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00:00Hello and welcome, you're watching the small and mid cap show. I'm Mahima Vachrajani and
00:11with me is Anushi Vakaria. Well, today we're going to speak to two very interesting managements.
00:16First off, we have man industry and we're joined by Mr. R.C. Mansukhani, chairman of
00:21man industries. Welcome to the show, Mr. Mansukhani. My first question to you is a big order win
00:27on cards. What is the kind of revenue potential that you're expecting from this particular
00:32order, almost a 1,900 crore order? So, this order, 1,850 crore from the international
00:41bidding, from the international market and the offshore pipeline. Ours will be supplied
00:49to offshore pipeline and is a well-reputed island gas company putting up the offshore
00:57line. After this order, our order book is roughly around 4,000 crore. The mix of domestic
01:12order and export order, the export order approximately 3,600 crore and domestic order 400 crore.
01:20And this all will be completed, we are trying in one year, one year, during the one year.
01:27Understood. So, Mr. Mansukhani, this big an order win, what is the kind of revenue potential
01:33that you're expecting by the end of FY25? FY25 revenue potential, you are talking about
01:40the potential, we are trying to reach 4,000 crore. This year was 3,200 crore. And
01:49the roughly 25% growth this year. Next year, we are potential for 100% growth from that to 24%
01:58as regard to this new orders and some bid we had given in the international market,
02:04which is around 12,000 crore. As well as our subsidiaries company also going to start
02:11value-added products and synergy business also, which will also come. The 25-26 will be
02:20much better, higher EBITDA, higher turnover in coming time. Mr. Mansukhani, I know she's joining
02:28in here. Now, I want to understand about the kind of order book that we are looking for by the end
02:32of March 25. So, your execution, you mentioned that it's going to be in the 12 to 18 months.
02:39I want to understand what's the kind of order book that we look forward to in FY25,
02:42and what usually is the kind of execution periods of your orders?
02:49Right now, we have around 4,000 crore order book. Out of 4,000 crore, 2,500 crore
02:55would be the current year, before 2025 we have to do. In the next three quarters,
03:03roughly 2,500 crore. And the next year will be 1,500 and plus new orders, which we are expecting
03:12the same trend of the growth in 25-26 also. And as well as to our other units also going to start,
03:21which is the subsidiary companies. In consideration, we are planning to reach 6,000
03:27crore in next two years. Okay, Mr. Mansukhani, fair here. Now,
03:32on the export side of the business, I understand that this is an international order. I want to
03:37understand the kind of margins that these international orders have versus the domestic
03:41orders that we generally get. Is it on the higher side?
03:47Yeah, this is a higher EBITDA margin business because of the special uses of the offshore,
03:55where the special coating also needed. So, this is a higher, we are anticipating 14-15%
04:02EBITDA for this order, as well as the current order and some low value added water, which is
04:08our segment only 10%. So, then if you see the water, island gas and export, the mix of the
04:16order, the next year we should reach around between 12-13% our goal to reach the EBITDA,
04:23which will be much, much, much better. Got it. Mr. Mansukhani, you are diversifying
04:30into new segments of stainless steel as well. Give us some color as to what is developing there,
04:35what is the kind of capex that you are planning in the stainless steel side of things?
04:39Yeah, the SS plant is coming in the Jammu, which is a project cost approximately 500 crore.
04:48And all the equipments, the major equipments we order one year before, which is going to get the
04:55delivery in a few months. And we are planning to start on 25th onward. And that is a high value
05:03orders, high value product line, which will be give the additional revenue in first year
05:10around 800 crore. And then slowly, slowly we'll improve it, as well as to our own pipeline
05:16business also, we are doing some expansion and some diversification. Also, date revenue also
05:22improved as well. ERW also we started, the SAW, ERW, SS and again the value added product.
05:34All including the basket, we will be in the range of around 6000 crore next two years.
05:40All right, sir. So, considering this capacity addition that we are making in the stainless
05:43steel pipes and the ERW, I want to understand what is the kind of capex that we've laid out
05:48for this year and going forward the next two years as well, if you can give us an outlook on that.
05:55Right now, our capacity is roughly 1 million tonne and then we added 150,000 tonne ERW,
06:03which is already started to three months before, four months before we already started.
06:08We got all the acquisitions, API, monogram, etc. Jammu, we are coming around 25,000 tonne
06:16seamless pipe, which is a high value product. And some companies plan putting up the plant
06:24in abroad also, which will be the additional revenue, the capacity would be around 500,000
06:29tonne, where the some approvals required and then work is going on the full speed.
06:35Understood. And Mr. Mansoor Khan, you know, considering all of these
06:39capacity additions, in Q4, your capacity was around operational, I mean, utilisation was
06:46around 45 to 50%. So, FY25, what is the kind of utilisation that you expect, you know,
06:53by the end of FY25, let's say? Still, although this time we are very busy,
07:00but capacity utilisation is 60-70% is going on. And we will see the near future. Mostly,
07:10we are going to utilise more capacity rather than putting more money in the company.
