JINDAL STEEL LIMITED (JINDALSTEL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Jindal Steel Q2 F527 Earnings Conference Call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-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 hand the conference over to Mr. Vikash Singh. Thank you, and over to you, sir.

Thank you, Anam. A warm welcome to everybody. Good evening. We would like to thank the management to give us the opportunity to host them. Without taking any much time, I will hand over to Vishal for the management introduction and opening the call. Over to you, Vishal.

Thank you very much, Vikash. Ladies and gentlemen, a very good afternoon. Thank you very much for joining us to discuss the Q2FI27 earnings release of Jindal Steel. Joining us on today's call are members of our senior management team, Mr. V. R. Sharma, managing director, Mr. Rajiv Kumar, chief operating officer, Mr. Sandeep Modi, CFO, Mr. Damodar Mittal, whole-time director, Mr. Devu Jyoti Roy, executive director, Raigarh, and Ms. Rupali Mehra, head of sales and marketing. I will now head over to the floor to Mr. Vyar Sharma for his opening remarks. Over to you, sir.

Gentlemen, my friends, the media persons, I invite you on today's interaction. There is not only an investor's meet or investor's discussion. This is a two-way exchange. We will be happy to take your questions after this particular session. The company has done wonderfully well in last quarter. We have done a record sales in the history of this company in many quarters in the last so many years. That is 19,448 crores. So, I think we are now on the path to reach to 1 lakh crore rupees per year of sales. This is what our aim is. With 19,448, if we multiply by four quarters, That should be 80,000. But our aim is to reach to 1 lakh road as early as possible. The steam sales is up by 27%. Habitat is up by 34%. Despite of very bad weather in Odisha, a lot of rains were there, the iron mines were full of water. Thank you. The company is doing very well in terms of availability of the raw materials, whether it is coking coal or it is iron ore or availability of pellets through our internal resources or other consumables. We have seen in the last three months' time a very topsy-turvy situation where we found that there was a shortage of natural gas in the country, and there was a shortage of propane. And this was a difficult time, basically, because of this Hormuz issue or the Iran and U.S. war. So, fortunately, we are having the coal gas irrigation plant, and we switched over to coal gas, that is, resin gas, for many of the heating furnaces, galvanizing lines, color-coating lines, and there was no impact on our productivity, production, and profitability. And still we are continuing. We are not using propane or natural gas. We are using our coal gas, that is called syngas. Or you can say we coal the gas through. Our dairy plant has also done well. And this is based on coal gas, that is again we call it syngas. We have two blast furnaces in Ambul and two blast furnaces in Ryagad. So all four blast furnaces, they are doing well now. The new glass furnace, which we installed last year, that has reached to a level of about 10,000 tons per day, that is in Angul. Hopefully, we will wrap it up in this particular month, say, today is 23rd, so I think in seven days' time, we should reach to about 10,500 tons per day, and in November, we are aiming for 11,000, and then December, 12,000 tons per day. Availability of iron ore from OMC and NMDC is seamless, there is no problem. The problems related to landslides from NMDC route to Angul route, those are over now, railway is working, and the water from mines is already receded, so now the operations at OMC, all eight mines, they are working very well. So, our own mine, Cassia mines, that also, it is being rammed up earlier, and we are still from our own mines also. We have two pellet plants, one in, two pellet plants in Burbil, both are running well, and the pellet plant in Angul is also running well. So, by and large, I would say that the company is in very, very solid state, and we'll be making a record production in the Q3, which will be ending on December 2026. Q4, we are further looking very positive, and we feel that we'll be surpassing the records what we are going to make in Q3. I think Q4 will be much better. As far as the market is concerned, the market is sporting very well. Though the input costs have gone up, but we could recover the entire input costs, and we could make some positive impact in NSR while we compared on the input costs. So, the steel scenario is very good. I think it is now 10% YOY basis, there is a growth. Though our production has gone up by 22%, the industry overall growth is about 10%. So, we are aiming that we will continue making such performance in other two quarters also, that is Q3 and Q4. The exports are also picking up. We are doing about 100,000 tons of export every month, mainly hot rod coils and plates, some quantity in rails and the structures. Yes. We are hopeful. The Honourable Finance Minister, the Commerce Minister, Mr. Pius Guell, he is already in Germany, and I think he is negotiating with the EU on the basis of the mother of all deal, what we signed as FTA. So, I'm sure he's taking up with the government of the European, EU Parliament, how to give us the most favoured steel pliers to be done, we are very sure, and the government is trying to apply the FTAs in the interest of Indian engineering industry, Indian steel industry, Indian aluminium industry, and also for Indian garments and other industries. So, we have seen a very positive impact from UK, and the moment the quota system by EU is relaxed for India, which we are very much hopeful, and the government of India is trying its best, then there will be another door opening to sell more and more steel to Europe. There is a steel deficit of about 28 million tons in Europe, and I think India stands the first chance to be right and good quality of steel. CBAM is an issue today, but overnight the CBAM cannot be diluted. I think EU Parliament and Government of India will find some solutions how to meet out the demand of the local people there in Europe, And they can enjoy the... Sorry, there was a disconnection, and now I think I'm audible to everybody. So, coming back on the international steel scenario, the outlook is very positive. The demand in the country is very good. I'm also pleased to inform you that 192-kilometer-long salary pipeline is already commissioned. The commercial supplies to plant from Badbil to Angul will be starting I think in next to three days time. All trials are done. The first batch of iron celery has been spread and well received. So tomorrow again we are going to restart and hereafter this will be continuous operation without any stoppage. We are now aiming to increase our overall product mix. Today also we are at a level about 60-40. Now we will be reaching somewhere about 65-35, 65% flat products including plates, and 35% will be long products. So this is what we are aiming for. Now, I will request my other colleagues, they will speak with you, and they will give the numbers, what we have already declared. Many of you must have seen that the results are declared and already displayed to the media. Thank you very much. Good afternoon, sir. Myself, Sandeep.

