? I am talking about EBITDA margins, sir.

Vishal S. Budhya, Chairman

So, both in terms of EBITDA margin and in terms of volume growth, we are very much on track and we are confident.

Alex Matthews, Analyst — Trinity Capital

My best wishes to you, sir. Thank you so much for presently answering.

Vishal S. Budhya, Chairman

See you in the next call as well.

Operator

Thank you very much. The next question is from the line of Pawan Kumar from Shade Capital. Please go ahead.

Speaker 11

Am I audible?

Operator

Yes, sir.

Speaker 11

Thank you for the opportunity. Okay. So, our first question is, like, there is a negative operating cash flow, and you have alluded that trade table was paid. So, would we be expecting the same in the coming quarters?

Vaibhav Gattani, CFO

So, the negative cash flow was because of the reason we had IPO money and we had used that for early paying of the creditors and in turn we had availed cash discount. So, that was the reason you'll see that the trade payables decreased drastically. Almost trade payables have become zero as we speak and we are getting cash discount on our purchases. So, this current financial year, you will see that the number may look to be on a negative side. But again, once the next year is there, there will not be any reduction in paybus. The paybus would more or less remain in the single digit. So, you will again see this reduction of credit risk level coming back in terms of operating cash flows. And again, this is just because of the changes in working capital that has resulted into it. There is nothing on the business side which has resulted into this.

Speaker 11

Okay. And so regarding this quarter-on-quarters drop in a bidder margins, is there something to do with also the coal prices or just to the monsoon impact?

Vaibhav Gattani, CFO

Sir, it is just because of the monsoon impact. In fact, we had increased our steam prices by almost, if we will compare quarter 1 to quarter 2, we had increased prices by almost 17%, 17-18% from quarter 1 to quarter 2. At the same time, in the last month, we increased by 17-18%, whereas the coal prices also went up to similar extent. So we have that advantage, we have that pricing power that is given to us by way of agreement. So, it is purely because the coal which is there to be utilized during monsoon season because we are based out of an area which receives significantly good amount of rainfall. So, the coal which is available to use is wet. The transmission losses are significantly high during monsoon season. So, these two, three factors contribute to the decline in the efficiency on steam to fuel conversion. Otherwise, the pass-through has been there and will, as it is already guided by the agreements.

Speaker 11

Okay. So, my last question is like, if you really see steam sold versus the revenue, there was a significant delta, quarter on quarter and even year on year. So, would this be continuing for next quarters also?

Vaibhav Gattani, CFO

So, can you please repeat, I didn't get that question.

Speaker 11

Like if I see the steam sold, it will increase by 12%. And revenue from steam has increased by roughly 43%. Okay, it is significant delta in terms of the revenue.

Vaibhav Gattani, CFO

Yes, okay. Got it, got it. Yeah, got it. So 43%, again, we should not look at it because it is because of two factors. One, because of the increase in volume. The other one is because of the increase in fuel prices. So our request would be not to evaluate in terms of how much value has increased, how much sales value has increased. The important factor would always be to evaluate how has a better person moved. That is what we would want to guide the street on and not on value because in case the coal prices goes down, the sales value will have to be revised downwards as per the agreement. But the margins, the EBITDA part, and not in percentage term, but absolute term, those margins would more or less remain in similar range.

Speaker 11

Thank you for all the answers. Thank you.

Vaibhav Gattani, CFO

Thank you. Thank you.

Operator

Thank you very much, ladies and gentlemen. In order to ensure that the management is able to address all questions, kindly limit your question to two participants. Thank you. The next question is from the line of Vibhor Talreja from Nest Amsofio. Please go ahead.

Speaker 11

Am I audible?

Operator

Yes, sir.

Speaker 11

Thank you. Thank you for sharing the results. And I think my question is with respect to the guidance on volume growth, which is approximately 25% for this year. And for H1, we have achieved close to 14%. What that would mathematically imply is that H2 volume growth would be more like 35%, and on H2, H1, the growth will be pretty massive. I guess all that is a function of your new capacity coming in, but I just want to make sure that I got my numbers right, and we are expecting over 30% volume growth on a YY basis in H2.

