Man Industries (India) Limited

Stock Opportunities
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In the recent Q1 call, there are certain red flags. Please see below from the recent transcript. There are serious mistakes pointed out by analysts in the presentation. There is lot of confusion on order book and Bid book. I think this business seems risky as 80% of the order book is from Saudi Arabia and looking at current political situation in middle east, I find this business quite risky.
Transcript portions
Dhavan Shah: Sir, this is Dhavan Shah from Alfacurate Advisors. So, my question is on the projected capacity
by FY26. So, in this presentation, I think we have shown that by FY26, we will be having
2,25,000 capacity of ERW versus the last quarter presentation it was showing roughly 2,75,000
tons, so why there is a reduction of roughly 50,000 tons in ERW?
Nikhil Mansukhani: 5,000 tons in ERW?
Dhavan Shah: This quarter presentation is showing 2,25,000 tons of ERW capacity by FY26 and in the last
quarter presentation, it was showing roughly 2,75,000 tons?
Nikhil Mansukhani: So, Dhavan, there might be some clerical error. We will get back to you on that

Pradeep Rawat: Sir, my first question is regarding our ERW CAPEX, so we are planning to expand 100,000 tons
per annum capacity for ERW. So, what would be the CAPEX for this expansion and when could
we assume this plant to be commissioned?
Nikhil Mansukhani: The ERW CAPEX, Pradeep has already been completed and it is under operation.
Pradeep Rawat: So, I am talking about the expansion that we have shown in our presentation. So, currently, we
have a capacity of 1,75,000 tons per annum and we are expecting this capacity to be 2,75,000.
So, I was just asking for that additional capacity?
Nikhil Mansukhani: Pradeep, we will get back to you that. I think there has been some clerical error on that. So, we
will get back to you on that like we said in the first thing, we will get back on that particular
thing.
Dhavan Shah: And when this Saudi Arabia plant would commission?
Nikhil Mansukhani: 12 months.
Dhavan Shah: So, it would be in FY26 only?
Nikhil Mansukhani: Yes.
Dhavan Shah: And so I think in the presentation, we have to update that thing also, right?
Nikhil Mansukhani: Correct. We will send the updated one.
Darshil Pandya: So, just one question from my end, regarding the 10% EBITDA margin guidance that you have
given. So, if we could know that is it because of the order book that we have right now has a
higher margin or how will we achieve that margin in this full year?
Nikhil Mansukhani: The order book which we have now is on the exports are more on the higher margins. So, we
are confident to achieve the yearly guidance which we are giving.
After reading the Q1 Transcript, My confidence level is low and I am thinking of booking profits to be on safer side. Views of more knowledgeable members are requested on my assessment.
Disclosure- I bought at 138-140 level, I am not a SEBI registered advisor and my views are biased and are based on my little understanding of the business. Please make your own assessment for any decision you take.

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Hi Folks, I am curious about the impact of expected metal price increase on EBIDTA. I know promoter was saying margins will grow. Do you know if Man Industries pass thru the metal price increase with these contracts/order wins or do they have to absorb them? I am guess this current drawdown is due to bullishness on metal prices esp. from chinese govt

D: Invested recently

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Promised 2100 topline in sep 2023 → did 3199
profit of 106 cr → 3.3% net profit after taxes and depreciation

this time promise 3100 → 4200 so going by old numbers
139 cr or profit

current outstanding shares → 6,47,35,188
current eps - > 16.37
new eps on sep 2025 → 21.47

growth of 24% approx eps

current price → 296 ->current pe → 18.08
Forward looking price → 367 - > ~17
Forward looking pice → 400(100 rs premium) → 18.63 PE

So bottom line is market is pricing in just 25% growth for this stock. Much better choices out there.

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In one of the con-call, I wll share the link the chairman said that they lock the price witht the supplier; based on the date of the order are safe from price increase of metal/raw material

Keen to learn more from your learning as looking to invest in the stock

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Check from 29:00 min same question asked by Akhilesh, that might help bring clarity of the metal price and effect on EBIDTA

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Would you clarify that how come you decided to take a p/e of 18

Sector p/e is around 28-30?

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Management maintain guidance of 3300 crores in full year as per press release to exchanges.
6c112b07-e465-4a96-a4e1-471287c5523c.pdf (436.2 KB)

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Show cause notice.

the company and three executives have been barred from the securities market for 2 years and fined a total of ₹25 lakh each.

D- not invested.

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Today’s SEBI order intrigued me to dive deep into the history of the company. I wanted to pen down my understanding so that I can revisit it down the road to see how things panned out vs my interpretation of the current situation.