Let me take you through Jindalip Steel's consolidated financial performance for the Q2 FY27. We have delivered our highest-ever quarterly gross revenue of 19,458 crores, up 44% yoy, while net revenue increased 43% yoy to record 16,704 crores. This was driven by the record Q2 sales volume, as Mr. Sharma said, of 2.38 million tons and higher average selling prices, supported by a higher share of flats and a lower proportion of TMT within the long products. Domestic sales accounted for approximately 92% of total volume. Our adjusted EBITDA stood at 2,504 crore, up 34% year-on-year, while adjusted EBITDA per turn increased 5% worldwide to 10,529 rupees per turn. The sequential moderation in EBITDA was primarily due to higher raw materials and operating costs, notwithstanding the positive impact of higher volume and improved sales mix. Coming to the cost part by better ASP, profit after tax was 771 crore compared with 844 crore in the preceding quarter. Our balance sheet strengthened during quarter. Our consolidated net debt declined by 1141 crore from 15927 crore at the end of June to 14786 crore as at September end. Net debt to EBITDA ratio improved from 1.71 to 1.51. Cash and cash equivalent stood at 7237 crore, providing substantial liquidity as we execute our growth program. CAPEX during Q2 FY27 was 1228 crore and in the whole H1 was 3187 crore. We remain continue to discipline capital allocation with investment directed towards our steam and supporting infrastructure businesses and a focus on return as the newly commissioned facilities wrap up.

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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands-ups while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Akhil Esh from MK Global. Please go ahead.

Yeah, hi. Thanks for giving me the opportunity. So, my first question is on the production. So we have achieved already 4.8 million ton in the first half, and now our run rate becomes quite steep of requiring 3 million ton for the second half per quarter, right? So how confident are we, you know, kind of achieving this guidance? And also now since our flat mix has also increased during this quarter, do we see it maintaining in the coming quarters and achieve 70-30 mix in FF28?

So, we are quite confident that we will be in a position to achieve this 3 million ton per quarter. So, that means a million ton per month. To be very precise, the production planning is 0.96, that is 960,000 tons per month. As far as the mix is concerned, yes, you are right, we are aiming for 65-35. 65 will be the flat products, which includes plates also, and 35 will be the long products. The reason being for this particular shift from, say, 50-50 ratio, 55-45 to 60-40 or maybe 65-35 is that there is a better value addition, especially in plates. So plates are doing extremely well, and today we are undisputed leader in plates, selling plates to the country. We produce more than 220,000 tons plates per month in both the locations, and thanks to Government of India's spending money defense, and also on the merchant vessels and merchant ship building. So this is a good sign. The market for windmills is still very hot in India and also outside India. So we'll continue making more and more plates, and supported by more and more hot rod coils. So the hot rod coils also, we are aiming only for the evaluated hot rod coils. We are not manufacturing vanilla products in hot step mill. And either these are high carbon steel or medium carbon steel or something which is niche markets but very highly remunerative products that we are manufacturing. So maybe not 70-30, but yes, we will try to maintain 65-35, including plates. Thank you.

My second question is now on this slurry pipeline. So now since it has been commissioned, do we see any benefit to accrue in the remaining of FR-27 as well, or the benefit will start to come in from FR-28 onwards only? And also, will there be any additional cost associated with the ramp-up, which could come as a surprise?

No, there is no additional cost because this is a pumping station basically, grinding and pumping station. So all the grinding machines are in place. The pumping station is in place. The water arrangement, etc., everything is in place. We are getting water from government. There is no problem. And this water, when we make celery, we maintain a celery in a particular density, that is specific gravity, 1.822 level. And the water we recover at Angul. So in a way, the water consumption in Angul, that is reduced, because this water, when it goes there in Angul, we filter it and we recycle it. We don't throw water outside because we have a zero liquid discharge policy. Then your next question is the cost impact, yes. There will be benefit out of it because the iron ore which is being transported through trucks mainly, that will now be shifted through Celery Pipeline. So today we are receiving more than 700 trucks per day full of iron ore. They come from Mudville, Coenjer area and they come to Angul. So all these 700 trucks, at least 500 trucks will be eliminated now. Only 200 trucks will come which are geographically in the area whether we take the iron ore to Mudville or we take the iron ore to Angul. So, the cost will be same. So, it is better to bring that iron ore to Angul in place of taking the iron ore to Badaburi. So, Badaburi grinding station is in place, and Badaburi pumping house is in place. Now, we have to run it on daily basis. Hopefully, from the day after tomorrow, this will continue non-stop till infinite time. There's no problem. And Rs. 700 per ton will be saving on freight and no additional expenses. So, no surprise.

