Indian Metals & Ferro Alloys Limited (IMFA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Indian Metals and Ferro Alloys Limited Q1 F527 Earnings Conference Call hosted by AdFactors PR. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Gupta from Air Factor Sphere. Thank you. And now to you, Mr. Gupta.

Thank you, Ranjir. Good evening, everyone, and thank you for joining us on Indian Metal Fair Alloy Limited earning conference call for the first quarter ended 30 June 2026. Today, we have with us Mr. Subrakan Pandha, Managing Director, Mr. Sauna Gupta, Chief Financial Officer, Mr. Vijayananda Mohapatra, Whole-Time Director and Chief Operating Officer, Mr. Suresh Babu Chigarpilli, Head of Federal Online Business Unit. We will begin the call with the opening remarks by Mr. MD, Mr. Subrakan Pandha, who will provide an overview of the company's business performance, key operational developments, and the outlook of 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 or discussed on the today's call may be forward-looking in nature and should be viewed in the conjunction of the risk and the uncertainties that the company faces. A detailed explanation of this risk is included in the earning presentation that has already been shared on the stock exchanges. The company does not undertake any application to publicly update this forward-looking statement. With that, I would like now like to hand over the call to Mr. Subrakhan Panda. Over to you, sir.

Thank you, Vaidup. At the outset, let me welcome... Not just firm. I will not get into the details. to the stock exchanges, but suffice it to say that as a We are also looking to commission the KNR1 greenfield project, where the first furnace, we have already initiated the process of heating the refractory lining. Um... Thank you. Thank you. We're looking at about 120-odd thousand tons. So there is a full 50% increase in tonnage, which is coming. One point here I would like to point out, that in all our interactions, we have, you know, while we never, we generally don't give any guidance with regard to tonnage, but given that there is so much happening in terms of greenfield, in terms of the acquisition, etc., so we have given some indications. As far as FY27 is concerned, we had indicated 400,000 tons, but we're going to tone it down a little bit because while we were able to switch on all furnaces at KNR2 in the month of March and, in fact, got a little bit of production, but, you know, some of the transformers we feel should not be loaded beyond a certain point. So we are taking it a little safe, if I can put it that way. We have already ordered two sets of transformers plus a spare. So sometimes in Q2 or Q3, we will be looking to replace the two sets of transformers where we have a little bit of concern. And secondly, as far as the gas cleaning plant is concerned, again, some work needs to be done on that, and therefore we are restricting load a little bit to ensure that we comply with emission norms. So when all of that is sorted out, I think we will be able to push. The load higher, as we had indicated. But as I said, just to be transparent and clear, we're toning down the guidance a little bit for FY27. So I think there will be a lot of questions. So let's go into the Q&A mode, and I'll do my best along with my team.

Shall we open the line for questions?

Yes, please. Go ahead.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue stops.

Good day, everyone. Today is a bit busy day because after AGM, concluding AGM, we are starting with the concord. Anyway, now, Mr. Panda, I understand we expect to sell additional ferrochrome to India, and I understand that ferrochrome demand in India is a bit weak. Mainly because of stainless steel flaps are imported from China and stainless steel producers are happy converting them into finished products. The benefit of ferrochrome, use of ferrochrome is going to China and not to India. So, like in steel products, there should be restrictions on imports of stainless steel products, especially stainless steel slabs. So, they will have to produce stainless steel slabs in India using Indian ferrochrome. So, this is one suggestion. I need your comments, please. Thank you.

I would not like to comment on that because there are, you know, there are multiple issues in terms of demand supply and other issues, so it would not be prudent of me to comment. But yes, in general, I have always held a view that whether it comes to stainless steel or any other commodity or any other product, that it's Indian industry is confident and wants a level playing field. So, if there is a... If there is an unfair competition, then that is something that should be looked into. But I would just like to limit my comments to that much.

Okay, yeah. Mr. Shah, are you done with the question?

No, can I ask you one more question? Yeah. Now, ferrocrome production of Samman Core and Glen Core from South Africa will start, and the expectation is that they will produce 4.5 million tons of ferrocrome per year. So now, what will be its impact on short-term ferrocom prices as well as on chrome oil prices? I understand from our MD's comment that in the past that in long term, it will balance out because Chinese ferrocom production will shift to South Africa. But what will be the impact on short-term impact on ferrocom prices? Thank you.