07:16Although our company is debt-free, we have the surplus cash around 200 crore
07:20end of this March, 24 March. So, without getting the additional load of the company,
07:27it is debt-free. The more revenue, more productivity, more EBITDA improvement,
07:33the company mission is getting much, much more benefit to our shareholders.
07:39Mr. Mansoor Khan, I'll stick to these two segments that you're bringing in. Now,
07:44over here, if you have to look at your margins in general, 10%, which are expected to remain
07:48flat this year, but in the next three years, you're seeing 15% of margins, as per your last
07:54conference call. I want to understand, like, in the stainless steel pipes and the ERW,
07:58what are the kind of margins that they have as compared to the other segments of your business?
08:04We are taking the blended EBITDA, which will come current year, little improvement last year,
08:14although revenue will increase. We are anticipating between 11% to 12% current year,
08:19and 12% to 13% next year. And then in 26, 27 onward, the full-fledged, there will be much
08:29higher, but this time we cannot announce, but we can give the little bit guidance for the two year,
08:33current year, next year. There will be improvement and subsequent later on also,
08:38which we are not confident yet. All right. And lastly, I just want to touch,
08:45there was an important, there was an interesting note from MK, wherein they had said that with the
08:50addition of these two segments, that is the stainless steel and ERW, they expect the revenue
08:56to double in the next three to four years. So what is the kind of overall revenue potential?
09:00We discussed the short term side of it, the near term, but overall, how do you view it as an all
09:05in the next three, four years line of business with the addition of these two capacity additions
09:10that we are making? Yeah, we are, we are anticipating the growth will be around 100%
09:17compared to 24 closing. 24 closing were approximately 3000 plus. So we are, we are
09:25able to achieve 6000 crore in next two years. And subsequently the growth pattern will continue
09:32because, but the capex will be completed and then growth will continue every year.
09:38Got it. Well, Mr. Mansukhani, thank you so much for taking our time and speaking with us at NATV
09:43Profit and giving us those insights on man industries. Now we're going to speak to Zaggle
09:49and this is on the back of an agreement that they've entered into with Hero Motocorp Limited.
09:54To talk about this further, we're joined by Mr. Raj P. Narayanam, founder and executive chairman
10:00at Zaggle, who joins us now. Welcome to the show, sir. My first question to you is that,
10:06you know, this particular agreement with Hero Motocorp, what is the kind of revenue potential
10:12that will bring into your books overall for FY25? Sure. Thank you so much for having me on the show.
10:20See, this is a great, you know, arrangement which we have entered, contract which we have entered
10:27into with Hero Motocorp. This is basically on the, you know, save and save product,
10:32which is expense management and employee benefits. You know, revenue is, you know,
10:37would still take, you know, too early to say and, you know, we really do not, you know,
10:42comment on specific, you know, contract. But overall, I think it would add very well to the,
10:49you know, to the revenue. Got it, sir. And sir, just with regard to,
10:56you know, how the journey for this will work, this is obviously an annualized contract,
11:03is that how annualized revenue realization which you will be, you know, penciling in every year?
11:10No, yeah, you know, so it is like a monthly revenue which we would be generating,
11:15you know, consistently, month on month, month on month, and this is, you know, contract till
11:19termination. So, you know, we expect this year, you know, to do very well and this is simultaneously,
11:25you know, we are also very hopeful that, you know, this will continue for,
11:28you know, many years such. Understood. And sir, just in terms of
11:33revenue potential that this unlocks for you even going forward, is there something in mind in terms
11:41of you have got Hero as a new client? Is there also some other products which you would be
11:47looking to cross sell to Hero? Oh, absolutely. You know, the entire
11:52opportunity is land and expand. And, you know, while landing into Hero, Hero is a very, very
11:58large corporate with thousands and thousands of, you know, employees and, you know, and is
12:02absolutely a class, you know, company, we are very proud of entering into this agreement,
12:08this will give us opportunity not only to expand our current business, but also look at, you know,
12:13various other opportunities to sell our products to them. And we hope that, you know, in maybe
12:19next couple of years, we should be able to, you know, fully, fully on board where, you know,
12:24Hero with all our, you know, products. Understood. And, sir, how difficult is it
12:31once someone on boards with you, just want some perspective, how difficult is it for them to
12:38migrate to other competitors away from you? Is it, is that, does that happen often or does
12:46that nearly never happen? Just want perspective on that. Okay, so, you know, I'll give you a very
12:51straight and candid answer. It's difficult. It's not easy, you know, to replace once you have
12:57entered, you know, into a corporate because there are a lot of things, you know, which you do with
13:01the corporate, you know, on boarding of, you know, their entire employees on your platform,
13:06you know, plus ensuring that, you know, they are issued cards, then those cards are loaded.