Thank you so much. That answers my question. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from the participants in the conference, please limit your questions to one per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Amit Dixit from Goldman Shacks. Please go ahead.

Yeah, hi. Thanks for the opportunity and congratulations for good performance. So, I just wanted to get the update on captive coal mining. How much coal was mined this quarter and what is the opening plan for the other two mines?

Yes, so together in Rayagard and Angul, we have total coal mining capacity of about, total availability is about 15 million ton. And Garay Palma in Rayagard is about 4 million, approximate number I am giving it. And the other mines are in Utkul, that is near to the plant in Angul. So, today, we are meeting out over 50-55% of the requirement from our own mines, the captive mines. There was some delay, or I can say there was some stoppage because of very heavy rains. I think from 10th of October onwards, everything is going very well. So, we are aiming that we'll be reaching to a level of about 65 to 70 percent of the total requirement we'll be emitting out from our coal mines. And it also depends upon the cost. We are sometimes getting very good deals from Coal India, and so Manadi Coal Field, and we try to avail that deal also. And sometimes we need washed coal for our coal gasification plant if our washery is not doing well or if we need more washed coal. So that also we buy from outside. But by and large, everything is going very well. There is no problem. We will be meeting out our entire requirement in the next year from our old coal mines. And it also depends upon the costing. If the cost advantages are there to buy something from outside, that we'll be blending and we'll be buying from outside.

Okay.

Thank you, sir.

Thank you. The next question is from the line of Parthiv Jhonsa from Anandrathi. Please go ahead.

Thank you so much for the opportunity. Just continuing to the previous participant's question on captive mining. What is the current iron ore, you know, across, especially the ROIDA and, say, Cassia? What is the current quantum, what we are getting?

Cassia, I'll tell you first. Cassia, we are taking out 22,000 tons per day today, and we are going to maybe to level of 30,000 tons per day. Cassia is very rich in minerals in terms of heavy contents. So, we use this as a sweetener. ROIDA at the moment is not working because one right-of-way we have to obtain from forest department and this will take a couple of months time because there was no road available from Mines to Main Highway. So we had two options, either to make a flyover conveyor or a road. So then finally, the government has taken us our request that yes, you can make a road. But this needs some tree transplantation, family trees, and then equivalent amount of land, whatever we are going to utilize, that land we have to take for afforestation. So, this will be done soon, and soon means, say, by January, we will be in a position to do it, and then ROIDA will be in operation fully. It was in operation, but this was suspended because the right-of-way was not available, and these are the formalities, what with the Government of India, we are working, and I am sure by December end or January, we will be in a position to obtain it. And the rest of the IRNO requirement, we are meeting out through OMC and NMDC. OMC, we have 13.5 million tons of long-term agreement, and they are spotting us. Though there were problems in last month, especially last two months, during the monsoon season, because most of their mines were full of water. And NMDC, there was a stoppage because of landslide on a railway track. This took about 27 days to clear and to relay the railway line. So now it is working well, so no problem. So this quarter, the another two months will be superbly good. So no shortage. Hope I have answered. Kasia, 40,000 tons today, per day, and we are going to ramp it up to 30,000. In terms of shortage, we can do it 50,000 tons per day also. But we are meeting now, the OMC and NMDC, they are supporting us. We are meeting out our requirement.

Thank you so much. That was actually quite, quite elaborate, sir. Thank you so much for the elaborate answer. Sir, my second question is pertaining to Angul. Now, we believe that we draw water from Brahmani River as per your EC documents, right? And the current sanction, what we have is about 59.1 billion liters on the analyzed basis. So, you have applied for about 140 plus, but today it is at 59.1. Now, you know, considering Brahmani's, you know, water reservoir level is quite short. You know, it's about 12.5% below its normative level. And now, when you have given that Q3 and Q4, you'll be doing like a record volume. So, wouldn't this, you know, water be a challenge because you require water across each and every step, right? Even if you consider whatever water you used last year, just multiply that, it's about 11% of reciting what you have done. Even after considering and putting everything, there would be some sensitivity, you know, to the volumes, in my understanding.

Thank you. Thank you for your concern, and thanks. You have done a very good study. So, first of all, I'll tell you, we do not need 59 MLD now. We are using only 31, which is sufficient. And in next year, we will be using at least 15% less. Why? Because we are pumping water from Badabil. So this water will be surplus. So in a way, we are helping other people to utilize more and more water from the same dam, where from we are connected at. So, there is no issue. So, water is not in short supply, because of these two reasons, and God has been very kind. We had very good rains. All of the dams in the vicinity, they are full, and there is no problem. And I am sure government is taking care of it. So, no shortage of water.

Okay. Thank you so much. Thank you for your answer.

Thank you. The next question is from the line of Benakin from HSBC. Please go ahead.

