Saket Jindal, managing director, Maharashtra Seamless, expects to see about 12-15 percent margins from new orders. In an interview to CNBC-TV18, Jindal says the company should be able to achieve this number despite a slow US market.
Maharashtra Seamless won an order worth USD 22 million from US oil company, Statoil. "We will be starting the delivery within a few months like starting next month and then completing in three to four months. So, it is a good requirement and it will fill up our order booking which was a little lacklustre as recently and give us more comfort levels in terms of our profitability and production," added Jindal.
Below is the edited transcript of Jindal’s interview to CNBC-TV18.
Q: Could you give us more details about this USD 22 million export order you have one? When will the revenues accrue from it? What kind of margins?
A: We have got this order from Statoil in USA. It is an oil company. It is a seamless pipe order and these are all casing pipes. There are some electric resistance welded (ERW) requirements also which is higher diameter like 9.5 ince x 8 inch and G55 grade. We will be starting the delivery within a few months like starting next month and then completing in three to four months. So, it is a good requirement and it will fill up our order booking which was a little lacklustre as recently and give us more comfort levels in terms of our profitability and production.
Q: If you complete the delivery in the next three to four months does that mean you will book this entire revenue of USD 22 million in the coming quarter?
A: Yes, in the coming quarters we can say we will be doing 80 percent delivery.
Q: What is your order book position and what is the capacity utilisation at Maharashtra Seamless?
A: Our order book position is a little below the expectation as of now, but still it is picking up. We have generally like a month-and-half order booking in seamless capacity. We are still more comfortable on ERW. For ERW pipes we have got a Hindustan Petroleum Corporation (HPCL) order also which is around Rs 80 crore.
Q: What is the capacity utilisation in all these categories?
A: For ERW pipes, in two and half months it will be almost 100 percent capacity utilisation and later on if the orders starts coming in it will continue like that.
Q: If you can give us for the past six months or one year what has been the average utilisation in all your categories?
A: If you see this financial year March ending, it has been little lower around 60 percent utilisation, the year before that was more than 90 percent.
Q: Could you tell us what the actual order book stands at and any more deals which are in the pipelines or order wins?
A: In Oil and Natural Gas Corporation (ONGC) we have bid for around 95,000 tonnes and that tender is expected to open in the end of the month and we hope to get a substantial share of this requirement. In exports, we have been bidding in USA specially and there are certain oil companies where we have bid and we expect to close some deals in the near future.
Q: Could you tell us how the margin picture on these new order wins have been, particularly on the export side? Are they showing you some sort of an improvement because raw material prices have come down? What is the margin trajectory on these order wins?
A: The margins are quite reasonable. Although it is very negatively priced because the market in US is also quite slow and it is not as bullish as it was earlier, but still we can say approximately 12-15 percent margins.
Q: What is the percentage of your export book?
A: If you see the trend, it has been around 30 percent share of the export market and currently also export has substantial share. One can say about 25-30 percent should be in our export book.