MAHSEAMLES

E-Communication MSL/SEC/SE/2022-23 17th October, 2022 BSE Limited National Stock Exchange of India Limited 25th Floor, P.J. Towers, Exchange Plaza, C-1, Block-G, Dalal Street, Mumbai-400001 Bandra - Kurla Complex Bandra (E), Mumbai-400051 Stock Code: 500265 Scrip Code: MAHSEAMLES Dear Sir/Madam, Sub: Earnings Presentation Dear Sir/Madam, Pursuant to Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, please find enclosed Earnings Presentation for the quarter and half year ended 30th September, 2022 issued by the Company. You are requested to kindly take the same on record. Thanking you, For Maharashtra Seamless Limited Ram Ji Nigam Company Secretary Encl.- As stated above Earnings Presentation Quarter ending 30 September 2022 17 October 2022 1 Forward Looking & Disclaimer Statement This document contains “forward-looking statements” about our business, financial performance, skills and prospects. Statements about our plans, intentions, expectation, beliefs, estimates, prediction or similar expression for the future are forward-looking statements. Forward looking statements are based on management‟s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil & gas companies, steel prices worldwide and domestic, economic & political conditions. We can not assure that outcome of these forward-looking statements will be realised. The Company disclaims any duty to update the information presented here. The material presented can not be used for any other purpose in any form without our express written consent. www.alimtiaz.com 2 Maharashtra Seamless – Segments & Capacities Seamless Pipes ERW Pipes Renewable Energy Rig • MSL • New generation • Wind • 450,000 mt/annum offshore jack up rig • 7 MW at • API certified Maharashtra • USTPL • Operating with • High frequency • 100% subsidiary 98% efficiency on 3 • PSL 2 • Solar • 200,000 mt/annum year contract with • 125,000 mt/annum • 52.50 MW AC at ONGC at day rate Maharashtra & • Total of USD 38,656 Rajasthan • 650,000 mt/annum from May 2022 • Market share of 55% in seamless pipes segment with manufacturing facilities at Nagothane & Mangaon in Maharashtra and Narketpally in Telangana. • Market share of 25% in the API certified, high frequency ERW pipes segment with manufacturing facility at Nagothane in Maharashtra. • Capacity utilisation of pipe segments will improve in FY 2022-23 due to improved efficiency and strong demand. www.alimtiaz.com 3 Products & Industries served Industries Others Seamless ERW (Coated & Premium Served Pipes Pipes Connections, Pipe Fittings) Agriculture  Automotive  Bearing  Chemical   Drinking Water  Engineering  Fertilizers  Housing  Irrigation  Mechanical  Oil and Gas    Petrochemical   Power   • Hot Finished • OCTG Casing • MS & GI Pipes • 3LPE,3LPP and • Pipe Fittings Pipes & Tubes and Tubing • API Line Pipes FBE Coated • Premium • Cold Pilgered / • Cylinder Pipes • OCTG Pipes and Casing Pipes Connection Pipes Types Cold Drawn Tubes • Subsea Sour • Tubing • Internal Coating • Boiler Tubes Service Seamless Pipes • API Line Pipes Pipes • OCTG Drill Pipes www.alimtiaz.com 4 Highlights – Maharashtra Seamless (Consolidated) Total revenue EBIDTA & EBIDTA margin 1800 300 36% 1444 1436 250 1353 220 1350 1161 225 27% 983 168 160 e e 135 900 r 150 r 18% o o r r c c 18% 450 . s R 75 . s R 14% 14% 12% 16% 9% 0 0 0% Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Profit after tax Earnings per share 200 177 30 26 153 23 150 20 91 95 99 14 14 15 100 e r o r c 10 . . s 50 s R R 0 0 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 www.alimtiaz.com 5 Highlights – Maharashtra Seamless (Standalone) Total revenue EBIDTA & EBIDTA margin 1600 240 40% 1195 1168 180 181 1200 969 1068 180 159 30% 139 843 124 e e 800 r 120 r 20% o o r r c c 400 . s R 60 . s R 15% 15% 17% 16% 10% 13% 0 0 0% Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Profit after tax Earnings per share 160 24 123 18 114 17 120 18 93 91 93 14 14 14 80 e 12 r o r c . 40 . s 6 s R R 0 0 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 www.alimtiaz.com 6 Highlights – United Seamless Tubulaar Total revenue EBIDTA & EBIDTA margin 400 80 40% 67 279 269 300 60 53 30% 226 193 36 e e 200 r146 40 r 30 25% 20% o o 17 r r c c 19% . . 