Earnings Call Transcript - XNSE:IMFA 2026-11-04

Operator

Ladies and gentlemen, good day and welcome to Indian Metal and Ferro Alloys Ltd. Q2 and H1 FY27 earnings conference call hosted by AdFactorsPR. As a reminder, all participants will be in the lesson-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now have the conference vote of Mr. Vishal Bhallada from AdFactors PR. Thank you, and over to you, sir.

Vaibhav Gupta, Head of Investor Relations

Thank you, Yusuf. Good evening, everyone, and thank you for joining us today on the India Metal and Ferrola Limited earnings conference call for the second quarter and half year ended 30th September 2026. Today, we have with us Mr. Shubhrakan Panda, Managing Director, Mr. Shauna Gupta, Chief Financial Officer, and Mr. Vijay Panda Mohapatra, Old-Time Director and Chief Operating Officer. We will begin the call with the opening remarks by Mr. Shubhrakan Panda, who will provide an overview of the company's business performance, the operational developments, and the outlook on the business. This will be followed by the question and answer session. Before we begin, I would like to remind everyone that certain statements made today or discussed on today's call may be forward-looking in nature and should be viewed in conjunction with the risks and uncertainties that the company faces. A detailed explanation of the risk is included in the earnings presentation that has already been shared on the stock exchanges. The company does not undertake any obligation to publicly update these forward-looking statements. With that, I would now like to hand over the call to Mr. Subrakan Panda. Over to you, sir.

Shubhrakan Panda, Other

Thank you very much, and good afternoon, ladies and gentlemen. A warm welcome from my side and on behalf of IMFA to this investor call for Q2 FY27 results. I will keep my opening remarks brief and then jump into the Q&A session, which is, I think, the most value is there for you as well as for us. In terms of our Q2 performance and H1 FY27 performance, these are noticeably higher than the corresponding periods from the previous year, and that is, of course, on account of two things. One, there is significant capacity addition which has come online, and secondly, that prices in general have been better than they were in the corresponding period last year. In terms of capacity, as you know, we started operating KNR2, which is the unit acquired from Tata Steel. We started operating that from March of this year. We have steadily increased production over there. Initially, in the first half of the year, production was slightly lower than we had planned. And I have shared the reasons for that in the last call, which is that in two sets of transformers, in two furnaces, the transformer parameters were not ideal, and therefore we were limiting load a little bit. But I'm glad to report that in the month of October, we have reached a rated capacity of roughly about 84,000 tons per annum production. Which will go up to the full rated capacity of about 100,000 tons per annum from the existing four furnaces by December, when we will complete the changing of the transformers in the two furnaces. That being said, as far as our Greenfield unit is concerned, KNR1, the first furnace achieved hot metal tapping. And we have already initiated pre-commissioning. Thank you. We are there and thereabouts, which means that we will... Thank you. Luckily, we are mostly sort of insulated from that because the biggest impact comes from chrome ore, which is, of course, in-house for us. But even with a marginal moderation of margins going ahead, we have more than sufficient volume to... While South Africa is scaling up output, but we expect that China will, I mean, output of ferroprone from China will reduce. So we remain confident about the industry, and we remain especially confident, by God's grace, about IMFA's own position, where we have worked very hard. And we are realizing the benefits of that now. One quick point, we have The board has approved a capex of about 375 crores for two things. One, to increase... Eventually, this will take our total output beyond 1.2 million Tuls, which is what I've been doing. And secondly, we have also announced a CapEx for low-carbon ferrochrome, for producing low-carbon ferrochrome, which is, of course, a value-added product which will, you know, bolster margins and diversify the product basket. So that's for a broad overview of the business, and, you know, I think it will be good to get into the Q&A now.

Operator

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only headset while asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please limit yourselves to two questions only. Should you have a follow-up question, please rejoin the queue. Ladies and gentlemen, we will now wait for a moment while the question queue assembles.

Operator

Participants, to ask a question, you may press star and 1. First question is from the line of Joe Shah from Seven Seas.