Thank you for your question. So as we have discussed in the past, my view is that the special tariff which has been announced by ESCOM for South African producers or other two producers, that certainly makes South African ferrochrome more competitive. I think the jury is still out as to how competitive they become with this power tariff. But having said that, generally our expectation is that we would expect to see in terms of chrome units. That means if the South African producers consume more chrome ore themselves, then it logically should lead to less chrome ore being available for Chinese. Now, again, something which is evident is that if South African production increases, and I don't think the number of 4.5 million is right, because at the moment only Glencore has switched on, I believe, Lion 1, and Suresh might have the numbers, but I think it's something like 700,000 tons expectation. Including others. But whatever that number is, that clearly if ferrochrome production in South Africa goes up and China doesn't compensate in terms of lesser output, then you will see some sort of glut. And that is going to impact everybody including the South African producers themselves because they have made it repeatedly clear that 62 cents is not something which is, you know, which is very, very attractive but something that they need to stay in, need to get to stay in the game. Having said that, we are confident about our competitiveness and our resilience, and we believe that with different sectors also starting to ask for special tariffs like manganese, etc., that we may see some short-term turmoil. Even that, I'm not so sure. But clearly, you know, I think it should balance each other out. And that is where also the point I made at the beginning, that even if we see some price correction, please keep in mind that we have another 50 percent volume coming in. So that will certainly provide a boost to, you know, to our numbers in subsequent quarters. So we are quite, by the grace of We are quite… quite confident.

Okay.

Thank you. Next question comes from the line of Tisha Chamriya with Trineta Asset Managers, Discoway.

Good evening, sir. Am I out of the room? So, my question was that you have already answered it halfway. So, given the current ferrochrome pricing environment, where does our company believe it sits on the global cost curve? Like, have there been any recent operational initiatives that have strengthened your competitive positions related to the South African and Kazakh producers?

So, you know, it's very difficult to accurately pinpoint where we stand, but suffice it to say that we are fairly competitive and resilient, as I mentioned a little while ago, and therefore You know, what we believe is that we are, you know, we will be able to hold our own, whatever may be the circumstances. And I'm not found, and I'm, you know, the situation is not as, you know, one might think. As I said, very clearly we expect that increase in ferrochrome production in South Africa should lead to a reduction in chrome ore, because if that doesn't happen in this whole exercise of giving a special tariff to encourage restarts, we'll again get all, you know, It will not work out well. So that is one. So we are fairly competitive on a global scale, if I can put it. If I can ask Suresh to sort of talk a little bit about some of the initiatives that we have done in terms of digitalization and other Kaizen initiatives, et cetera, that we are taking. So Suresh, in a couple of minutes, if you can just give a little update on what, you know, you have been, some of the initiatives you have been spearheading to enhance our competitiveness.

Yeah, yeah. Thank you for that. So we have initiated digital twin at one of our locations, and we are originally deploying in other locations also. So this is basically to make the operator intervention as a list and cost optimization model. And we are also initiating the Kaizen theories at different locations to optimize the cost. So we will be very competent as far as the throughput cost is concerned.

Got it. And also, China is like the key driver for global cell phone demand. And based on your certain interaction during the quarter one, are you seeing any improvement in the stainless steel production or inventory replenishment? Or how does that shape your outlook for the second half of the FR-27?

So, I don't think I have the numbers for FY27, but yes, you know, stainless steel production has grown. I mean, it may not be, you know, very aggressive growth, but about 2.5% to 3% growth is there globally, if you look at it. And secondly, you know, I think from a point of view of what is supporting prices at the moment, It is actually cost pressures because of availability of ore and pricing of ore, which is supporting ferrochrome prices. And of course, as you well know, that because we have our captive chrome ore mines, we are by and large insulated from that situation.

Thank you. Ms. Chamaria, please rejoin the queue for more questions. Next question comes from the line of Partir Johnson with Anand Rati. Please go ahead.