100 s 20 s 16% 10% R R 16% 12% 0 0 0% Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Profit after tax Earnings per share (assuming 100% addition to MSL’s EPS) 80 61 12 9.1 60 46 9 6.9 e 40 r o 29 6 4.3 r c 23 3.4 20 . s R10 3 . s R 0 0 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 www.alimtiaz.com 7 Standalone Profit & Loss for Q2 FY23 v/s Q1 FY23 Rs. crore Particulars MSL USTPL Q2 FY23 Q1 FY23 Q2 FY23 Q1 FY23 •USTPL is a wholly owned Revenue from operations 1148 1058 263 278 subsidiary of MSL. Add: Other income 20 10 5 1 •Scheme of Total revenue 1168 1068 268 279 amalgamation has been filed on 06 July 2022 with National Company Law Less: Expenses Tribunal, Mumbai (NCLT) Cost of materials consumed (796) (672) (157) (176) for amalgamation of USTPL with MSL. Change of inventories (FG + WIP) 29 (31) (4) 3 Employees benefit expenses (24) (18) (3) (3) •Price Waterhouse & Co. LLP is advising MSL in Finance cost (10) (10) (1) (1) this regard and the Depreciation (26) (27) (8) (7) amalgamation is Other expenses (176) (157) (33) (49) expected to be concluded within FY 23. Total expenses (1004) (915) (207) (233) Profit before tax 164 153 61 46 Less: Tax (41) (39) - - Profit after tax 123 114 61 46 www.alimtiaz.com 8 Annual Highlights – Maharashtra Seamless Total revenue EBIDTA & EBIDTA margin 4000 3644 800 40% 664 3110 551 3000 600 539 30% 446 e 2668 2316 e 306 2000 r o 400 r o 20% r c 2228 r c 22% 21% 20% . . s s 1000 R 200 R14% 15% 10% 0 0 0% FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 Profit after tax Earnings per share 75 475 380 57 55 350 262 39 e 225 r o 35 r c . s 198 . s R 30 21 100 R 142 15 -21 -3 -5 -25 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 www.alimtiaz.com 9 Operational & Financial Performance Maharashtra Seamless Limited (MSL) Particulars Q2 FY23 Q1 FY23 Q2 FY22 H1 FY23 H1 FY22 FY22 Seamless ERW Seamless ERW Seamless ERW Seamless ERW Seamless ERW Seamless ERW Production (kMT) 89 13 84 18 84 20 173 31 138 36 315 74 Sales (kMT) 90 13 85 17 78 17 175 30 136 34 315 80 EBITDA (Rs. Cr) 163 1 154 19 87 15 317 21 145 54 392 73 EBITDA/tonne (Rs.) 18,072 1,006 18,128 11,447 11,166 8,911 18,099 6,949 10,709 16,015 12,424 9,098 United Seamless Tubulaar Private Limited (USTPL) Particulars Q2 FY23 Q1 FY23 Q2 FY22 H1 FY23 H1 FY22 FY22 Production (kMT) 21 23 18 43 29 72 Sales (kMT) 22 22 17 44 28 73 EBITDA (Rs. Cr) 67 53 17 120 26 93 EBITDA/tonne (Rs.) 30,146 23,635 10,398 26,883 9,309 12,674 www.alimtiaz.com 10 EBIDTA Mix – Maharashtra Seamless Q2 FY23 Q1 FY23 Rs. crore 2 15 13 19 1 Seamless 154 ERW 163 Rig Q2 FY22 FY22 Renewable Energy 18 15 57 7 73 15 87 392 www.alimtiaz.com 11 Key Balance Sheet Items Unquoted Equity/Preference Share investments & ICDs given Rs. crore •Preference shares of Particulars September 22 March 22 March 21 Rs. 500 crore, ICD of Preference / Preference / Preference / Rs. 50.51 crore & Equity Equity Equity ICD ICD ICD equity shares of Rs. Indian Entities 6.96 crore in USTPL not considered as Jindal Premium Connections 4 3 4 3 4 3 application for amalgamation of MSL Finance 3 - 3 - 3 - USTPL with MSL has been filed with NCLT, Mumbai. Overseas Entities Maharashtra Seamless •All ICDs of Rs. 102 17 172 17 130 17 371 (Singapore) crore will be realised by March 2024. Jindal Pipes (Singapore) 22 - 22 - 22 - •In H2 FY23, Rs. 42 crore will be used to Others (ICDs @ 7% p.a.) reduce outstanding SBLC. Unrelated Parties - 102 - 144 - 232 Total 46 277 46 277 46 606 www.alimtiaz.com 12 Key Balance Sheet Items Liquid investments – Long term & short term Rs. crore Particulars Sep 22 March 22 March 21 Long term •Investments in bonds are sub-divided Bonds (PSU) & Debentures 307 307 283 into tax free bonds (40%) and Listed Equity Investments 12 16 14 perpetual bonds (60%). (A) 319 323 297 Short term •The investment in bonds because of inherent risk and yield advantage Mutual Funds (Liquid schemes) 444 47 168 was made to be held to maturity. Fixed Deposits (SBI & HDFC) 59 126 118 Cash & Bank Balances 6 37 48 •Investments in liquid schemes of mutual funds and in fixed deposits (B) 509 210 334 are undertaken to maintain liquidity whilst keeping risk to a minimum. Total liquid investments (A) + (B) 828 533 631 www.alimtiaz.com 13 Key Balance Sheet Items Borrowings – Gross & Net Debt Rs. crore •USTPL acquisition loan of Rs. 315 crores Particulars Sep 22 March 22 March 21 was