Operator

Please go ahead.

Joe Shah, Analyst — Seven Seas

Mr. Hooran, congratulations for the I was applying into low-carbon ferrogram. That will definitely improve our margin. And the question is, I would like to have an update about critical minerals. I think I understand that we are trying to get some critical minerals mined in the oxygen. So kindly let us know what is happening on this critical mineral front. And one more thing, I will come across a report that ENFI is planning to go beyond the melting of Phydectan. So, earlier we have said that after 2029, once we know result of underground mining of Sukhinda, new underground mining of Sukhinda, we know extra output, and then based on that, we will be planning for expansion in capacity given 5X10. So, can we give us some thoughts on this item also? Thank you.

Shubhrakan Panda, Other

Thank you for your kind words on the performance. Because while we have participated in a couple of auctions prior to, I mean leading up to today, but we have not been successful in terms of a breakthrough. Time to time. So we remain alive to the opportunity. sooner rather than later, we will be able to... At this point in time. Our overall approach to capital allocation is very clear that we will only allocate capital when we see, when we are confident about, you know, our ability to add value and create value for. Good morning, everyone. which is happening shortly. And we, of course, have the partially built furnace at KNR2, which we expect to be operational around July or so of next year. We have got some initial environment clearances and all that. But I think we will be able to give a more accurate timeline, perhaps. In a couple of months' time when all the commissions are in place, but we are fairly confident about commissioning that by July 2027. So our guidance in terms of tonnage continues to be 380,000 tons for SY27, the slight reduction being on account of lower output from K&R1 and a slight delay in K&R2. And our volume guidance for SY28 remains... Thank you. 1.2 million tons, make the timeline a little shorter. But eventually, basically, our 1.2 million tons was coming 0.6 from Sukhinda and 0.6 from Mahagiri. So this underground, so this capex will take Mahagiri from 0.6 to 0.75. So net-net, it increases our o-raising ability, and we will therefore add further smelting capacity in due course.

Operator

Okay. Thank you.

Operator

Thank you. Next question is from the line of Parthiv Chonsa from Anandrati. Please go ahead. Mr. Parthi, if your line is unmuted, please go ahead with your question.

Parthiv Chonsa, Analyst — Anandrati

Yeah, am I audible?

Operator

Yes, please, go ahead.

Parthiv Chonsa, Analyst — Anandrati

Yeah, happy, happy Diwali in advance. Sir, my first question is pertaining to some, I might have missed the starting comments, but just on the global, you know, macros, now considering, you know, a couple of your peers from South Africa, I know, you know, in the last call you said that the global balance is the same, but a couple of peers in South Africa have actually started, you know, increasing Thank you. So, do you think that the price at the global industry is also not taking up for this case and this will remain under stress in near term? Is there an expectation of that?

Shubhrakan Panda, Other

The analysis remains the same, which is that... And there is clearly a revival underway thanks to the special tariffs which have been approved. Our peers there are... Any other factors which may have an influence on the stainless steel industry. Now, you know, could you see a little bit of turbulence in between potentially because it's not a question of flipping a switch and starting in South Africa and flipping a switch and stopping in China. But by and large, it is not in the interest of South Africa. I think India is also joining the party now in terms of significant increases and changes Thank you, Dr. Ball. I mean, you know, India's stainless steel per capita consumption remains at about 3.5 kilograms. The economy grows and matures. So we are quite confident about the medium to long term prospects. And even in the short term, as we have said in our press release, we expect prices to be by and large supported. Moderation of prices happen. We are still seeing an average of about 1,17,000 or so for the quarter. We'll moderate a little bit on the... So, we remain quite confident about about the second half of

Parthiv Chonsa, Analyst — Anandrati

That's actually quite elaborate answer, sir. Thank you. Just to take the first question forward, your next quarter expected realization will be the range of 1,16,000 to, say, 1,18,000, around the similar level?