Vaibhav Gattani, CFO

So, you were spot on. You rightly calculated, you rightly did the math. So, this is what the number should look like because of the factors you have already mentioned, the new capacity coming up. The existing locations ramp up, the utilization will increase. It is getting increased at existing location. So, the H2 will have to be delivered at 35% growth vis-à-vis H1 to have an overall increase of 25% year-on-year. And this is what the internal planning is on a monthly basis.

Speaker 10

Thank you very much.

Operator

The next question is from the line of Mihir from Pitme, Sunmat. Please go ahead.

Mihir, Analyst — Pitme Sunmat

Thanks for the opportunity. In terms of working capital, how should we look at trade tables going ahead? So, would you be purchasing coal on credit going forward? How do you foresee managing your working capital requirement, cash requirements going ahead?

Vaibhav Gattani, CFO

So, we would be purchasing, the intent would be always to purchase coal on cash basis. So, on the creditor fund, you can consider either 0 or 5 crore, 10 crore kind of. Apart from that, I think there should not be any creditor for fuel outstanding on our balance sheet date or on any particular day.

Mihir, Analyst — Pitme Sunmat

So, on the utilization also, like there is existing facilities are underutilized and what's the rationale behind going ahead and putting up capacities while existing capacities are underutilized?

Vaibhav Gattani, CFO

So, the existing capacities were designed to take care of the future potential future business requirement of a particular industrial state so that the utilization levels has been increasing. It will see, as I mentioned earlier, the utilization levels have been increasing, but the new capacities which are coming up, it will go location by location. The Wapi location, the Wapi facility which is coming up, it is in the same GIDC, but it is almost 7-8 kilometers away from our already operational facility. So, and it is on the other side of the highway. So, we are setting up, we may be setting up in the same GIDC, but it is a bit far from our existing facility. So, this facility should take care of the nearby demand. The second one is Jagadiya, wherein we came for the first time. We have gone for the first time. The third one is Piranha. Piranha, we were anyways not there, so this is the first facility which is coming up. The Nandesri facility, which is going live, since we already have significant amount of volume consumption there, if we'll evaluate individual plant-wise, we required setting up a new facility in Nandesri, and hence we are on track. And the new facilities also almost sold out in terms of revenue time. So that's the thesis. We are not looking to do projects at locations which are saturated. We are trying to do projects at locations which the market has potential there to be catered by setting up additional facilities.

Mihir, Analyst — Pitme Sunmat

So, would it be fair to say that is it the constraint of the business that you can't service the customers beyond the range of 7-8 kilometers, like you mentioned for the WAPI?

Vaibhav Gattani, CFO

No, not really. The WAPI location was predominantly the new GIDC, the new area was targeted because it was on the other side of highway. Okay, and transporting a pipeline, transporting of steam or laying down the pipeline from one side of the NHIA road to other side of the NHIA road, it requires permission from NHIA authority, and that typically takes around one and a half to two years. This is what we have seen in the past. That is what we experienced in the past. And the customer, which was there, which is our customer in the new upcoming facility, is a marquee name, and we didn't want to miss out that opportunity. The revenue, the realization, overall, it was adding significant value to the overall Steamhouse brand. And as we opted off setting up a project, and anyways, we are also getting good demand on that particular side also. So, it made sense to set up a facility nearby to the facility of the end consumer, and in a one-and-a-half-kilometer pipeline network, we'll be able to sell out the entire scheme which is getting installed here.

Mihir, Analyst — Pitme Sunmat

And what kind of...

Operator

So, sorry to interrupt, but can you please rejoin? Just the last question.

Mihir, Analyst — Pitme Sunmat

Just the last question from the side. What is the reason for not aggressively expanding in Sachin, that the demand is the highest of all the locations that you have mentioned?

Vaibhav Gattani, CFO

Vishal, sir, if you will take this question and if you can guide. I'd love to answer this question.

Vishal S. Budhya, Chairman

So, Sachin, sorry, Sachin GEDC comprises of two kind of business models. One is the chemical industry, where we have major concentration. We have almost touched all the industries here in Sachin GEDC, which are into chemical pharma. The second big cluster you very rightly said is the textile cluster, which is much bigger in volume as compared to the chemical volume that we have currently. And this volume is but very price sensitive, because the buy of steam in their revenue is very high. Therefore, for them, we are evaluating right now, a big project where we might, we will be able to use the industrial and municipal waste of the city and supply steam to these industries. Two things. One, the cost of steam will go down. Therefore, we'll be able to liberate that cost and address all these customers, number one. Number two, we'll also be able to complement the city where a good solution will come out for both industries. So, yes, you very correctly said that Sachin GIDC is our next good bet to do work on.

