MAN Industries delivers steady performance in Q1FY'22 despite Covid-led disruptions

MAN Industries, a leading pipe manufacturer in India, delivered steady performance in spite of hiccups caused by the pandemic. It managed to overcome all challenges like production curbs due to shortage of oxygen, and logistics constraints on account of limited movement owing to regional lockdowns.

The company is confident of achieving a topline of INR 3,000-3,500 crore in 3-4 years with further production expansion in the ERW and bending pipes segment. Also, Man Industries aims to attain EBITDA of 11-13% every year. Currently, the company is operating at 40-50% capacity utilisation levels.

With respect to ERW steel pipes, a new line is to be installed at its existing facility at Anjar, Gujarat with a projected installed capacity at 1,25,000 mntpa and an estimated capex of around INR 150 crore to serve the hydro-carbon and city gas distribution (CDG) sectors. This expansion is expected to be completed by May'22.

Meanwhile, steel bends, value-added products units and upgradation are to be implemented at Anjar plant at an estimated capex of INR 100 crore, which are expected to be operational by Apr'22.

Furthermore, the ERW plant expansion is expected to start production by Q2FY'23. Having 6-7 competitive players in the industry, MAN Industries targets to gain 10-15% market share in a year's time.

Highlights

1.Leveraging existing capacity to drive growth: The existing LSAW and HSAW capacity of 5,00,000 t each is driving the company's growth.

• It aims to optimise utilisation to generate higher revenues from the current set-up.
  
  
• Focus on higher-ticket projects for better utilisation and reduced wastage.
  
  
• Debottlenecking to enhance production and improve margins.
  
  

2.Strong demand from oil and gas sector: The oil and gas sector being the largest consumer of steel pipes, the company expects global demand for steel pipes and tubes to increase at a CAGR of 6.2% from $142 in 2014 to $230 in 2027. Also, increase in spending for exploration and distribution of oil and gas will lead this growth.

3.Limited business in water segment: Although the situation has eased post-Covid, the company is still not very aggressive on bidding on water projects as the margins are quite less. However, their main focus is on the oil and gas segment as 90% of the projects come from this space.

Also, the company sees opportunities worth INR 140,000 crore for large diameter steel pipes in government water infrastructure projects like the Jal Jeevan Mission and another INR 1,12,000 crore in the National River Linking Scheme.

The Union Budget 2021-22 has allocated INR 50,000 crore for the Jal Jeevan Mission.

4.Update on order book: The company's current unexecuted order book as on date stands at INR 1,500 crore, to be executed in the next 6-9 months while the bid book stands at INR 1,000 crore. From these orders, the company expects to achieve 30-32% gross margins for the full year. The company continues to have a robust book of outstanding bids for more than INR 1,000 crore at various stages of evaluation for several oil, gas and water projects in India and abroad. The company therefore expects good order inflow in the near future.

"We expect the demand for SAW pipes to remain stable on account of strong policy support from the government in the form of increased gas consumption in the overall energy mix, Nal se Jal programme and the National River Linking Project etc. Also, crude prices remaining elevated at $70 per barrel, should aid in incremental capex in the oil and gas sector. This should benefit our company," said Dr R.C. Mansukhani, Chairman, MAN Industries (India) Limited.

Seeing the traction in the oil and gas sector, the company is unveiling a new product offering of ERW pipes, which, it said, will be an additional growth engine.