Yeah, thank you very much. My first question is on costs. Now, there are a lot of moving parts in terms of coking coal, multiple projects coming on stream in the second half. So, at this point of time, what is the cost guidance for the second half if you can break it up into coking coal and benefits from the multiple growth projects that are coming on stream?

Thank you very much. Cost, you know, is always a concern, an area of concern, and each management or manufacturing division, they always want to reduce the cost. So, first of all, the point here is the coking coal, I will tell you. Yes, the coking coal, the last quarter, we had an impact of about $12 to $14, and now, for the last couple of days, the coking coal is very stable. We are not expecting too much of variation. Even if it comes, maybe some 10-15 dollars that you can absorb, no issue. Availability is not a totally problem. Then we are also having our coal mines in, cooking coal mines, you know, in Mozambique. So, the Mozambique mine of ours is doing very well, and we are getting two vessels every month without fail. So, that is supporting us. Another opening which I feel is likely to come, that is Russia. So, hopefully, now the time has come that this war will stop and Black Sea operations will be regular. The moment the Black Sea operations will be regular, then I think Indian steel industry will not have a shortage of coal. Already Indian steel industry has reduced its exposure on Australia from 75% to 78% to about only 50% today, and the Indian industry has shifted towards Mozambique, South Africa, Colombia, Venezuela, and also America and Canada. And now the new coal power country is Russia. They are not new, but new after four and a half years or five years. So the moment this war stops, the war ends, then everybody will be comfortable. And I'm sure if this is done in the next one or two months' time, and they sign a treaty protocol that they will not attack on the vessels, then I think cold prices, cooking cold prices may come down in December or January. So, I hope I answered your question.

And, sir, what are the benefits from the various projects?

I'm sorry to interrupt you, sir. I'm sorry to interrupt you, sir. If you have follow-up questions, please rejoin the queue.

What are the benefits that if you can quantify some of the various growth projects that the company is bringing on stream like the salary pipeline and ramp up of the other mines?

You see, as I told you, the salary pipeline is going to give us 700 rupees per ton on 20,000 tons per day. So this is direct impact. So this will be a net profit, and this will definitely recover our cost. So the ROI will be very fast. This is a big benefit. And over and above this particular financial benefit, the other benefit is to be public, because all these 700 trucks coming to plan every day. So, in pipeline, there are 2,000 trucks. So, 700 trucks in our company, 700 to 1,000 trucks, they are on the road. Another 700 or 600 trucks are for loading. So, the 2,000 trucks will be off the road. So, you know the accidents and the fuel consumption, the diesel consumption, the pollution, air pollution, then horn pollution, because in India, everybody blows horn. So, all the sound pollution, you can say, that will be reduced in the social cost. Government of India is also supporting these particular projects for these regions. Now, the other area is, you know, most of the railway racks today, as per the directives or as per the requirement of power plants, they are engaged in transporting coal from coal belts to a different part of the country. So that the power availability in the country is stable, and there is no increase in the tariff, power tariff. Because the whole world today is struggling on power tariffs. Like, for example, the electricity cost in Europe today for a domestic user, household user, or industrial user, that is ranging from Indian rupees 12 to 15 or sometimes 18 rupees per kilowatt hour per unit. Whereas the government of India has maintained the overall price level for the domestic users or the commercial institutions to a level of less than 8 rupees and maximum maybe 10 rupees. And there's upper cap also. So, I think it's a good cause. So, more and more coal going to power plants means more and more industrial growth and more and more, I would say, helpful to obtain a better life. So we are a very small part of that, that we are trying to reduce the diesel consumption, and we are also trying to make railway racks spare so that government can utilize these railway racks basically to transport coal to different destinations in the country. Thank you.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to one per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Amit Murarga from Axis Capital. Please go ahead.

Yeah, hi. Good evening, and thanks for the opportunity. So, firstly, on the cost inflation, I think in the last quarter, you had spelled out about 2,000 rupees a ton cost inflation due to West Asia conflict. So, sorry, I think it was 1,200, 1,300 per ton. So, could you kind of give the same number for Q2?

So, Sanjeev, for the cooking coal prices, we expect an increase of $20 to $25 per ton.

No, no, I think the answer... Yeah, yeah, please. Please go ahead. Please ask your question again.

So, in the previous Q1 call, you had mentioned that due to the West Asia conflict, there was a cost inflation of $12 to $13 a ton, which is $12 a ton. So, could it be a similar number for this quarter? Yeah, could it be a similar number for this quarter?

Mr. Sandeep is replying you.

So, I will give you the last quarter, we are going to say $12. This quarter, we are saying $20 per ton, which will be, we expect an impact on account of the coal cost.

Sure. And this is beyond the coking coal inflation, right?

Just to be sure. No, no. Coking coal, I have said $20 to $25. And for the West Asia conflict, which I think you are reflecting more on the diesel and other parts, that was, I think, we did not give $1,200, $1,200. We said around $4 to $5, and that continued to put around $4 to $5 per ton.