Mihir, Analyst — Pitme Sunmat

Thank you so much for the opportunity. Thank you.

Operator

Thank you very much. The next question is from the line of Krisha Kansara from Boeing ANC. Please go ahead.

Krisha Kansara, Analyst — Baring AMC

Yeah, thank you for the follow-up. So, in the public interactions, you have clearly mentioned about the penalty clause, you know, which gets triggered when Steam House fails to receive Steam under, you know, Steam Purchase Agreement. So, that part is clear. That penalty is, I think, around 12% interest. My question is more from the steam generation and distribution point of view. So, in cases of any, you know, supply disruptions at the client's plant, because of issues which are related to our pipelines, or in cases where we are not able to supply the pre-decided quantity of steam, what are the penalty clauses in such cases? And have we faced any such kind of incident recently?

Vaibhav Gattani, CFO

In most of the cases, we do not have any penalty clauses. The steam will be supplied subject to availability that is clearly mentioned in the agreement. In fewer agreements, the steam supply, the quantum or the minimum guaranteed supply is to be calculated on quarterly basis. So, let's say the contracted capacity is 10 tons per hour. The minimum guaranteed supply, let's say, is 60% of the contracted capacity, which is, let's say, 6 tons per hour. So, if we are not able to supply 6 tons per hour on a quarterly basis, then only penalty can be levied, can be recovered by the customer. We have not seen any instance in past wherein we had paid any penalty for non-supply of steam. And there are exclusions in that particular calculation in case the plant is to be taken and the annual mandatory maintenance, those periods will be excluded while calculating. So we asked about any issues with regards to penalty.

Krisha Kansara, Analyst — Baring AMC

Understood. Thank you, sir.

Operator

Thank you very much. The next question is from the line of Rabindranath Nayak from Nirmal Bang Institutional Equities. Please go ahead.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Thank you, sir. An audible? Yes, sir. Yes. Sir, thank you. Sir, you, two plants, that is waste-to-energy plants are coming. One is, you know, Nansari phase 2 and the other one is Wapi phase 3, phase 2, phase 3 perus, yes, phase 3 in GIDC, right? Okay, they are expected in the second half of this year, right? Sir, yes, sir. Okay, they are in track. Now, you mentioned that the pool... Sir, just to add, sorry to interrupt, there is one

Vaibhav Gattani, CFO

more waste-to-energy plant which is expected to go live in next calendar year. So, just wanted to add, there are three under-construction facilities and not two for waste-to-stay. Okay, but please, sir, please go ahead, sir.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

These two facilities are coming in the second half, would you? Yes, yes, yes, yes, yes, that's true, sir. Okay, so that, you know, now coming back to this facility, your fuel cost here, whether it is lower than the, definitely it should be lower, or how the project economics works in terms of output, If you are selling the steam at 4,000 rupees per ton, like your current capacity, then fuel cost will be lower in this car, or the capacity cost is high so that the margin will be lower. How the economy will work on the margin front? Can you please explain a bit on this?

Vaibhav Gattani, CFO

On the waste to steam front, you are asking about, sir? Ah, yes, waste to energy. Sir, okay, got it. So, on the waste to steam front, sir, CAPEX is almost 1.5 times to 1.75 times of our coal-fired projects if we compare apple to apple in terms of capacity. But on the OPEX front, sir, the OPEX cost goes down by almost 50%, 55%. Oh, so that's the benefit, that's the advantage we have in our waste-to-stream facility. Capex-wise, it is higher, but again, even at such Capex level, we are able to have our payback within two and a half to three and a half years once the project is stabilized.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Okay. So, if you go by the, you know, catch-to-performance, these two facilities will come, which will also reduce coal dependency on this project will be almost nil. There is no coal cost involved. So, then there will be some expansion in the margin front. Is it the right understanding?