Hi, sir. Congratulations on a great set of numbers on the record quarter. It was a fantastic result, sir. So, I just wanted to quickly check on a couple of things. I'm sorry, actually, I missed your opening remark. I just wanted to get your understanding on this entire South Africa. Now, considering that, you know, the volumes have actually started picking up from Merafe, though they are down compared to, you know, last year, but they are still much higher than Q1. So, what is your understanding on that? Because eventually, they would be selling it to China at the end of the day.

Yeah. So, a couple of things on that part is, as we have discussed on the call, I have discussed on the call several times in the past two quarters. Thank you. That is, if ferrochrome increases, then logically chrome ore should, you know, supply should reduce, and that will impact ferrochrome production in China. Having said that, if that were not to happen for whatever reason, keep in mind that South African miners and, you know, integrated producers have the possibility of selling just the ore. So it doesn't make sense, logically speaking, to convert it into ferrochrome and drive down prices and make less money themselves and for everybody else. But where is that, you know, where is that balancing point or the tipping point? And, you know, is it possible to fine-tune it with that efficiency? I think we'll have to wait and watch. But the other point I made in my opening remarks is that, you know, as against 65,000 tons of production on average, in Q1 FY27, we have a volume of 80,000 tons. And by the end of the year, financial year, that is, so the fourth quarter, which is January to March 2027, we will be looking at a full 50 percent higher volume at roughly about 120,000, 125,000 tons per month. Parthiv, I don't know if you caught my other comment about we are slightly toning down the Production guidance at KNR overall, because we were indicating about 400,000 tons for FY27, but while we have been able to start the four furnaces at KNR2, but a couple of furnaces, I think we are not loading the transformers fully, because these are units which have not operated for a long time. And therefore, we have ordered two full sets of transformers and a spare. And over the course of Q2 and Q3, we will be replacing the slightly doubtful transformers with the new ones and also some work on... GCP needs to be done. So these are the unexpected surprises that one has when it comes to an acquisition, especially one which had not been running. But this is par for the course. And again, from a results perspective, volume, I mean, even with these volumes, we are expecting fairly attractive numbers in Q2 and going ahead.

Okay, that's actually quite helpful. So, basically, when you say 120 run rate, do you mean to say your volume, so 27 would be about 360, 380 kind of a range? Thank you very much.

380 is what we are expecting for the year. If you remember, we had set 200,000 tons. That's where we were hoping that we can, based on what we had seen during all the checkups that we had done while taking over the unit, that we will be able to load it a little more. Broadly, again, Suresh, I think, can confirm, but about 6 to... 7 megawatts is, lesser loading is happening. We also didn't have, they also didn't have adequate power availability, so that has come through another, Suresh, how much? 15 MBA?

15 MBA, yes, yes. 15 MBA is an enhanced load.

So, all of that will impact tonnage a little bit, but as I said, prices at the moment are more than making up, and even 380 plus will still be a significant boost in terms of tonnage.

Thank you. Mr. Jones, please reach out and thank you for more questions. Next question comes from the line of Manan Vandoor with Wolf for PMS. Please go ahead.

Hello, thank you so much for the opportunity and congratulations on the number. Sir, I just had one question around your realizations, EBITDA realizations. So, few quarters back, you have said that our EBITDA realizations...

Sorry for interrupting. Sir, Vandu, there's a lot of disturbance from the background.

Okay, okay.

Yeah, can you hear me now?

Yes, please go ahead.

Okay, sorry for that. Sir, just the question was that earlier, two, three quarters back, once about the EBITDA profit, you had stated that our average EBITDA would be around 20,000 rupees, but then you said that because of... The plant being closer to the different ports is going to help us and raise it to around 22,000 something. So, just needed an understanding that are we still on par with that or is it going to be higher, about 25,000? Like, not just because the realizations are better right now, just in general, over a long period.

We have a guidance in terms of specific numbers. What I had indicated is that both KNR1 and KNR2 are more competitive than Therubali in terms of cost of production, and therefore once KNR1 and KNR2 all stabilize and we get to that 500,000 tons production in a smooth manner, then we will see our margins improve by about 1,500 to 2,000. So that is what I had said. Now, at the moment, on a per-turn basis, if you look at for Q1, obviously the number is a lot higher because what we are seeing is... You know, our selling price being just shy of $1,20,000, blended selling price, so that is significantly higher. And secondly, the point I had made is that, you know, just being a little conservative in making this statement, that, you know, whatever you see a correction or don't see a correction, we have a lot of volume coming on line, which will, you know, boost the overall performance. So that's the specific statement.