Involved Parties:
JM Mansukhani - founder of Man Industries who passed away in 2011

Ramesh Chandra Mansukhani (RC) - elder son of the founder and current Executive Chairman of Man Industries

Jagdish Chandra Mansukhani (JC) - younger son of the founder who is not involved with Man Industries anymore

Nikhil Mansukhani - son of RC and current CEO/Managing Director of Man Industries since Oct 1st, 2021

History:

There has been many years of family fued between the two brothers marred with legal battles. Interestingly, JC sued RC during the last days of their ailing father in 2010. The petition by Jagdish Chandra Mansukhani seeking reliefs for alleged oppression and mismanagement against Man Industries (India) Ltd was dismissed by the Company Law Board. Link.

RC and JC; two bothers then resolved a family fued by splitting Man Industries businesses in 2013 post passing away of their father in 2011. Link

It seems like demerger of real estate business finally happened from Man Industries in 2018. Link

JC filed a complaint with SEBI that led to a major investigation by the SEBI.

image
image1144×259 49.9 KB
(snapshot from FY21-22 AR)

Details of major allegations in today’s SEBI’s order is as follows:
1759153803084_1.pdf (1.2 MB)

  1. MIIL failed to consolidate financials of Merino Shelters Pvt. Ltd (MSPL), a wholly owned subsidiary, into its consolidated accounts

  2. Loan transactions: MIIL advanced loans of Rs. 5,641.38 Lakhs (approx. ₹56.41 crore) to its subsidiary, MSPL, which was later converted to a capital advance without prior audit committee approval, and not disclosed as a related party transaction. There were additional loans extended to group companies, like Limitless Contracting Private Limited (LCPL), also without proper approvals or disclosures.

  3. Write-offs: Advances/ICDs amounting to Rs. 4,000 Lakhs (₹40 crore) given by MIIL to certain parties were written off during FY 2019-20 and 2020-21 without sufficient disclosure and compliance.

  4. Round-tripping and fund rotation: There was movement of funds between related parties, disclosed only on a net basis, contrary to required accounting standards. MIIL and its subsidiary also engaged in round-tripping of funds to reduce outstanding balances, and created liens and pledges on company assets for credit facilities without disclosure.

Nikhil was very brave today who appeared for a TV interview at market open to provide a 20 minutes detailed clarification to the investors. Below are some of the clarifications he provided about the major allegations listed above:

  1. MIIL failed to consolidate financials - The MD explained that Marino Shelters Pvt. Ltd. (MSPL) was not consolidated into Man Industries’ accounts primarily due to a family dispute and a de-merger between the brothers that resulted in court orders. This legal context was why management did not include MSPL in the consolidated financial statements during the disputed years. He stated this was fully disclosed in board meetings, AGMs, and the notes to financial statements every year, with references to the specific court order and the dispute. The company maintains that any non-consolidation was not intended to suppress group losses; the MD said the financial impact would have been negligible—a difference of only 3 crore across a 10,000 crore topline. He asserted there was no monetary loss from non-consolidation. Since FY23, MSPL has been consolidated into Man Industries’ accounts after the dispute was resolved.

  2. Loan transactions: All loans and advances provided to MSPL (and other subsidiaries) were issued under Section 186 of the Companies Act, which legally allows infrastructure companies to extend such funds. The Managing Director repeatedly emphasized that all loans and advances were fully repaid with interest, and no write-offs occurred. In particular, he rejected SEBI’s claim that any inter-corporate advances were written off. He asserted that the transactions were clearly disclosed and discussed in board meetings, balance sheets, annual reports, and AGMs. In cases where a loan was temporarily converted to a capital advance (e.g., for a commercial property transaction), the advance was ultimately reversed and funds were returned if the deal did not materialize, with interest paid to Man Industries. Management claims all such related party and loan transactions have stopped since FY21 due to internal audit strengthening and policy changes.

  3. Write-offs: The Managing Director of Man Industries clarified that there were no write-offs of loans or advances given to sister companies, including MSPL. He stated all inter-corporate deposits and advances were fully recovered with interest, directly rejecting SEBI’s claim of undisclosed or improper write-offs. The MD emphasized that this is recorded in the company’s financial disclosures, and no funds were written off in FY20 or FY21. Any conversion of loan to capital advance was reversed, and the money was returned when the commercial deal did not happen, with interest paid on the amount. He asserted the company maintains documentation and transparency regarding these transactions and will legally challenge SEBI’s contrary observations.

  4. Round-tripping and fund rotation: The Managing Director firmly denied any allegations of round-tripping or disguised fund rotation between Man Industries and MSPL (Merino Shelters). He stated there was no round-tripping, no fund rotation, and no funds sent and then brought back to create a false impression. All intercompany transactions were fully disclosed, documented in board meetings, and reflected transparently in financial statements. The MD explained that loans and advances provided to MSPL were recovered with interest and were not rotated through any other entity or reversed in a way that would conceal losses or manipulate accounts. He stressed that SEBI’s concerns about fund movement were unfounded, as there was no intent or action to disguise loans or hide financial losses. All related party transactions have stopped since FY21, with strengthened internal audits and controls, and there is now full consolidation and transparency in accounts.