Vaibhav Gattani, CFO

Yes, sir. That's what we are trying to say. That's what we are trying to hide the state. That there should be an increase in absolute EBITDA per ton than what we have done in quarter two. Quarter 2 was an, is an abnormal quarter, I would put it that way, or is an exceptional quarter, not abnormal, is an exceptional quarter, historically, because of the monsoon challenges, and also, just to add two things, because, as I told in my speech also, that the steam supplier, one of the steam supplier was not able to supply steam for one particular month, otherwise the volume growth would have been much higher, It would have been higher than what we did in quarter one. Also, if you would have seen the TV channels, news channels, and if you would have read the newspapers, there were periods in the month of July in Surat, Vapi, and Keshwan Nandesvi, wherein the industries, the industrial state got shut down. The industries were filled with water. This happened post-1968. This was very the flood kind of situation in this part of the world, in this part of the country, and hence the volume utilization, although it grew by 1%, but this could have been much better. But because of these challenges, and hence, the quarter 3 and quarter 4, the quarter 4 in particular, once these waste-to-steam facilities, the two of these waste-to-steam facilities start generating revenue, the EBITDA per ton should increase significantly higher. And hence, we are guiding that the next full year's EBITDA per ton should be between Rs.1100 to Rs.1200 per ton, because these 3 plus 1, 4 waste-to-steam facilities should be operational for next full year. And hence, we are very confident on achieving that number. Okay, sir. So, there are two monitorables for the second half.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

One is your cost reduction. Just last question. The cost reduction through interest, the finance cost will go down, and the EBITDA term will expand in the second half. Is it the correct understanding, sir, for the second half? Yes, sir.

Vaibhav Gattani, CFO

Yes, sir. That's perfectly what we are trying to do.

Rabindranath Nayyar, Analyst — Nirmal Bang Institutional Equities

Thank you. Thank you very much, sir.

Vaibhav Gattani, CFO

Thank you. Thanks a lot, sir. Thank you, sir. Thank you.

Operator

Thank you very much. The next question is from the line of Pawan Kumar from Shade Capital. Please go ahead.

Speaker 11

Thank you for the follow-up opportunity. Sir, as you are telling that waste-based plants are having better economics, can you highlight any limiting factor in this?

Vaibhav Gattani, CFO

So, waste is the only limiting factor. In case, if we have waste available nearby an industrial state which has steam demand, the intent of company would be to set up waste to steam projects there. The waste is the only limiting factor. Apart from that, it's a much profitable business opportunity for us. And the target is to develop this model multifold in times to come.

Vishal S. Budhya, Chairman

I would like to add on this. Waste quantity and waste quality, they both have been the most important factors on setting up waste to steam project, number one. But what we have also done differently is we have added industrial waste over basket. So whenever you read about waste-based projects, we are generally targeting municipal waste. Municipal waste generally has a lower calorific value in India. What we are doing is we are trying to mix industrial waste with municipal waste, which is, one, solving the local problem. So when we set up a project in Wapi, it is solving the issues of the industries that are generating waste in Wapi, as well as the city nearby. So, it's a multifold solution that we have brought, and this is very good economics for us. The calorific value of overall feed increases in this case. So, ways to steam model, the only limitation is that we should find such opportunities. We cannot have it everywhere.

Speaker 11

And so, the last question, like in an assumption of capacities, we are assuming that plant has to be used for 24 hours. Can you just tell us how many customers are using this facility for being 24 or some color on that?

Vishal S. Budhya, Chairman

I think not in that. Approximately something, I will not be able to challenge this number, but hardly 7% of the industry would be or 10% max. In number of industries, hardly 10%, not 25%.

Operator

Thank you very much.

Operator

This is the last question. I would now like to hand the conference over to Mr. Vishal Esputia, Chairman and Managing Director Thank you, everyone.

Vishal S. Budhya, Chairman

Thank you, Amitji. Thank you, I practice team. Thank you, the analysts and participants in the early call. We really appreciate the time and the interest. Rather, some of the questions that were brought by the analysts and the participants were really good opportunity for us to explain our business model. And I think we will need a complete one-year round to explain what Steamhouse is, what Community Boiler Business is. But once again, I really appreciate and thank the investors for investing, for all of you to participate here, and the whole team everywhere. Thank you so much.

Operator

Thank you very much. On behalf of Steamhouse India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Krisha Kansara, Analyst — Baring AMC

Thank you.