Okay. Thank you so much, sir. That's it from us.

Thank you. Next question comes from the line of Partip Jonsa with Anand Rati. Please go ahead.

Yes, sir. Sir, just wanted to quickly take the previous question forward. You know, considering EBITDA per ton has actually, you know, substantially improved, I agree, you know, pricing had to play a lot of role in it. But has the benefits of that K&R 1 and 2 started, some benefits started coming in, the added or enhanced EBITDA per ton?

Not that much, and the reason I would say that is when you are ramping up load, so that's where for some time you are consuming power without any output and all of that. So a lot of inefficiencies are there in the initial period. So some probably is, some benefit is there. It's very difficult to quantify it because, as I said, there are, I mean, for For example, we have the... We have the renewable energy contract that we have signed up with JSW Energy. Now, we have had that corridor since June, and we are expecting the power to flow in August. So, I mean, it's maybe a crore or so a month. Those little inefficiencies are there, but then it's next to impossible to absolutely synchronize it, fine-tune it to that extent. So that is where I am saying that we will see the benefit of Kalinganagar in its fullest form, probably from Q4 of this year, assuming that we are able to smoothly operate the four furnaces at a higher load at KNR2 as well as the two furnaces at KNR1.

Got it, sir. And, sir, my last question is pertaining to the inventory. I just wanted to get, inventory and the other expenses, just wanted to get a sense of what is the closing stock on books as on date, and the other expenses were relatively lower, you know, QOQ. So, what has led to that dip in other expenses?

Shauna, could you be able to answer that, please?

Yeah, so on the second question, I will answer it first on the other expenses. So as you know, it's a quarter. Before, we had said that since the call, in the U.S.D. had gone up from Q3N to Q4N, from 89.9 to 94.65, so, you know, exports that we raised for NPM, that is, the market impact of 32 crores has come in our financials as a negative for that. But for left-of-one aim, more or less, the currency has remained similar. So those 32 crores impacted more than that. In fact, we have got some forest gain during this quarter. So that's where the maximum amount of benefit has come on the other expenses. Besides whatever is the cost-efficiency initiatives we have taken, specifically on the predictable maintenance and shutdown, so there also we have got some cost-benefit. So these two ads up to the lower other expenses. And on the inventory side, Ferrochrome is under control of whatever is the inventory plan. On the chrome mode, we have a stock, primarily, we have stocked up to meet whatever is our additional capacity for next one year. So approximately a Ferrochrome stock of total 6 lakh tons, a promo stock of 6 lakh tons is there with us.

And Parshav, I'd like to add one more point, that in the context of dramatically increasing our ferrochrome output, we'll also have to build up a little bit of ferrochrome stock, because that's about 17,000-18,000 tons, which works well when we have only two locations. But now that we have a third location and higher tonnages, So, this is where over the next one or two quarters, you know, we will be sort of making sure that everything sort of settles down in a manner which is efficient. So, that is why I am repeatedly saying that Q4 onwards is when we expect to see smooth operations with, you know, inventory having reached the, ferrochrome inventory having reached the level that we wanted to reach for a given higher output. So, all those things will settle down by fourth quarter.

Okay, sir. That's quite helpful, sir. Thank you.

Thank you. Next question comes from the line of Harj Vasa with SBI Cap Securities. Please go ahead.

Congratulations, sir, and your team on fantastic results. So, one of my questions is already answered, but it was just pertaining to selling price. As you all know, that the utilization per ton was around $1,19,000 this quarter. So, is this trend continuing for two few as well, like currently?