Shubhrakan Panda, Other

No, no. What I was saying is roughly around 1,16,500 or something like that is what we are seeing in... There's a slight increase in cost. You know, the margins will tighten a little bit, but that will be more than made up with volumes. So one point I think you perhaps missed out is... 100,000 tons quarterly output for the first time. So that is the planning as of now.

Parthiv Chonsa, Analyst — Anandrati

Sir, my second question was pertaining to the ore raising. I believe this quarter, the ore quantity has been considerably lower than previous four quarters, right? So, what should we consider? Was this because of seasonality factor or? It would be, say, a certain X of the production going forward. So I think this time around, it was 1.7X the production, the ore raising which was done. Can this increase going forward, considering that, you know, so can the underground will take some time to come on stream and you would require more ore? I know that you have excavated, you know, ore in the past as well, additional quantity, but what will be the ratio going forward? That's a major question.

Shubhrakan Panda, Other

Okay, so two things. There is certainly a seasonality to oar raising, at least currently when we still have opencast output, and therefore during the monsoon season, and this time around the monsoon has been extended and quite severe, for lack of a better word, as in terms of more number of days with heavy rainfall, and what that definitely means is that as far as opencast output is concerned, it definitely takes a hit. So, there is clearly a seasonality to O-raising. So, if you go back and look at, you know, the past five years' data or something of that sort, you will find that O-raising in Q2 is always a little bit lower. That's a question of how many days of rainfall you have had, you know, and what impact that has. But our target for FY27 continues to be 1 million tons of ore raising, which is a milestone in itself, and of course, required to support our smelting targets, ferrochrome output targets. The other point I just want to reiterate so that it is clearly understood that, you know, our short-term target is 1.2 million tons of ore raising overall, which is 0.6 million tons from Sukhinda and 0.6 million tons per annum, that is, from Mahagiri. What I have indicated in earlier interactions and investor calls is that we are reasonably confident or fairly confident that we will go beyond the 1.2 million ton mark in terms of oil raising and that will enable us to add more smelting capacity. So, what the board has approved today is CapEx to take Mahagiri from 0.6 lakh tons to 0.75 lakh, sorry, 0.6 million. available in Starting in 2029.

Operator

Mr. Patir, does that answer your question? Mr. Patev, you are not audible.

Operator

The next question is from the line of Harj Vasa from SBI Cap Securities. Please go ahead.

Harj Vasa, Analyst — SBI Securities

Thank you for the opportunity and congratulations on a great set of numbers. Happy day-valuing advance. Sir, most of the questions are answered. I just had one. If you can quantify, sir, how much increase has been there in the metallurgical code QQ sequencing, if it is possible?

Shubhrakan Panda, Other

I don't think we have the numbers. In any case, broadly, we don't want to go down to the specifics of cargoes and the pricing. But broadly, I would say that we are around the 375 to 380 mark in terms of Coke pricing, and there is a little bit of upward momentum going ahead. But that is understandable because of currency fluctuations as well as, you know, various other issues including high-grade costs. But having said that, you know, I think we have repeatedly said that while we will see a slightly tighter operating environment, but we have more than enough volume increase to report better overall numbers.

Harj Vasa, Analyst — SBI Securities

Okay, sir. Thank you. And all the rest.

Shubhrakan Panda, Other

Thank you.

Operator

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star N1. Next question is from the line of Prakya Mladda from Omni Management LLP. Please go ahead.

Prakya Mladda, Analyst — Omni Management LLP

So, sir, earlier we had guided that we were looking for some long-term contracts for selling ferrochrome. So, where are we on this, and what are the capacity expansions in the steel industry which you are aiming at to supply, maybe Jindal or some other players?