repayable gradually till February 2029. Loan for USTPL acquisition @ 7.55% p.a. 315 336 375 • In view of sufficient internal accruals and (Prepaid in full on 10 October 2022) rising interest rates, this loan was prepaid in Loan for rig acquisition @ 5.30% p.a. 281 304 352 full on 10 October 2022. Gross Debt (A) 596 640 727 • After above prepayment, the only long term debt is an USD denominated ECB for rig acquisition which has annual repayment Less: obligation of USD 10 mn till March 2026. The net of tax cash flow from the rig contract is Liquid investments (refer slide 13) (828) (533) (631) adequate to meet ECB obligations. ICDs given (refer slide 12) (102) (144) (232) •Rental income of rig is also in USD. Liquidity available (B) (930) (677) (863) Accordingly, no cash loss is envisaged due to adverse foreign exchange fluctuation. Net Debt (A) + (B) (334) (37) (136) •No additional long term borrowing is required in FY 23. www.alimtiaz.com 14 Key Balance Sheet Items Corporate Guarantee & SBLC reduction schedule Rs. crore Particulars Actual Projected March 21 March 22 September 22 March 23 March 24 September 24 Discovery Drilling 257 218 209 180 116 - Maharashtra Seamless (Singapore) 147 76 41 - - - Total 404 294 250 180 116 - •Corporate guarantee outstanding of Rs. 209 crore (~ USD 25.65 mn) is for bank loan availed by Discovery Drilling against rig Jindal Pioneer. There will be no cash outflow from MSL on account of this corporate guarantee as cash flows from long term contract of Discovery Drilling are more than sufficient to service bank obligations timely. This corporate guarantee will gradually reduce on monthly basis and will fall off on 30 September 2024. •SBLC outstanding of Rs. 41 crore (~ USD 5 mn) is for bank loan availed by subsidiary, Maharashtra Seamless (Singapore). In FY 2023, SBLC has reduced by USD 5 mn in September 2022 & will be paid off by March 2023. Maharashtra Seamless (Singapore) does not have any other debt & therefore, further support is not required from MSL. •As rig prices have increased on account of rise in crude oil prices, value of equity investments made by MSL in Maharashtra Seamless (Singapore) has increased and opened new vistas of monetising the same. www.alimtiaz.com 15 Ca pital Allocation – Over next 2-3 years Industry and Market Trends • Prepayment of long term debt of Rs. 315 crores was undertaken in October 2022. • In pursuance of increased focus on value addition products in pipe segment and renewable energy segments, following areas have been identified where Rs. 852 crores of internal accruals are expected to be utilised: Estimated annual Sl. Particulars Rs. crore Location turnover increase 1 Heat treatment, finishing facilities & EMI for capacity enhancement 184 Narketpally By Rs. 800 crores 2 Solar plant for captive consumption 80 (USTPL) Cost saving Rs. 20 crores 3 Complete line for cold drawn pipes including pilger & drawbench 100 By Rs. 50 crores Mangaon 4 OCTG line & billet pre-heating surface 95 (MSL) By Rs. 50 crores 5 Hot mill upgrade - Hot mill to PQF (14”) 350 By Rs. 1000 crores 6 EMI machine (14”) 12 7 3 Roll sizing mill (14”) 10 Nagothane Normal replacement 8 Flying saw & Ultrasonic Testing Machine (7”) 10 (MSL) expenditure 9 Mill upgrade including annealer, hydro, Ultrasonic Testing (ERW) 6 10 Electronic upgrade of EMI & Ultrasonic Testing Machine (OCTG) 5 Total 852 • As capacity utilisation will increase, there will be additional working capital requirement of Rs. 300 crores in USTPL and Rs. 250 crores in MSL. • In addition to above, we are also targeting opportunities for drill pipes ID coating, 3LPE plant, premium joints and new Contd.. ERW API pipe mill. 16 Order book details as on 10 October 2022 Order book of MSL Rs. crore Order book of USTPL Rs. crore Segment Seamless ERW Total % Segment Seamless % AU + Dealer 682 31 713 44% Export 84 57% Export 326 35 361 22% AU + Dealer 33 23% ONGC & OIL 352 - 352 21% Cylinder 30 20% Downstream 24 183 207 13% Total 147 100% Total 1384 249 1633 100% •Total combined order book of MSL + USTPL is Rs. 1780 crore. •Execution timeline of order book of MSL is 4 months and of USTPL is 1.5 months. •Sustained high order book position will translate in improvement of capacity utilisation by 5% in FY 23. •Strong demand position is expected to