Maharashtra Seamless Ltd.’s production volumes declined q-o-q during October-December, 2023 (Q3FY’24), the company reported in its investors’ call held recently.
The company dominates the seamless pipes market with a 55% share, with operating factories in Nagothane & Mangaon (Maharashtra) and Narketpally (Telangana). It also holds an 18% share in high-frequency ERW pipes (API certified) with a plant in Nagothane.
Once the finishing facilities in Telangana are installed, the company’s existing capacity of 100,000 metric tonnes per annum (mtpa) will be activated.
MSL’s ambitious expansion plans:
Narketpally plant (USTPL):
- Adding heat treatment, finishing, and EMI facilities to boost production capacity.
- Installing a captive solar plant for sustainable energy.
Mangaon plant (Maharashtra):
- Adding a complete cold drawn pipe line with pilger, drawbench, and OCTG capabilities.
- Upgrading existing facilities for enhanced production efficiency.
Nagothane facilities:
- Transforming the hot mill into a PQF mill for premium quality finishes.
- Installing advanced equipment for sizing, cutting, and testing (both ERW and OCTG lines).
- Upgrading existing machinery and implementing electronic advancements.
Overall, this ambitious investment aims to increase production capacity, improve product quality, and enhance operational efficiency across all three manufacturing plants.
Other highlights:
Production declines q-o-q: The company’s production declined by 6% q-o-q to 126 kMT in Q2FY’24 compared with 134 kmt in the last quarter. Y-o-y production increased 7% as against 118 kMT in Q3FY’23.
Sales up q-o-q: Saleable steel sales volume went up by 2% q-o-q to 135 kMT in Q3 from 133 kMT in the previous quarter. Sales registered a 10% increase y-o-y as against 123 kMT in Q3FY’23.
EBITDA shows growth q-o-q: The company’s EBITDA registered a rise of 12% q-o-q to INR 343 crore in Q3 compared to INR 306 crore in the preceding quarter. Moreover, EBIDTA increased by 52% y-o-y against INR 225 crore in Q3FY’23.
Order book position: MSL order book position as on 26 January 2024 stands at INR 1,563 crore. Of this, INR 1,019 crore (nearly 65%) is for exports and others, while INR 544 crore is for ONGC and OIL orders.
Company expects order book position to remain steady based on current trend of seamless pipes prices and support of back-to-back booking of raw material leading to locking of margins and negating impact of fluctuating raw material prices.
Domestic demand is booming, driving rapid procurement and dispatch of orders from ONGC and Oil India. BPCL, GAIL, Indraprastha Gas, and Assam Gas have issued large tenders for ERW pipes, signifying significant investment in oil and gas infrastructure.
Outlook:
Despite volatile raw material markets, the company has secured a guaranteed supply that shields them from price fluctuations. This, combined with favorable trends in seamless pipe prices, fosters stability in their profit margins.