Yes. So, basically, what Sandeep is telling, from West Asia, what we are bringing, we are bringing the fuel only, either crude or maybe LPG or propane. Okay, that, in fact, was a little less for us because we continued working through coal gasification. Yes, the coal, coking coal, there is no control on that. So, that was a loss, basically, or cost in, input cost had increased. Now, it all depends upon the geopolitical situation. If you feel that the United States, they ease out the supply of crude from Iran and also from Russia, then I think the oil prices may come down. If oil prices come down, then industry as a whole will get benefit. But just for the factor of safety, we are considering that maybe if this prolongs and there is no decision taken by superpowers, the two superpowers, I would say, to end this war and to relax the sanctions on Iran and or on Russia, Then there may be an impact of another $20 in times to come. But let us see, because overnight situation changes. The moment we know that the war is going to end, then I think the availability of oil and the gas will increase or will age out. Next question, please.

And the coking coal $20 is for Q3, the jump that you are talking about?

Yes, Q3.

And the 700 per ton from the slurry pipeline, by when will it get fully realized?

From tomorrow, because tomorrow we are going to start the commercial production.

So, as you mean, the full volume will start flowing immediately?

Yeah, it is a, like only 20,000 tons per day we will bring. So, on 20,700 rupees, we will be selling per ton.

Okay, okay, sure, got it. Thank you. That's all from me.

Thank you. The next question is from the line of Darshan Mehta from Daulat Capital. Please go ahead.

Thanks for giving me the opportunity. Sir, just wanted to understand whether we would have seen any cost benefit this quarter because of moving from propane to coal gasifier?

Yeah, coal gasifier. You are right. I'll tell you. Right question. Have you completed the question or yet to be?

Yeah, I have a question, but you can give answer of this question.

Yes, yes, yes. You see, the propane prices have gone up to a level of about 100 rupees per kilo, and equivalent, when we make cool gas, that is called syngas, then equivalent, we were getting 30 rupees a kilo. So, that advantage was 70 rupees a kilo. And that is what the re-heating furnace is, especially for the downstream industry. We have the cold rolling mills, galvanizing lines, color coating lines. So, these lines, they got benefit out of it.

Okay, okay. And in terms of steel sales, I mean, on part-time basis, can you quantify this? Will it be possible for you?

No, no, it will be very difficult because the balance sheet is consolidated, it is a balance sheet, so very difficult. But I told you that whatever consumption we were doing, we are getting an advantage of 70 rupees per gallon.

Okay, but at some point you will again move to propane. Well, let's say if things are normalized, you would again like to move to propane, being a cleaner fuel. Is the understanding correct?

No, we will not move to now propane. We have taken the taste of a battered chocolate, so we will not leave it. Okay, okay. Because we have done all those changes. It is not one-to-one replacement that we switch on, switch off. We have done all those changes in our burner system, automation system, so that we can accommodate the coal gas, or you can say sin gas. So, now, again, going back on propane, then, you know, it will take shutdown, and then we have to incur cost, and then we have to use the heavy fuel, heavy fuel, heavy-priced fuel. And all these fossil fuels, like propane, LPG, these will always be, or natural gas, always be imported in the country. I think the country's domestic users, they need it more than what we need it today.

Understood, sir. Understood. Thank you.

Thank you. The next question is from the line of Rajesh Majumdar from 361 Capital. Please go ahead.

Good evening. I'm thankful for the opportunity. I just wanted to know a couple of things. One is, what is the proportion of TMT bar you've sold in the quarter? What is the drop in the realization thereof, and what is the impact on the pricing chain in the last one month in TMT bars? That was the first question.

Yeah, so first question, let me reply. So, you know, historically, we were doing about 20% of our total production. We were selling through TMT road. So, TMT was not doing very good in last quarter. So, we increased the volume of hot road coil and reduced the volume of TMT. So, TMT now, we are selling only to the major projects, and we are not selling for the retail market in that proportion that we used to do it. So, I would say that now we are making only 120,000 tons per month of TMT, and earlier we were making 220,000 tons. So, 100,000 tons of TMT, whatever the steel was going to be utilized for TMT, that we are now utilizing in flat products, that is for plates as well as for hot rod plates. So, what was your next question? Sorry.

Yeah, thanks. So, my second question was, since your ASP has generally been unchanged largely due to the higher share of flats, the last month increase in realizations we have seen mostly in the rebar side will not impact significantly in the coming quarter, or do you feel that this quarter of realizations can improve a little bit sequentially?

Yes, we feel that quarter 3 and quarter 4 will be better. Historically, quarter 2 used to be very bad. Because of rainy season, constructions were at very low level. So, cement and steel, I mean the rebars, they always suffer in Q2. But now Q3 is very optimistic. It is a festival season. The building construction in the country is going very well. We have seen and experienced very good rains. That means more and more construction steel will be utilized. And now the prices are also, I would say, if you compare construction steel that is rebar and hotwood coil, so they are almost similar. Maybe 1,000 rupees here and there. There is no much difference. So I think Q3 and Q4 will be much better.

In terms of EBITDA button, because of overall cost?

Yeah, in terms of EBITDA button.

Okay, thank you so much.

Thank you. The next question is from the line of Rashi from SETI. Please go ahead.

Thank you. Just on the realizations, how did the flat realizations move in the last quarter, and how did the long realizations move?

Rashi? Rashi?

Yes.