Shubhrakan Panda, Other

So, actually, we generally sell against long-term contracts. So, significant quantities are against long-term contracts, and even when we sell what we call spot contracts, these are not random customers, but repeat customers, where we just don't have the legal backing of a long-term contract or an annual contract or anything of that sort. Now, in terms of marketing and enhanced output, we are, when we were, 260,000 tons of output, which is what we ended FY26 with. We were 90-10 in favor of it. FYI, by 2028, we will be. 100,000 tons of domestic sales, but depending upon market circumstances, these are, you know, can easily be, you know, both components can be moved up or down a little bit. Now, broadly, in terms of... Our presence in it. This is a broader base of customers. You know, we are selling tonnages there. Thank you. Thank you. We are very confident, and the market situation is such that even in the domestic market, there is plenty of opportunity, and of course, as the largest producer, we feel that it is our responsibility as well to make sure that the domestic market is properly catered to.

Prakya Mladda, Analyst — Omni Management LLP

Okay, okay. Second thing, sir, on your cost per turn, this quarter the cost per turn is quite higher than Q1. So, is it some seasonality or a one-off cost from starting the new 4 days? And how do you see this cost going forward in Q3 or maybe FI 27 and 28?

Shubhrakan Panda, Other

So, there are, you know, without getting into the specifics, I would say there are two things. One, as I have indicated, that metallurgical coke prices have moved up a little bit. Secondly, I think there has been a slight upward revision in chrome ore pricing as well, because of more mix coming from, more of the ore coming from underground, the open cars, so that moves up the costing slightly. There will be a slight element of... Relating to startup of the Greenfield site, and the final element... But we also are paying for a hybrid energy corridor, what's known as a GNA-RE corridor, but our renewable energy hasn't started flowing as yet. So the first tranche of 70 megawatts from JSW Energy we are expecting by the end of this month. So, for example, we are carrying some monthly cost towards the hybrid renewable energy corridor without actually utilizing it. So those inefficiencies I had in previous calls said. You know, until, let's say, December of 2026, all these up and down will happen. But we expect to start the new year on a much cleaner slate in terms of these inefficiencies relating to startup being, you know, starting up and scaling up a new location being ironed out.

Prakya Mladda, Analyst — Omni Management LLP

Sir, in the guide.

Shubhrakan Panda, Other

Costing thing, I think I've pretty much covered it, but if there is anything else you'd like to add?

Saurabh Gupta, CFO

Yeah. So on the costing part, what you said is correct. BEDCO cost and the startup cost are the key things, which has, to some extent, increased the overall cost. And also a little bit of the selling and distribution, you know, the sitting costs have also increased into the geopolitical situation. So that has led to an EBITDA cost going up currently. Scaling up happens in both cleaners 1 and 2. This cost is expected to go there.

Prakya Mladda, Analyst — Omni Management LLP

Sir, any numerical guidance on what the cost can be pertain for, say, next year when things normalize and when new capacities are up and running?

Shubhrakan Panda, Other

No, we don't give any guidance. We are expecting that due to economies of scale, Margin to be We expect that to be to all other things.

Prakya Mladda, Analyst — Omni Management LLP

Okay, sir. Thank you. Thank you. Congratulations for the good set of numbers and all the rest. Happy devices.

Operator

Thank you. Next question is from the line of Avantika Jawahar from Banyan Tree LLP. Please go ahead.

Avantika Jawahar, Analyst — Banyan Tree LLP

Yeah, hello. Am I audible? Yes, please proceed. I want to talk about the aviation investment that you've made. What exactly is that, and how does it roll into the company's plan?

Shubhrakan Panda, Other

So, actually, in IMFA itself, we have certain aviation assets which are, you know, Given that our mines and other sites are far flung, so we have, you know, some aviation assets, primarily helicopters, but because of, you know, certain restrictions which are applicable on the main operating company because of the aviation assets, so we are therefore moving those assets to 100% subsidiary so that IMFA, which is the main operating entity, is, you know, is not settled with certain compliances which are not relevant to the core business. So beyond that, You know, this is not related to aviation per se, as in we are not getting into aviation or anything of that sort. It's just the transfer of certain aviation assets from INFA to 100% subsidiary, so that the main operating entity is, you know, is not tackled with certain unnecessary compliance. Aviationist.

Avantika Jawahar, Analyst — Banyan Tree LLP

Thank you so much.