Conclusion:

Nikhil Mansukhani took over the charge for MD on Oct 1st, 2021 just when JC filed complaint with SEBI. So he has inherited a lot of family legal dispute from his dad and uncle and has been cleaning the mess since then. He showed a lot of bravery to come for live TV interview this morning and provide detailed clarification on all major allegations.

At the core of the SEBI’s allegations, the financial quantum of alleged wrong doing is of Rs. 56.41cr of loan transaction to MSPL (in FY2017-18) and write-offs amounting to Rs. 40cr (in FY2017-18).

I have no doubt that company has done these two shady transactions in FY17-18. And company rectified it by round-tripping and getting this amount reversed and give money back to the company (either before SEBI investigation or after which would be interesting to know). End of the day, no financial damage done to the company.

Man Industries popped-up on my quarterly results screen after March 2025 results where it showed superb topline and margin growth. Upon digging further it seemed like company’s new CAPEX plans and move to higher value products would improve the financial trajectory of the company in next 12-24 months. It seemed like a decent risk:reward bet and hence I bought it around then without knowing anything about the ongoing SEBI investigation (my miss on due-diligence there).

Now today’s SEBI order has been a curve ball to the entire thesis of buying Man Industries. Since there has been no siphoning off of money by the promoters, I will give Nikhil Mansukhani a second chance.

My thesis has been that business can do Rs. 4200-4800cr topline in FY2026 with EBITDA margin moving towards 10% mark. And possible topline of Rs. 5500-6000cr in FY27 with around 11-12% EBITDA margin. If they can deliver, market price of the stock can still be significantly higher from here as the ongoing overhang of SEBI is behind the company.

Disc: holding in family accounts with no transaction in last 20 days. This position is on a very tight leash going forward from here. Not an advise. Please do your own due diligence as promoters carry a dark image of suspension from capital markets on their head going forward which can impact the valuation.

P.S. I used AI to better understand details of the SEBI order and today’s TV interview to make sure I don’t miss out on anything important.

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This could be what played out in man industries. Clarity might take time to emerge since the management might challenge the outcome but reinstating trust in shareholders might be difficult in this market but will be an interesting case to see in hindsight since the business growth isn’t likely to be affected by this decision. I expect the stock to recover if and when the q3 earnings come out to be blockbuster. Q2 might be flattish so there could be a long consolidation. Again it’s just a possibility but a good educative video.

Disclaimer : Sold my entire position after the gap down to avoid uncertainty. Might buy it back depending on the developments. Not a recommendation. Please do your own due diligence.

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They got a stay on the SEBI order in SAT today after paying 50% of the penalty amount.(Usual method with the current SAT judge)

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Man Industries -

Company Overview and Q4 FY 26 highlights -

Company’s manufacturing capacities -

Anjar ( Gujarat ) - focussed on exports markets -

2 LSAW Lines

2 HSAW Lines

1 ERW pies unit

Anti Corrosion coating systems ( PE, FBE, CTE, PU coatings )

Total capacity @ 8 lakh MTPA

Pitahmpur (MP) - focussed on domestic markets -

HSAW Line

LSAW Line

ERW Line

PU coatings facility

Total capacity @ 4 lakh MTPA

National Pipes Company ( Dhahran, KSA ) - acquired in Q4 FY 26 ( for aprox 1000 cr ) -

HSAW and LSAW manufacturing lines

Combined facility of 4.3 lakh MTPA

Greenfield Capex @ Jammu -

To manufacture Seamless Pipes - expected capacity @ 20k MTPA @ an estimated cost of 560 cr

This plant is eligible for multiple benefits like - GST refunds ( max upto 90 cr / yr ), 6 pc interest subsidy, subsidised power

Seamless pipes have 3-4X realisations vs their existing products. Margins in Seamless pipes are also higher @ 16-18 pc kind of EBITDA

Q4 FY 26 outcomes -

Revenues - 1157 vs 1218 cr, down 5 pc

EBITDA - 147 vs 136 cr, up 8 pc ( margins @ 12.7 vs 11.2 pc )

PAT - 50 vs 68 cr, down 25 pc

FY 26 outcomes -

Revenues - 3563 cr, up 2 pc

EBITDA - 467 cr, up 31 pc ( margins @ 13 vs 10 pc - substantial margin expansion )

PAT - 170 cr, up 11.3 pc - due much higher depreciation and interest costs

Last 4 yrs annual EBITDA margins - 13 pc, 10.1 pc, 9.2 pc, 7.8 pc - very encouraging / continuously expanding trend