Yes. So, there is a first question from a lady. And the first answer also from a lady. So, Chief of Marketing, Ms. Rupali, will reply you. Please.

Hi, Raji. Thanks for the question. So, in terms of TMT, while the realizations were down, because of the monsoon, as also our MD just mentioned, that Q2 is typically not a good season for TMT sales because of lower construction. The prices in HRC had strengthened, but that strengthening had come towards the end of the quarter two, which was primarily August and September. So we would see better realization impact in the quarter three. As far as TMT is concerned, as again, you just got to know that TMT prices also are now at a similar price level to HRC at this point in time, but the construction will pick up, and the overall change of TMT went from $52,000 to $59,000, and that of HRC went from $51,000 to $60,000. That was the kind of change that we saw in Q2. Are you able to quantify the spot versus 2Q average for both? In terms of the spot prices, today we are doing spot of HRC and TMT around 60. That's the spot prices. HRC is a little over 60, and TMT has just reached there. But in terms of Q1, if you were to compare, the spot prices in Q1 actually ranged in HRC for about 54 to 53, which is now towards September at 59. For TMT, the spot prices actually in the beginning of quarter one were around 56 and came down all the way to 45, now which is at around 60 this time.

Thank you.

Any other questions, please?

The next question is from the line of Manav Gogya from Aditya Birla Capital Limited. Please go ahead.

Yeah, hi. Good evening. Thanks for the opportunity. So, first question is on the other expenses. If you take a look, there's a 13% quote-on-quote exam. Would it be possible for you to let me know what the major reasons were behind this, and how should one take a look at for the rest of the year?

I know the other expenses includes, like, while we, just to give the background, we have a cooking coal and iron ore, which got classified into raw material. Other expenses by nature looks like other expenditures, but if you see the total fee, almost 30% is sitting in the other expenditures. Other expenditures largely complies of your store spare, repair maintenance, operational maintenance, freight, sailing expenditures, all these are there. And accordingly, as I said in my opening remarks as well, there has been an increase in the freight expenditure, especially on the Middle East crisis and the diesel increase. That is also one of the key buckets for the increase in my overall other expenditure. And O&M and repair maintenance load spread has been in line with my volume. And if you see the techno-economics remain in the quarter two, bit on account of monsoon, bit higher consumption, that has also impacted our other expenditures. I think it will get rationalized as we see the monsoon behind in the Q3. So it should not be as elevated as has been this quarter. It should be the normalized in the subsequent quarters.

Understood. So basically you've played accounting for the majority of it, right?

Yeah.

Perfect.

Power and tool also, which has been the major bucket in today.

Got it. So, the other question is, would it be possible to give me what was the value added mix for this quarter? I think the presentation doesn't mention it. Last quarter we did 66%, if I'm not wrong.

57% was the value of the product mix during this quarter.

57 or 67? Sorry.

Yeah, I will tell you, you are also right, and my colleague Sandeep is also right. 57% because when we compare Apple to Apple, but when we moved from a low-priced PMT to high-priced other products, then it is more than 65%.

Understood. Thank you so much, sir. All the best.

Thank you. The next question is from the line of Mervyn Chidda from Inan Holdings. Please go ahead.

Yeah, good evening, sir. So just a few questions. First on, what is the current pellet production run rate at the company? And do we sell any merchant pellets in the market? Because I think in the past we used to give that data, but now since this data is not available, if you can highlight on that. And I believe there was one pellet plant also was supposed to get commission this fiscal, so what's the status on that?

Yes, thank you. Your memory is correct. We used to sell a lot of pellets. But after having installed the blast furnace number two, we are short of metallics now. So we make about 18,000 to 20,000 tons in budwill from two plants, and we make about 14,000 tons from our angul plant. So in a way, we are making about 33,000 tons pellets every day. And all these 33,000 pellets is consumed in-house. There is no problem. So, we don't sell anything. Rather, sometimes, we buy pellets from market. So, it is other way around. So, like, for example, last month, since most of the iron ore mines were drenched into water, it was difficult to do the mining. So, we have bought pellets from the market. Then the next, all the three plants are doing extremely well. So, we are making good quality pellets, which is helping us in taking out good production. And as far as the new pellet plant is concerned, yes, it is on the way. On the way means it has come up. Hopefully, by June next year, this will be fully commissioned. So, by March, we will be doing the complete installation, and maybe end of March or early April, we will start our trials, and June, it should be in commercial production. Hope everything is answered.

My second question was... I am sorry to interrupt you, sir.

If you have follow-up questions, please rejoin the queue.

Okay, just one more, if I can go about it.

Please go ahead.

Yeah. My second question was on the difference between the consolidate results and the standalone results. Both on the turnover and the EBITDA, the console was much higher than the normal run rate what we see in the past quarters. So, what is the incremental on the turnover side as well as the EBITDA side in the consolidated numbers?

So, you see, we have a 100% subsidiary in Galvestri Odisha Limited, and as a measure of the project got commissioned in the JASOL, their turnover and EBITDA both have been an increasing trend, and you will see this difference getting increased as we go to the quarters, because their EBITDA and volume both will keep increasing. At the same time, our overseas subsidiary in Mozambique also had a better EBITDA compared to the last year, YOY, given the better coal prices.