So, we don't generally give guidance beyond a quarter or so, because it's difficult, but having said that, Q2, we are seeing more or less results at the same level, a little bit of correction, but again, volumes will make up for minor correction in price that we are seeing. Beyond that, let's see how it plays out. Broadly speaking, I'm quite confident that the cost structure is such. And, you know, it's not a question of... Chinese buyers are, you know, just sitting, you know, South Africans will come and they will, the tonnages will simply shoot up. Because I think the disruption which was there in South Africa means that there is, they are very clear that companies like us, which have, you know, which have really worked with them to sort of have a stable relationship, we will continue to sort of get, I can't call it preferential treatment, But certainly some degree of, you know, understanding that it's not a, you know, it's a good idea to keep our supplies in the mix.

Okay, sir. Okay, sir. Thank you.

Thank you. Next question comes from the line of Arshav Patel with Molecule Ventures. Please go ahead.

Thank you for the opportunity. Congratulations on our blockbuster set of numbers, sir. This quarterly result actually puts us in a different league altogether. This is the first time we are seeing the full benefit of the integrated business model, which we boast about. So, my question is regarding the Q2 volume guidance. So, I agree that we cannot envisage a year out, but at least for Q2, can we expect now that the KNR2 has been operating at optimum utilization, at least the two ongoing furnaces, can we expect Q2 to have at least upwards of 90,000 metric ton sort of volume?

Look, I don't want to get into the specifics of numbers. In terms of production, we will certainly go up further beyond where we are at the moment. But as I mentioned, we are also looking to build up a little bit of stock because, I mean, if I just give you from a theoretical perspective, 17,000, 18,000 tons of ferrochrome stock is okay when you're producing 265, but when you're producing 400 or 450, it's not adequate. So those little balancing will happen. And Ashraf, I will reiterate a point which I have always made, which is that, you know, Shonaka, I don't know if you have anything to add.

Yeah, I mean, what we said is correct. So that's more or less will be about a quarter two. What we see is the average price relation will more or less have been seen. On the volume one, there will be some incremental volume. But since we are building on the ferrocrone stock, so more or less it could be on a similar dimension.

Okay. So good. Zoom it out and see on a yearly stance. So I understand that this time around what we have delivered is absolutely robust 30% operating margin, 35,000 metric ton EBITDA. This is the cyclical pick which we used to do and this we are able to do when the industry cycle is at median level. So this in fact reflects our benefit of captive ore. So can we just at least assume that even if there is a little bit of reduction in expected volumes by 5%, can we expect at least the quarterly EBITDA which we posted on Q1, can we analyze that, even the volume optic which we are seeing ahead of us?

So, in the interest of transparency, because we had talked about 400,000 tons of FY27 at various fora, I wanted to put that out there. While we, as I said, we don't give a guidance per se, but it's, you know, if you've stated a number, it is better for us to... To clarify why we are not achieving that number. But that apart, you know, I think annualizing this EBITDA again calls for us to look at what, you know, what the numbers and the margins will be two or three quarters hence, which I don't want to do. I am quietly confident, but, you know, what those numbers are, will it be slightly up, slightly down, is not something I would like to get into. Because again, I would reiterate that I think it's better to look at the general trajectory or the general sort of strength of IMFA rather than look at specifics in a quota.

Thank you. Mr. Patel, please rejoin the queue for more questions. Next question comes on the line of DV Agarwal with FICOM Family Office. Please go ahead.

Yeah. Hi, sir. Thanks for taking my question. I had one question regarding the expansion of psychos. So they've announced that they'll be increasing their capacity from 1,45,000 tons to 5,000 tons by 28. And at the same time, IMFA has guided to, you know, increase in domestic sales to 40% of the total volumes. So in light of this, capacity additions, how do you assess the domestic ferrochrome market over the next two to three years? Do you expect any extra supply to create an oversupply situation or expect pressure on domestic pricing and margins?

So, we're not, you know, I obviously wouldn't want to comment on FACOR's plans and their timeline that is for them to clarify to the markets and to investors. But broadly, you know, what we believe is that Indian ferrochrome demand is growing because stainless steel is growing. There has been some cutbacks. So, while we have added and FACOR is talking about adding, But there have been some cutbacks also. So I don't… I don't see any difficulties in that regard. In any case, like I have always said, that, I mean, whether we sell domestically or we sell, I mean, we export, there is not that much of a price difference because, I mean, the duty protection is hardly 2-3% or something of that sort. So we always retain the ability to sell more outside if we want to, but our approach has been that ours is the largest producer, I think it is incumbent upon us to ensure that the domestic ferrocrum demand is adequately met. And by no means do we feel that we are the only ones to do it. So, I mean, you know, others moving ahead with their plans is more than welcome.