Operator

Thank you. Next question is from the line of Karthik Yap Pandey from 361 Capital. Please go ahead.

Karthik Yap Pandey, Analyst — 361 Capital

Yeah, hi. Thanks for the opportunity. I have two questions. First, sir, how much are we exporting to China?

Shubhrakan Panda, Other

So, China, I would say broadly what we are exporting at the moment is about 120 or 1,000 tons per annum, and we expect that to get close to about 180 to 200,000 tons.

Karthik Yap Pandey, Analyst — 361 Capital

Okay, but the thing is, I think, in China, there are some, you know, curtailment of stainless steel productions. So, how are we looking at this, like you said?

Shubhrakan Panda, Other

So, you know, it's not so much curtailment of stainless steel capacity as phasing out of smaller, older furnaces and, you know, being replaced with newer, more efficient... So in terms of demand, we are absolutely fine, no concerns on that front. And as I mentioned, we're pretty much on track to starting next year with our existing customers to increase the tonnages based in line with not just our expansion, but their increased consumption as well. So one of our customers, for example, has gone from about 1.5 million tons of stainless steel production to 3 million tons of stainless steel production. So they are definitely looking for more tonnage, which is what we are placing with them. And one of our other customers is a very large industry producer who's, you know, we are, I mean, And therefore, we are looking to, I mean, both sides are looking to increase that.

Karthik Yap Pandey, Analyst — 361 Capital

Understood, sir. And, uh, so my next question, uh, would be on the cost front. So, uh, sir, given the explanation, would you be a key to what, what is the power of, uh, uh, hello?

Operator

Uh, Mr. Pardon me, there is background noise from your end. Your audio is not clear.

Karthik Yap Pandey, Analyst — 361 Capital

Yes, sir. Hello?

Operator

Yes, please go ahead.

Karthik Yap Pandey, Analyst — 361 Capital

Yeah, so, sir, I was asking, like, what's your thought process on the cost front? Like, lots of, you know, cost increase has happened, and so, like, what is the outlook for the next two, three quarters, like, you know, on a pattern basis, if you can describe me?

Shubhrakan Panda, Other

So, you know, we don't give any forecasts in terms of selling price or costing, but as I just clarified that in terms of cost per ton, clearly there is a slight increase in Metco prices, and we are seeing a slight upward trajectory happen as well, that apart because this quarter we have consumed more ore from underground mining than open cost. So that has marginally impacted the cost. There is also a slight... So, while that does not affect us, but elevated chrome ore prices leads to higher royalty outgoes. So, these are the three factors which are there from an operational viewpoint. And secondly, certain startup costs, etc., which are there, which once all the furnaces stabilize.

Karthik Yap Pandey, Analyst — 361 Capital

Okay, sir. That will help. Also, if I assume, like, if I think of it, like, is this quarter, you know, the next two quarters margin trajectory is going to be, or, like, how should I think of it? Just a broader understanding.

Shubhrakan Panda, Other

So, again, we will not give specific numbers because we don't do that. If you look at the trend in FY27, Thank you. Thank you very much. And I think we are ideally positioned to benefit from that.

Karthik Yap Pandey, Analyst — 361 Capital

It was very helpful. Thank you.

Operator

Thank you. Next question is from the line of Saket Kapoor from Kapoor & Co. Please go ahead.

Saket Kapoor, Analyst — Kapoor & Co.

Yeah. Namaskar, sir. I hope my work is here. Yes, sir. For the sales part, as we have, I think, 167 is the number we did for the first half, and 360 is the number that we have guided. We have done teleprompter sales of 1,61,265. We are looking to close the year with 360 numbers. 3,60,000 would be 1,00,000 volume for the quarter.

Shubhrakan Panda, Other

No, we have our volume guidance for in terms of output. Our volume guidance for FI It's like 80,000. That's production volume. And by and large, sales volume will match that by and large, but what we have been giving guidance is production volume.

Saket Kapoor, Analyst — Kapoor & Co.