13:11And, you know, when you load the cards, you know, month on month, month on month, there is
13:15reporting as to, you know, how much has been spent, you know, what time period has been spent,
13:20etc. So, there is a lot of integration which, you know, takes place. So, it's not easy once,
13:25you know, unless and until, you know, you go for, there is nothing which will, you know, make the
13:31corporate ask you to move because typically, these are all long-term contracts, you know,
13:37spread over years and years. Sure. So, I take your point. Now, you know,
13:43you've guided for doubling your revenue from 750 odd crore, likely to 1500 crore by FY26.
13:52How much of this 1500 crore as per your estimate would be recurring?
13:57And how much will Hero likely contribute to this revenue growth?
14:02You know, see, we are not a very concentrated, you know, customer-concentrated company.
14:08We have like every year, we are adding about 600 to 650 clients. Today, we have about,
14:15you know, 17 to 19% of cross-sell. We want to move that cross-sell from 17, 19 to maybe 25%,
14:22you know, over the next, you know, few years. And the whole idea is that, you know, at 775,
14:29you know, doubling it to 1500, you know, doesn't look tough at all. You know, there are too many
14:35tailwinds, you know, which we are seeing, you know, the digitization is happening at a rapid
14:41speed. And we expect, you know, the outlook to be very, very bright, you know, for the next 2-3
14:47years. And of course, too early to say about the long-term game. But, you know, one of the things
14:53which we are always consistently maintaining is that, you know, we have to grow at a profitable
15:00speed. You know, the growth should not come at the cost of, you know, profits. And that is where
15:05our focus is. Understood. Sir, you also, so how much would the annual revenue roughly,
15:12annual recurring revenue roughly be at? Would that number be available at all?
15:17What component of your revenue? So, if you really look at it, you know, our business is into,
15:24you know, three parts, you know, one is SaaS, you know, which is the recurring revenue,
15:28which is the software fees, you know, the second is the program fees, which is, you know, in one
15:33way recurring, but you know, it depends on the spends. So, I think, you know, majority of our,
15:38this again, these two constitute, you know, fairly large number, I think both of these,
15:44you know, would be recurring in nature with majority of our clients. So, I would say
15:48up to maybe 95, 98% of our clients, this would be recurring in nature.
15:53Got it. And with regard to margin expansion, you've guided that in two to three years,
15:57your margins will likely expand. Now, I want to try and get perspective on this because
16:02you're winning new orders at a very fast pace and you're largely a software-based company.
16:08So, why this slight delay in margin expansion? Could you give us perspective on that?
16:15Yeah. So, you know, if you look at it, Harsh, you know, the way we are improving and increasing
16:22the number of clients, you know, also, you know, you have to implement the software in
16:29these companies and then, you know, these companies who are taking the software plus
16:34the transaction plus the card for the first time, it will take a little bit of time,
16:38you know, for them to go, you know, for them to spread across the company. So, you know,
16:44that takes time and that is why what we are saying is the operating leverage which has to kick in.
16:48So, it kicks in, then again, you expand and then again, the operating leverage, you know, kicks in.
16:54Okay. So, that is how, you know, we overall see it will take a little bit of, you know,
16:58while we are writing that it may take a little bit time, but you know, we possibly will try to
17:04outdo, you know, our guidance. Understood. And with regard to cash balances, you know,
17:10you have a very strong and large cash balance in organic expansion. Is that what you're looking at?
17:16Or what's the plan with regard to cash balances? So, you know, the idea is to grow and, you know,
17:22in next five, seven years become a billion dollar company. That's our aim, you know, in that
17:27organically, I think majority will come organically, but we are constantly looking at
17:34inorganic expansion. You would hear from us, you know, very soon, maybe in a month or so
17:40about one, you know, acquisition which we are planning to make, you know, and post that you
17:45will constantly see that, you know, wherever there is either geography device or, you know,
17:51it is in the adjacency in terms of products, you know, we would be going ahead and acquiring
17:55companies. Understood. Sir, we look forward to that announcement. But is there a range in which
18:02you're looking at acquisitions just in terms of size? Would it be 100 to 150 crore? Could you give
18:07us a number there, broad? There would be, you know, like basically some tokens, okay. And along
18:13with some tokens, there could be a large, you know, opportunity acquisition can come, but you
18:19know, you also understand that there is always a slip between cup and lip. And especially when
18:24you are trying to acquire a large company, there are various things which can go wrong. That's why
18:29I don't want to, you know, stick my head out and say that, you know, we will do this. But, you know,
18:35let's cross our fingers and nothing is going to happen, I think, you know, till the Q4, you know,
18:40of this financial year. So, we should really prefer a large acquisition. I think we should
18:46wait till then. Okay. Great, sir. It's been a pleasure speaking with you. Thank you so much
18:51for coming in and chatting with us very candidly. Thank you, sir. Thank you. Okay, with that,
18:59that's all the time we have, in fact, on the show today, completely out of time on the small and
19:04mid-cap show from Mahima, myself, Anushi, everyone who puts the show together. Thanks so much for
19:09watching. Stay tuned. On the other side, more to come. Stay tuned to NDTV Profit.