The next question is from the line of Ashish Kejriwal from Nuwama Institutional Equities. Please go ahead.

Hi, thanks for the opportunity. Two questions. One, is it possible to share what the blended price increase for us quarter and quarter and how much power we have sold in this quarter? Because, you know, we have commissioned 1050 megawatt power plant, and though we have surplus power available. So, is it possible to quantify some numbers on power sale as well as a price increase in this one? And secondly, in October, are we seeing a sales volume run rate of around a million ten? Because that is what is required to achieve our lower end of the sales volume guidance of something like 10.5 million ten. Thank you.

I will answer the first question. I think whatever the information we give in the ASP, which can be given in the investor deck, we will continue to stick to it. And as far as the second question, I think you asked three questions. But within the first A, A, B, I have given a big answer about your power. Any steel plant will have the power capacity. And at the same time, when the steel production takes the shutdown plant and other things, they will keep having the surplus power. So that success power will anyway getting the, basically, sold in the market. But in the overall scheme of, think of my mind, almost 1,000,000 crore rupees of the revenue, which Sarmaji said, will be going to be achieved. And that's the mini skill number. So I think that we should factor into. Second, your run rate, which you are saying for the achieving for the next quarter and remaining part of the year, For getting the lower end of the guidance, on the saleable basis, it should be 9 lakh ton to 9.5 lakh ton per month. So we should be able to achieve the guidance, and we are very, very sure and comfortable to achieve those guidance, given the monsoon season and everything gone behind us, all the plants are fully ramped up. Like Srimaji, always make you count for the day basis, and you have been answering on the day basis, and I am still learning in the steel industry. On a day basis, we are actually, yesterday also exceeded our near to the design capacity. I think it gives us the confidence that we should be in the mid-range of the guidance. I hope, Ashish, you recall me and remember me.

Yeah, obviously. Thank you so much for this. Thank you.

So we can take a few more questions if it's available. Though we are only time, but we can take a few more questions if it is there.

Yes, sir. The next question is from the line of Sumangal from Kotak Securities. Please go ahead.

Yeah, good evening. So my first question is, if you could update us with the status of the 2 million ton DRI plan, which is expected to come timeline. Utkal B2 mine, I think that is the last mine which is yet to be commissioned. So where are the approvals and the timeline? And lastly, we got the answer of spot prices, which is around 60,000. Just want to understand what is the average which we saw in 2Q. Because we shared the range of prices from starting to end of the quarter, but the average would help us to kind of understand how the spot is versus average. Thanks.

Yes. So, DRI plant first. The DRI plant will be commissioned again in June 2027. This has already come up. So, there are certain equipments which are imported. So, because of, you know, the shipping issues and all these things, so this may delay. But June, yes, will be in production. And the next question was?

ASP, this overall NSR average versus the spot prices.

The spot prices, you know, it is very difficult to tell because when we compare with the index in the country like Big Mint or Fast Markets, so, you know, those are the numbers, and all these people, they are reporting the numbers. Telling a set price will be difficult on a public platform because it attracts, you know, something unethical practices because the market picks up those numbers and whether up or down, and the market starts behaving accordingly. So, average we have already given you that in the last three months' time what we have done, HR coil from 51,000 to 60,000. The TNT was somewhere about, again, 52,000 to 60,000. The structure was ranging from 60,000 to 65,000. Rails were more than 70,000. So, these are some approximate numbers, which on a public platform we can share. Sorry, we cannot tell the exact numbers today. That will be against the policy of company and against the interest of our customers.

Sure. And what about the Utkal B2 coal mine?

This is, now the procedure is going on. I cannot say the date because, you know, sometimes many things are in the hands of government. So, we have to, there is no obstacle. There are certain clearances what we have to update. I think it should come in this financial year. Not a problem.

Understood. Thank you, sir, and all the best.

Thank you. The next question is from the line of Ritesh Shah from Investec India. Please go ahead.

Hi, sir. Thanks for the opportunity. As a purchase on external power sales, would it be possible to quantify the number at the EBITDA level just to better appreciate our operating profits? That's one clarification. Second, Sharmaji, if you could highlight something on DRI, the next phase, I would presume that there will be a CGP backed along with it. Are we getting any specific linkages from the government? And there is a government scheme, I think, 37,500 crores. Is this project a part of it? If yes, what is the element of incentive or subsidy do we expect from the government? Thank you.

On power sale, our CFO will reply you. But on the other part, other points, CGP and DRI, yes, first of all, We are getting the benefit from central government on this project, so for the installation of DRI plant, as well as coal-based DRI plant, coal-gas-based, and as well as for coal gasification. So, we are expending our capacity, cold gasification. So, three more gasifiers, which is having capacity of 35,000 Nmq per hour each, that means 105,000 Nmq per hour that is being installed. And fortunately, at this time, all these gasification plant is being done, at least 95% of the indigenous components. So I would say it's all made in India project, nothing imported, barring some 5-7% of very, very critical components which India does not manufacture. The gasifiers are being built in India. One of the gasifiers is being built in our company itself, that is in Ryapur Machinery Division, and other two gasifiers we are building in Godrace, Mumbai. So, this is what we are aiming to, and hopefully these will be commissioned by June, and the DRI also will be commissioned by June. On PowerSafe, I request our CFO to reply.