Sir, and also in your investor presentation, we have seen that the cost per term has moved from, say, 85,884 to 88,368. So, taking into account the current trend, this is what the range will be, in the vicinity of this 3% to 4%. That is how the cost will trend or since you have mentioned it, that cost will be slightly higher. So this 3% bracket is a good assumption?

Shubhrakan Panda, Other

I would not like to get into specifics of numbers because then we are getting into projecting costs, which I don't want to do that. But having said that, I... That there is a slight upward trajectory as far as coke prices. We will not see any significant change, and you will continue. For example, until you cross.

Saket Kapoor, Analyst — Kapoor & Co.

Just to add to it, sir, on your presentation, slide number 14, you have very well mentioned also that the power and fuel cost are higher family due to higher production, also along with the startup and the stabilization cost, which you were just alluding to. And sir, also, you have mentioned about this mark-to-market impact also on the forex. So, can you just give, quantify a number for these two events? Firstly, the stabilization cost. You can meet.

Shubhrakan Panda, Other

I have to respond to mark-to-market, but fuel and power 7.0. Prices have been high. Thank you. And secondly, of course, we are consuming more in terms of quantum, so that is there. And, you know. Can you multiply the MTM, please?

Saurabh Gupta, CFO

MTM, it is, as you know, in September 8, the currency dollar was at 95.98 compared to 94.6. About 8 crores impact, notional impact in the profit and loss statement, which was in the, embedded in the other expenses.

Operator

Sorry, Mr. Kapoor, will you please speak?

Saket Kapoor, Analyst — Kapoor & Co.

Yes, I will join the two. Thank you so much.

Operator

Next question is from the line of Josha from Seven Seas. Please go ahead.

Joe Shah, Analyst — Seven Seas

So, this is a quarterly output of a one vector you mentioned, is for Q3 or Q4?

Shubhrakan Panda, Other

Q3.

Saket Kapoor, Analyst — Kapoor & Co.

Q3, okay, very good.

Joe Shah, Analyst — Seven Seas

And Q4, I understand that KNR1 will be fully operational.

Shubhrakan Panda, Other

Q4. Well, actually, even in Q... We are actually starting in the middle of the quarter. So, like I mentioned, we are expecting the second furnace in K&R 1 to be... So, by the time we end the quarter, we should be... We'll be, you know, operating at optimal load, and that's where in Q3 we're expecting. 3,80,000, which is what we are still maintaining.

Joe Shah, Analyst — Seven Seas

Okay, okay. Very good. Okay. Thank you.

Operator

Thank you. Next question is from the line of Vinny from JN Investments. Please go ahead.

Vinny, Analyst — Investments

So my question to you is, Inquire is a fully integrated business model, so spanning chrome ore mining, some captive power, and ferrochrome production. So as the company scales towards the 5.34 lakh tons of ferrochrome capacity, How should we now quantify the comparative advantage of this integration, which you compared with the standalone ferrochrome producers who produce just ore and power externally?

Shubhrakan Panda, Other

So, look, I think clearly the advantage of being fully integrated, as in having captive war and captive power is, you know, not just from a competitiveness angle, but also from a resilience angle. But equally, when you look at it from the smelting side of things, it's not necessarily a poor cousin, if I can put it that way, in the sense that, you know, Regulations, the way they stand, we are required to, and we believe it does make more sense for us to add value. That is number one. And secondly, once we get to the stage of half a million tons and all that, there are certain advantages in terms of economies of scale as well. Finally, there is one other point, which is that with a broader base of ore available to us, that is where we are able to produce certain niche grades. And that is why we are looking at the diversification into low-carbon ferrochrome. So, niche crates at the moment will produce about 10 to 10. This is the first material which is 015-phosphorus. Thank you. We will be producing 20,000 tons of low-carbon ferrochrome, which has a significantly higher price per ton and margins. Besides broadening our product basket, it also bolsters our margins.