Right, fair enough. Thanks a lot, and all the best.

Thank you. Next question comes from the line of Vinit Thakur with PLUS91AMC. Please go ahead.

Hi, sir. Thank you for the opportunity. Congratulations on a great set of numbers. So, I joined late by question by the representative, but could you just explain to me how the increment in the margins, what has led to and what would be a sustainable margins going forward as well?

So, very clearly, prices have moved up substantially. So, that is what is added. But in terms of the overall number, our volume is also on the way up. So, as against the standard of about 65,000 tons, we have produced and sold about roughly 80,000 tons. So, it's a combination of volume as well as prices moving up. And like I said, we have more volume coming online in the next one to two quarters. So, we are quite confident about the numbers that we will churn out.

So, post the new plant, the Kalyama Lever plant, what would be your capacity going forward?

So, as I said, our capacity will be about little more than half a million tons. We are expecting an FY27 about 380,000 tons, which is a slight reduction from what we had indicated earlier, and we are still maintaining 475,000 to 500,000 tons for FY28.

Production or capacity, sir?

Production.

Production of half a million and 28, you're saying? Yeah. And so could you comment on the West Asia crisis and how that led to a margin increment to what is the industrial scenario going forward now post-West Asia crisis?

Fortunately for us, no impact of the West Asia crisis, because we don't import anything from West Asia or sell anything to West Asia. In the initial days, certainly there was a little bit of disruption in terms of container availability and all of that, but that has by and large settled down. But many of the fact that we have 95% exports at this stage, and a lot of that is going to the Far East, which is not affected by this, is obviously beneficial. And secondly, when we talk about gas requirement and all of that, that's not relevant for any of us. Unfortunately, we have not had any noticeable impact. Yes, freight rate and domestic freight and export freight has gone up a little bit, but prices are more than made up for that.

Thank you. Mr. Thakur, please rejoin the queue for more questions.

Next question comes from the line of Shivam Purohit with SBA Securities. Please go ahead.

Yeah, hello. Thank you so much for the opportunity and congratulations to the entire team for posting such strong results. So, sir, my question is regarding the Metcol cost. So, recently we have seen the Metcol prices have declined or have corrected for quite some amount. And so, the question pertains that the bookings that we have done during the current quarter, that is 2Q. So, is the effect of those declining prices expected to be seen in the upcoming quarters, let's say 3Q or 4Q?

Actually, met-coke prices have moved up a little bit. I don't know about coking coal, but as far as metallurgical coke is concerned, it's moved up a little bit on account of Columbia, etc., their currency depreciation. But again, these are, I mean, prices by and large have made up for all of those things.

Okay, so a small uptick would be the impact that we would see in the Metcook prices.

It may not be in Q2, maybe in Q3.

Three months, let's say.

Thank you. Next question comes from the line of Ijash Lahoti with SOIC Research. Please go ahead. Mr Lahoti please go ahead with the question. Mr Lahoti please unmute yourself and go ahead with the question. Since there is no reply from the line of Mr Lahoti, we will promote the next line. That is Mr Sakit Kapoor from Kapoor & Co. Please go ahead.

Yeah. Thank you for the opportunity. Sir, as you mentioned correctly that the price trends are more likely to be in the same vicinity of closer to $120,000, or is it difficult to hazard, I guess, for the entering quarter? And since we have already spoken that for you, the visibility for a quarter or max two is what you can guide us. So taking that into account, what should be the reasonable EBITDA runway on top of two activities which we did for Q1? What should we model in for the coming two quarters at least or what is the visibility in front of you?

So, again, you know, I don't want to get into too much of guidance, but clearly, as far as prices are there, are concerned in Q2, we are seeing broadly speaking similar prices, maybe slight correction, but we will also have a little bit of tonnage, slight tonnage extra in Q2 to make up for it, and Q3 and Q4 is when we will have much larger tonnage coming online. So, while I'm not saying that prices will go down, but I would not want to hazard a guess. But on an overall basis, I think we are fairly confident of delivering robust numbers.