Hi, so as I replied to Ashif as well, in case of any large steel company, there will be a power generation from the captive power plant, and there will be the opportunity for staying in the market, depending upon the steel production demand and the supply. However, these are on the 1 lakh crore rupees kind of turnover company, it is a very, very miniscule number to be taken into.

Sure, Sandeep. Sharmaji, any update on linkage, if at all, from the government? Because I presume government is open, encouraging gasifiers. So, will we be a beneficiary over there? And if not for this linkage, what is the plan for the feed?

There is no problem. First of all, yes, you are right. Government is open to provide coal with the exemption of 50% of royalty. So, this is one. And secondly, from our own minds also, we will be in a position to feed the coal gasification. No problem.

Thank you so much. All the very best.

Thank you. The next question is from the line of Pallavagarwal from Antique Stock Broking. Please go ahead.

Yeah, good evening, sir. So, this question was, you know, on the, or more of a request for, on the annual report disclosures. So, I think, you know, we are not, we are just giving one line for raw materials consumed. So, you know, some of the other companies actually didn't do give up a more breakup of the iron ore coking hole. So, it would be helpful for us, you know, if we could probably share that in the next, you know, annual report going ahead. The reason I'm asking is because, you know, in the footnotes to the raw material consumed, The captive royalty, I mean, royalty premium amount is pretty significant. So, you know, just, you know, wanted to understand whether, you know, the benefits of lower, you know, captive coal, part of that is offset by, you know, higher auction premium or royalty premium that we pay. So, net-net, are we still better off with captive coal compared to external sources, or is the difference not very material?

So, I can give you the directionally answer. We are better off compared to that because in an earlier call, Farisabian mentioned, 2% of the SMS cost level, we have a benefit compared for the on account of the captive coal mine. That is the directionally I am giving the ballpark number. And at the same time, for the iron ore mines, I think there are two ways to look at it. One, you are looking at the financial impact number. Second is to having the backward integration and having the raw material security. And Mr. Sharma was saying, when there was a heavy monsoon, heavy rainfalls, and there was that sliding in case of other ONC mines, we were not able to get material. The casia, our own minds, only helps us to continue the production, and that's how you see during this quarter, casia consumption was 33% compared to last quarter, 25%. But that has helped us to improve the overall steel production and earn a better EBITDA. We record the best ever quarterly revenue and second best on the quarter-on-quarter basis. So I think that part has to be balanced rather than looking just on the third term of financial number.

Sure, that point is very appreciated. And, sir, lastly, if you just give an idea, what is a balanced CAPEX? You know, we've already incurred a significant portion. So, out of a total CAPEX plan, about 47,000 crores, how much is now left?

So, on the 47,000 crore of the CAPEX number, we have around 8,000 to 9,000 crore rupees available for the remaining like plant, DRI2, and other things to be completed, and at the same time, some pending payments which will be linked to the performance. So, that is the number available, but for this year, we continue to remain in the stated guidance of 7,500 to 10,000 crores, and during the H1, we were, as I said, 3,400 crores spent.

Sure. Yeah, thank you so much.

Thank you.

Thank you. That was the last question for today. I now hand the conference over to the management for closing comments.

So thank you, ladies and gentlemen, and thank you for all of the people, those who are attending this particular conference. So we have tried our best to give the answers of each and every question. May not be 100 percent, maybe 90 percent or 92 percent, but in case there is any other question, you may reach to Vishal, and he can reply by mail, because each and Everything cannot be clarified, but one thing which is missing, but you will see in our balance sheet, that our debt to EBITDA ratio has now come down to 1.5. So perhaps this is one of the best ratio in the industry, and you know, people used to have somewhere 4 is 2.1, 3 is 2.1, 2.5 is 2.1, and last quarter we were at level about 1.7, 1 to 1, and now it is 1.5. So this is a remarkable achievement. The company is today, the grace of God, and the support of our employees, people, and the support of our board. So we are today cash surplus. There is no issue. And we are not, again, I repeat, we are not in the race of putting millions of tons of plant overnight. We are still following the same philosophy, earn and invest. So we don't want to invest money unless we reach to our 100% capacity utilization. And the moment we are near to 100% capacity utilization, then we will review within our management whether we have to do something or not. Until that time, we want to maintain our health, and we want to continue as a responsible steel conglomerate or business house. The manpower is stable. There is no churning. The people from the middle management and upper middle management, those who are at a level about AGM, DGM, general managers, AVPs, assistant vice presidents, they are being elevated to take the higher responsibilities, and there is a very positive atmosphere in the organization. And fortunately, in the last couple of months, there is no exodus from the organization, and the people are very much stable. But yes, of course, some people will always leave the organization, and that is natural, and some new people will always come. But we have no issue on account of any manpower shortage. This is what I wanted to assure you. And with the support of all of you, we are very much confident that in times to come, we will do much more better and we may exceed your expectations. So thank you for your support always.

Thank you, sir. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.