Primary uses -

HSAW ( Hellical Submerged Arc Welded ) Pipes - least expensive - water transmission, irrigation, sewage drainage, city gas distribution

LSAW ( Longitudinal Submerges Arc Welded ) Pipes - more expensive than HSAW - cross country oil/gas, offshore / subsea pipes, WindTower

Seamless Pipes - most expensive - Refinery process pipings, Boiler/Superheaters, HP Hydraulics, Drill Pipes

ERW pipes - made by Man are API grade pipes and not lower value add ones that r used in Tubing, Scaffoldings, Fencing etc. These r used in similar applications as LSAW / HSAW pipes but with a smaller diameter

Key competitive advantage enjoyed by Man Indus -

Pipe manufacturing + coating + bending + logistics (DDP) - they do everything. Customers don’t need multiple vendors. The upcoming coating plant in Dammam (by March 2027) will make Man fully integrated in Saudi Arabia

In essence, Man Industries is transitioning from a mid-sized Indian pipe exporter into a globally competitive, India+KSA integrated pipe manufacturing powerhouse, uniquely positioned to ride the Saudi Vision 2030 infrastructure supercycle while maintaining a strong domestic presence

In Saudi’s competitive landscape, NPC is one of the few that manufactures both HSAW and LSAW pipes under one roof — a distinction no other single entity in the market holds

Combined capacity of 1.2 million+ MTPA (India) + 430,000 MTPA (NPC, Saudi) makes Man one of the largest SAW pipe manufacturers globally. Six production lines across 3 plants (Anjar, Pithampur, Dhahran)

Notes from Q4 concall -

NPC carries a current order book of aprox 1050 cr. Company also has cash / liquid investments on books of aprox 780 cr.

Man shall be taking on debt of aprox 670 cr + shall fund 330 cr via internal accruals

Acquired NPC at Dirt Cheap valuations of 1.5X EV/EBITDA

Nippon Steel + Sumitimo Metals were the previous owners ( holding 52 pc stake ). They wanted to concentrate on their core business. Plus Man has been sourcing from them for a long time. Hence this lucrative deal was offered to them

Some thoughts ( to be taken with a rich of salt ) -

The Japanese have a strong cultural preference for selling to known, trusted counterparties rather than running competitive processes — especially for assets with deep Aramco relationships where buyer credibility matters

However, both the HSAW and LSAW plants of NPC are old ( 1980 and 2001 vintage ). Should require frequent / substantial maint capex

The Liquid assets on the books of NPC may not be as liquid. May also be linked to performance guarantees / some may be receivables etc

Back to concall -

Shall also be spending 400 cr to set up their coatings facility @ Dammam in Saudi Arabia and one at Dhahran ( co-located with NPC ). Dhahran to Damman is 14 kms by road. Coatings have EBITDA margins > 25 pc

KSA’s $ 80 billion water infra and $ 1 trillion physical infra projects are key demand drivers for NPC for next 3-5 yrs

Guiding for a consol revenue guidance of 5000 - 5500 cr for FY 27 ( out of which, 1500 cr shall come from KSA business ). This guidance doesn’t include any additional revenues / profits from Marino Shelters ( their RE subsidiary ) - doing a joint land development of 6 acres land parcel @ Navi Mumbai

Cash on books @ 657 cr

Jammu plant should go live in FY 28. First year’s capacity utilisation should be around 40 pc or so

For FY 27, estimating NPC’s Revenues @ > 1500 cr @ 15 pc + kind of EBITDA margins

Marino should generate PBT of around 70 cr each for for FY 27,FY 28, FY 29. Marino’s PBT accrual to Man Industries shall last for 5-6 yrs

Elevated other expenses due to change over from FOB to DDP model. Hence the freight / insurance / customs costs r also reflected in P&L. Consequently, revenues r also higher

Allegedly - Japanese owners were not allowed to buy Chinese steel. Hence we’re losing / declining business @ NPC. This was another reason for them selling out

The coating plant @ Dammam should go commercial by Q1 FY 28. There would be residual land left over ( for future expansions ) as this plant was originally supposed to make pipes - later scrapped due NPC acquisition

Cash on books @ NPC shall also be used for maint and plant upgrades

Expecting to clock > 6500 cr kind of revenues in FY 28

Shifted > 70 of their business to DDP model in FY 26

Capex for FY 27 should be around 700 cr ( @ consol levels ) - towards completion of Jammu and Dammam capex

Expecting Q1 FY 27 to be strong ( haven’t been impacted by war in any meaningful way )

Shall be required to spend around 50 cr / yr kind of upgradation costs @ NPC for next 3 yrs

Disc: hold a small position, may add/reduce depending on results going forward, not SEBI registered, not a buy/sell recommendation

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