So, this Q1 number can be a base also for this financial year. That is not a bad, wrong understanding.

Sorry?

We can take this Q1 number of FI27 as a base for this current financial year.

Well, let me not make a definitive statement because we are seeing prices at recent highs. But there is still 50% tonnage waiting to come. So, you know, that's where even any slight correction will get balanced out is what we believe. But again, I would not want to be drawn into giving specific numbers because I think that would not be appropriate.

Thank you. Mr. Kapoor, please rejoin the queue for more questions. Next question comes from the line of Anand Sada with Chhattiskaya Investment Limited. Please goodbye.

Congratulations for the brilliant set of results. I just have one question, sir. There was, you know, we had a 50,000 ton furnace in the KNR2, in which there was some kind of environmental clearance pending. Do we have clarity on that, sir?

Not at the moment. We are hoping that somewhere around the middle of next year is when we can do that. In fact, at the current board meeting, we have also, you know, approved a slightly higher budget because, again, when we do a more detailed review of, you know, what is the situation and what work remains to be done. So a little bit of another 15, 20 crores or so is what we have approved in this budget. So somewhere around middle of next year or thereabouts, I mean, I don't want to give a definitive answer at this point in time, because, again, we will need to now move ahead on the environment clearance and all of that. But, Alexi, certainly we are keen on getting that going as quickly as possible.

So, just to clarify, sir, you are saying that by the middle of sometime next year, you will have some clarity in further quarter, the furnace will be operational. Correct, sir?

No. What I am saying is, in the next three or four months, we will have clarity whether that furnace will be up and running by middle of 2027 or, you know, slightly longer or something of that sort.

Okay, sir. Thank you.

Thank you. Next question comes from the line of Pranav J with Ageless Capital and Finance. Please go ahead.

Hi, sir. Thank you for the opportunity and congratulations on the good set of results. Very happy to see the company outperform. Sir, just going back to Q4, where you had mentioned that due to, you know, that there might be a one-time increase in cost due to the ramp-up of production, and which is visible in this quarter, just want to understand, is this the peak as to what our cost escalation might be, at least till Q3, since from Q4, once our operations stabilized, we can see a potential benefit, like you had mentioned?

So, look, from a cost escalation perspective, there are two things. One is the fixed cost, which is spread over or divided over a larger tonnage. So, that will enhance. But, obviously, the variable cost in terms of met coke and other things have been moved up or down a little bit. You know, that's hard to say at this point in time. We are not seeing significant, you know, risks on that front, having said that.

And, sir, secondly, just my one last question. We've seen ferrochrome prices correct a little, and since it is passed on with a lag, while Q2 is stable, as mentioned, Q3, Q4 might see a larger dip in realizations, since we already have a visibility of that.

No, we don't have visibility, or whatever visibility we have, I'm not... As I said, we, you know, one has to wait and watch because there are multiple factors, there are, you know, over-availability and pricing is a concern. So, it's not so simple for Rukun prices to dip also. So, but having said that, we definitely don't give a guidance for Q3 and Q4. So, one has to just wait and watch. What I will say, repeat, is that we certainly have higher volumes coming on to, you know, which will see us delivering a robust set of numbers going ahead.

Thank you. Mr. Jain, please rejoin the queue for more questions. Next question comes on the line of Joe Shah, 7 Cs. Please go ahead.

Now, Subhan, I want to understand the timeline for auctioning of polymetallic mines with a composite license. I understand that abutment deadline is 31 March 2021. Am I right?

What auction are you talking about?

Polymetallic mines with a composite license.

No, I have not kept up with that, so I would not like to comment until I look into that.

Now, coming to Iran talk optimism. We believe that the general belief is that, you know, Iran war has to come to an end in six months' time, and it will lead to reconstruction demand for stainless steel 316L. That will be a huge demand. So, what is your take on that?

Certainly, when all these geopolitical, you know, conflicts simmer down and settle down. There is significant... And in India, also, I believe that there is, you know, significant...

Thank you. Mr. Shah, please reach out to the queue for more questions. Next question comes from the line of Deepak Pandey, Sagan Capital, please cover it.