Vinny, Analyst — Investments

Got it. So, my follow-up to that would be, so, where would IMPA currently position itself on the global credit firm cost cost relative to the major producers in South Africa, Kazakhstan, and China? And has the company's relative cost comparativeness improved after the integration of the TNR2?

Shubhrakan Panda, Other

So, look, I mean, all I can say is that we are extremely competitive and amongst the lowest cost producers in the world. But, you know, very difficult for me to, you know, give a particular number. But I would certainly say we are in the lower decile in terms of costing. But second, and specifically if you look at China. This is something that I have mentioned a couple of times in the past, which is that China is today the world's largest producer of ferrochrome, but it is entirely dependent upon imported ore, which makes it a relatively high-cost producer. They do have certain advantages, which is Metcoco is produced in China, and, you know, their logistics cost to sell to industry producers is significantly lower than... But that being said, overall, the advantage arising on account of Chrome OS. You mentioned about integration of KNR2. Let me actually broaden that question and say that, you know, with regard to Kalinganagar becoming IMFA's largest site for ferrochrome, that will significantly improve our, you know, our EBITDA realization. That is the number of 1,500 to 2,000 rupees a ton which I was mentioning. Because if I break up our production capacity... 150,000 tons or 160,000 tons is produced at Choudwar with the costing of X. For a moment, please disregard what that X is. And we were producing 100,000 tons at Therubali, which is 6,000 to 6,500 tons a ton more expensive. Now, while in the next year to couple of years, we are not really looking at scaling back Therubali, but we will do that eventually. But in the meantime, what is happening is close to about I mean, about 250,000 tons of ferrocrome will be produced in Kalinganagar, and that is at par with Chodwar, maybe even marginally better on certain counts. So therefore, you know, whereas with 260,000 tons of production, only 160 was being produced, which was very efficient. When we touch 500,000 tons of production, 400 out of the 500 will be very efficient. So, that leads to an expansion of EBITDA margins is what we have been mentioning.

Vinny, Analyst — Investments

Okay, got it. I think that answers my question. Thank you very much, and all the videos for the future.

Operator

Thank you. Next question is from the line of Shravan Modi from Syndicate Family Office. Please go ahead. Am I audible? Yes, sir. Yes, please go ahead.

Shravan Modi, Analyst — Syndicate Family Office

Thank you so much for the opportunity. My first question is about, if you see, China remains a major driver of... Global stainless steel and ferrosium consumption. So what is the management observing in terms of Chinese stainless steel production, inventory replacement, and domestic ferrosium production? Are the current demand trends strong enough to absorb incremental global supply?

Shubhrakan Panda, Other

So China is absolutely, I mean, Asia is... China is definitely where you're seeing a lot of incremental capacity and growth happening. Yes, there has been, you know, the Chinese economy, if you look at it, has slowed down, but you're talking of a much, much larger economy. So, you know, I don't think it is a correct comparison to say China is growing at 4% now compared to, you know, 6% or 8% or 10% earlier because the size of the economy is very different today. Having said that, you know, they do have some challenges. It's not, I don't think it's. It makes sense for us to do a deep dive. India is And our just fun. Thank you. Further, if warranted, because these are fairly interchangeable. And why we remain confident about ferrochrome demand and stainless steel demand in India is that the per capita consumption is at about three and a half kilograms, whereas China at its peak... Public capex allocation in successive budgets, you know, now it's pretty much, I think the government has indicated it will be about 3.3% of GDP. But with the GDP itself growing at 3.3% in... Before we, you know, and as the economy mature, we believe a little bit of a sort of move towards stainless steel will also happen. We need it to be, you know, more. So, Shravan, one point here in terms of absorbing incremental capacity.

Shravan Modi, Analyst — Syndicate Family Office

Got it, sir. So, my second question is about South African producers such as Glencore and Samencore have been benefiting from preferential electricity targets. So, if these producers progressively increase furnace utilization, how do you see those impacting global ferrogram prices, particularly in our Asian market?