continue in entire FY 23 as there is good visibility of orders. www.alimtiaz.com 17 Dispatch Target & Margin Outlook for FY 2022-23 MSL FY22 Q1 FY23 Q2 FY23 FY23 % achieved in Segment Actual kMT Actual kMT Actual kMT Target kMT H1 FY23 Seamless 315 85 90 365 48% ERW 80 17 13 80 38% USTPL FY22 Q1 FY23 Q2 FY23 FY23 % achieved in Segment Actual kMT Actual kMT Actual kMT Target kMT H1 FY23 Seamless 73 22 22 105 42% •During a financial year, dispatches increase progressively in each quarter and therefore, we are confident of achieving our stated targets for FY23. •We expect margins of exports segment of both MSL & USTPL to improve going forward based on buoyant seamless pipes prices. As exports segment will have greater share in total dispatches, it will also lead to enhancement of overall profitability. www.alimtiaz.com 18 Government Policies Export Duty: • Imposition of export duty on iron-ore & certain steel products excludes seamless & ERW pipes. • This has improved domestic raw material availability and lead to reactivation of projects. Anti-Dumping Duty: • The Ministry of Finance, on recommendation of Directorate General of Trade Remedies (DGTR), has extended anti-dumping duty by way of a minimum import price for a further period of 5 years from 28 October 2021 on various types of seamless pipes from China. Atma Nirbhar Bharat Policy Implementation: • Domestic manufacturers are encouraged and preferred for development of import substitution products. • The seamless & ERW pipes sector is getting a major boost from Make in India and Atma Nirbhar Bharat policy. Under this policy, for any purchases made by PSUs, there must be a minimum 35% local value addition in supply of pipes which benefits domestic manufacturers. • For requirements of upto Rs. 200 crores, only domestic tenders are floated which excludes foreign players. Export Policy: • There has been removal of rebate of 13% by China to its domestic industry. www.alimtiaz.com 19 MSL – Sales & Marketing Update Industry and Market Trends Export market for OCTG has been generating sustained demand on the back of increased rig counts and stable steel prices. Capacities for OCTG remain overbooked. Brand „MAHA‟ has been able to penetrate further in North American markets. With freight costs falling and crude oil prices maintaining upward trajectory, demand is expected to remain healthy. MSL became a developed source for drill pipes for ONGC after successful completion of Field Trial Test. First order for drill pipes are expected to be supplied to ONGC & Oil India within 2022 and 3 more orders for drill pipes are expected to be awarded in next few months by ONGC & Oil India. MSL manufactured, tested and successfully dispatched its first lot of subsea sour service seamless pipes. Further, we have received another order of these value addition pipes in the previous quarter and henceforth, regular orders are expected. Order inflow mainly from power segment and refineries have resumed. Refineries are floating enquiries for large quantities to make up for their backlog. Further, Rail Vikas Nigam Limited (RVNL) has significant tunneling projects in North-East India where pipes are required for reinforcement Due to the change in government policy on ethanol, demand from sugar manufacturers are expected to increase. Additionally, as per recent change in Indian Boiler Regulations (IBR), sugar manufacturers are moving to seamless pipes for their high pressure application requirements. MSL is focussing on getting license for premium connections which will immediately enable it to bid in premium connection tenders where there is limited competition. Contd.. 20 USTPL – Sales & Marketing Update Industry and Market Trends Mill has been certified by American Petroleum Institute with API 5CT for Casings & Coupling Stock, API 5L for Line Pipes and API Q1 (Quality Management System) licenses. USTPL has been certified for Indian Boiler Regulations (IBR) and has also been certified by TUV Nord for Pressure Equipment Devices (PED) & CE Marking which enhances product profile for customers. USTPL has recently successfully developed 355.6 mm OD line pipes and 356 mm OD cylinder pipes. This particular size of cylinder pipes has been manufactured for the first time in India. Development of this size enables USTPL