Hi, sir. Congrats on a good set of numbers. Sir, it was in articulating some sort of entry into critical minerals. Any comment on that?

So, that is something we have very clearly said that critical manuals is something we are interested in because it is certainly adjacent to our skill set. We have looked at a couple of blocks, but have checked. So that is something that we will keep on trying to see if we can make a breakthrough in that. But yes, critical minerals does remain an area of interest for us.

Mr. Pandey, are you done with the questions? Yeah, thank you. Thank you. Next question comes on the line of Sakit Kapoor with Kapoor & Co. Please call us.

Yes, just in continuation to the center, how have we tied up for the selling of the incremental capacity? I think so, we were more inclined to sell domestically. So, how are things shaping up? And with respect to the key raw materials for the cooking code, the Medco part, I wish your comment how those prices are currently trending. These two questions.

Ferrocrome prices have moved up a little bit, not a tear away run, but moved up a little bit, which is again what happens if ferrocrome prices are high, especially in Colombia, etc. Thank you.

Yeah, around 19% days we have sold in the Mustang.

Yeah, so that is something that, you know, we can cater to, as I said, or, I mean, not from a point of view of price, because clearly there is very little duty protection, and therefore, by and large, there is, you know, there is parity between, between. Thank you. As well as some of our export consumers, customers, there is interest in picking up damage. Clearly, we don't see any concern on that front.

Slide number 10 speaks about our EBITDA cost per metric term rising from closer to $82,000 and to $86,000. So as you mentioned that the prices moved up and the other RM prices also improved. So taking into account the current setup, what should be the cost of per metric term trajectory be shipping up going ahead? Or what kind of missionary trend can we expect on this fund?

See, broadly, I think, what is it? So broadly, I think, you know, the biggest advantage for us is the fact that chrome ore is sourced from our captive mines, because that is the biggest, you know, input to the cost of production. So that is by and large under control. And I mean, only if royalty prices move up a little bit, that has an impact. Secondly, as far as Metco and all that is concerned, a little bit up and down does happen, as I said, on account of currency depreciation in Colombia, on account of ferrochrome prices staying high. All of that sort of translates through into input costs moving up a little bit. But, you know, that is the classical time lag, as one of the earlier investors asked in the question, that classical time lag between stainless steel, ferrochrome and chrome ore and metallurgical coke, except in our case, chrome ore is not impacted. But other things move up and down a little bit.

Thank you. Mr. Kapoor, please rejoin the queue for more questions. Next question comes from the line of Anishika Patel, an individual investor.

Please go ahead. Ms. Pardelle, please go ahead.

Ms. Pardelle, yes, please go ahead. Ms. Patel, we cannot hear you. Can you come in the range and talk? Since there is no reply from the line of Ms. Patel, we will move to the next. That is from the line of Harsh Tiwakar, an individual investor. Please go ahead.

Yeah. Hello, sir. So, congratulations for the recorded results regarding the revenue and the profit. Hello.

Yeah, thank you.

Yeah, yeah. So, I had some one or two questions regarding some coke since we had been impacted by the Middle East war due to the USA and Iran. How does it impact the coke consumption and prices?

Yes, along with that, I want to talk to you.

Hi, as I clarified just a couple of questions ago that... As far as the West Asia crisis is concerned, because we either import anything or sell anything there. But yes, certainly freight costs, both domestic and otherwise, have gone up a little bit, but nothing significant.

Okay, and one more question. What is the specific, what's the coke consumption pattern of ferrochrome and over consumption pattern of ferrochrome as of now?

So, broadly, that's 0.65 kilograms of coke and broadly 2.5 tons of chromor.

Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I now hand the conference over to Mr. Subrakan Panda, PMD, for closing comments.

So, thank you very much for taking time out to discuss. If there are any questions that we have not been able to answer, or if there were others in the queue who would like to reach out, please reach out to Investor Relations, and we will certainly make an attempt to revert to you. You know, eagerly waiting for the first furnace at KNR1 to start producing later this month. We will, of course, alert that, alert, give an update about that. And secondly, of course, the second furnace we are expecting by end September, early October to come online. So we will keep sharing regular updates. Thank you.

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