Shubhrakan Panda, Other

So, actually, I dealt with exactly this question, but I think it being an important subject, let me reiterate that ferrochrome production in South Africa had collapsed in 2025 because of high power costs and inland logistics costs. The inland logistics disadvantages continue, but as you correctly pointed out, that a preferential tariff is in place for two producers, and as a result of that, they are scaling up output. But what has been, you know, what seems to be the strategy is that there will be parity in terms of chrome units, which is that when ferrochrome production went down, more chrome ore was exported, and when ferrochrome production goes up, less chrome ore will be exported. Therefore, impacting China's ability to produce ferrochrome. So, but having said that, we, you know, there could be a little bit of turbulence when China, when South Africa is scaling up and, you know, until such time that China or somewhere else. A corresponding reduction happens. But having said that, it is not in the interest of South African producers to flood the market with excess tonnage and which will bring down prices which will not just affect, I mean, which will affect us for sure.

Shravan Modi, Analyst — Syndicate Family Office

Thanks a lot, sir. That's it for mine, and I wish you all the very best.

Shubhrakan Panda, Other

Thank you very much.

Operator

Thank you. Next question is from the line of Divya Reddy from Oracle Investments. Please go ahead.

Divya Reddy, Analyst — Oracle Investments

Yeah, hello. Good evening. Am I audible?

Operator

Yes. Yes, please go ahead.

Divya Reddy, Analyst — Oracle Investments

So, the 120 KLD ethanol project is expected to be commissioned in January 2027, following the delays related to geopolitical and monsoon disruptions. So, sir, what would be the expected annual revenue contributions and the EBITDA margin of this project? Also, if you could provide some color on the working capital requirement of this project.

Shubhrakan Panda, Other

So, Seanan, would you want to answer that, please?

Saurabh Gupta, CFO

Yeah. So, overall, the revenue is expected to be 320 crores, and EBITDA is around 10%. That's what is the current position based on the pricing, which you know is also regulated, is the overall situation in the ethanol project and ethanol market.

Divya Reddy, Analyst — Oracle Investments

Okay.

Saurabh Gupta, CFO

And working capital is a normal one. It is around what we are capturing is 60 days, 40 to 60 days, depending upon how we enter into a long-term agreement with the grain suppliers, which is a critical one here.

Divya Reddy, Analyst — Oracle Investments

Okay. And also, what would be the kind of return on capital that the management expects on the ethanol business?

Saurabh Gupta, CFO

So, we have an internal IRR of 15% that we have kept, but it will depend upon how the range of prices actually plays out in the market in future. So, it can go up. So, conservatively, we have kept IRR at 15% on the investment. So, your ROC will be also somewhere in the range of 13% to 15%.

Divya Reddy, Analyst — Oracle Investments

Okay. Okay, sir. Thank you so much, and all the very best for your future.

Saurabh Gupta, CFO

Thank you. Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, we will take this as the last question for the day. I now hand the conference over to the management for the closing comments.

Shubhrakan Panda, Other

Thank you very much. As usual, we look forward to the opportunity to interact with all of you. We thank you for taking time out from your schedule to be here on this call. I think we have an exciting story to share, and therefore we look forward to this opportunity. But your insightful questions do provoke us to not just be well prepared. But also, you know, sort of do a deep dive into various aspects of the business and, you know, be clear about a strategy moving forward. I think what I would like to end with is to say that we have, you know, we have worked pretty hard over the years. What is today a very resilient and competitive business, and now we are in the process of, you know, realizing the advantages or realizing the benefits of, you know, that fully integrated business model. But also diversify into higher value-added products, which will diversify the product basket as well as the bolster margins. And as I mentioned, we are also setting in motion today, the process of increasing mining output beyond 1.2 million dollars. So we are quite excited about what lies ahead and would like to assure you of our best efforts to... You know, to deliver a... Not just better than our peers, but do so in a manner which is transparent so that, you know, you have a clear insight into the operations of the company and what makes us or what gives us the ability to deliver these superior performances. Thank you very much.

Operator

Thank you, sir. On behalf of Indian Metal and Ferro Alloys Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.