to cover the entire range of cylinder pipes to cater to oxygen and industrial gas cylinders as well as CNG cylinders. Cylinder pipes of USTPL are being sold through cylinder manufacturers for installation in vehicles of Tata Motors, Eicher Motors, Bajaj Auto & Ashok Leyland. Registration process with Jay Bharat Maruti has also been expedited to penetrate cylinder pipes market further. Casing pipes of USTPL have received remarkable feedback regarding quality, tolerance and surface finishing from export customers who are also our largest customers. These pipes are as per API 5CT and are used in rigs of exploration companies such as Coterra Energy, Aera Energy & Chesapeake Energy Corporation. Recently supplied a trial order quantity to Jay Fe Cylinders, one of the largest CNG cylinder manufacturer in India. They are currently importing cylinder pipes from Italy & Japan and USTPL is engaging with Jay Fe to provide a domestic alternative in line with Make in India initiative. Trials of alloy steel P11 & P91 (for high temperature, high pressure boiler application) were successful and orders are expected soon. Contd.. 21 Market Trends – Huge Potential OPEC‟s production shortfall is at 3.58 mn barrels per day below its output goals. This shortfall is 3.5% of global demand caused by underinvestment in oil and gas sector over past decade. Rig counts in USA have now reached pre-COVID levels at 769, a 41% increase over last year, thereby contributing to strong demand position. Strategic Petroleum Reserve (SPR) in USA is at its lowest level since 1984 on account of frequent draws authorised to contain inflation. The current level of 427 mn barrels is 35% lower than average of 650 mn barrels over the past decade. Significant draws further are unlikely thereby indicating upward trend for crude oil prices. On account of the turbulent geo-political situation and low water level in river Rhine making it difficult to transport coal in Germany, energy costs in Europe have increased substantially. This has lead to certain European pipe mills reducing production or shutting down their European operations. In India, there is a sustained demand from ONGC & Oil India. Market sources indicate that around 500 new onshore and offshore wells are drilled every year. Taking a conservative estimate of seamless pipes requirement of 200 mt per well, we estimate fresh requirement of 100,000 mt per year. This is in addition to the regular requirement generated from development and work over wells. Further, ONGC has also placed an order to purchase 27 new land rigs which will replace ONGC‟s ageing fleet all over India thereby indicating increase in drilling operations by ONGC. India‟s oil demand is projected to rise 50% to 7.2 mn barrels per day in 2030 from 4.8 mn barrels per day in 2019 as against a global expansion of 7%. India‟s natural gas demand is projected to double to 133 BCM in 2030 from 64 BCM in 2019 as against a 12% rise in global gas demand. India plans to almost double its oil refining capacity to 450 MT in the next 10 years to meet rising domestic fuel demand as well as cater to export market. 22 Shareholding Structure – 30 September 2022 4.12% 2.67% Key changes – Q2 FY 2023 v/s Q1 FY 2023 67.25% • Promoter holding increased from 67.08% to 67.25%. 25.96% • DII holding increased from 3.70% to 4.12%. This also Promoters includes mutual funds who have increased holding from 2.93% to 3.08%. Others DII • FII holding increased from 1.28% to 2.67%. FII • Number of DII & FII have increased from previous quarter. Promoter Holding – Last 6 quarters Institutional Investors • L & T Mutual Fund, ITI Mutual Fund, Tauras Mutual Fund 67.25% 67.00% 67.08% • Aequitas Equity Scheme, Aequitas Investment • Green Lantern Capital, Barclays Wealth Trustees India 64.90% 63.82% • IIFL Turnaround Opportunities, Edelweiss Multi Strategy 63.73% • LIC MF Flexi Cap Fund, Kitara India Growth Fund • EAM Emerging Markets, Dimensional Emerging Markets • Morgan Stanley Asia (Singapore) Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 www.alimtiaz.com 23 Marquee Customers Oil and Gas Infrastructure www.alimtiaz.com 24 Investor Contact Kaushal Bengani Senior Manager – Investor Relations Tel. No.: +91-124-4624177 E-Mail: kaushal@mahaseam.com www.jindal.com CIN: L99999MH1988PLC080545 25