JINDAL STEEL LIMITED (JINDALSTEL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Chindal Steel Ltd. Q1F527 Earnings Conference Call. As a reminder, all participant lines will be in the lesson-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Bhattav Jhonsa, Vice President from Anandrati Shares and Stockbrokers Limited. Thank you, and over to you.

Thank you, Steve. Good afternoon, everyone, and thank you for joining us today. We at Anandrati are pleased to host Q1 FY27 Earnings Conference Call of Jimdal Steel Limited. I will now hand over the call to Mr. Vishal Chandak, Head Investor Relations, to introduce the senior management and initiate the proceedings of the call, which would then be followed by question and answer questions. Thank you, and over to you, sir.

Thank you very much, Parthiv. Ladies and gentlemen, a very good afternoon. Thank you very much for joining us on a Saturday afternoon to discuss the financial results of Jindu Steel for the first quarter of FY27. Joining us on today's call are members of our senior management team, Mr. Damodar Mittal, whole-time director, Mr. Dwego Juthi Roy, executive director, Raiger, Mr. Biju Nair, executive director, Angul, Mr. Suni Lagarwal, executive vice president, finance, Ms. Rupali Mehra, head of sales and marketing. Before we begin, it gives me immense pleasure to introduce three distinguished members who have recently joined the company's leadership team. Firstly, I am delighted to introduce our Managing Director, Mr. V. R. Sharma. Though he needs no introduction, let me begin by saying, Mr. V. R. Sharma is a distinguished industry leader with over four decades of international leadership experience across the steel, power, metals, and cement sectors. A mechanical engineer with an MBA from the College of Applied Science, UK, he has held several leadership positions across the industry. Mr. Sharma previously served us as the Managing Director of Jindal Steel Limited from 2019 to 2022 and before that as the Deputy Managing Director and Chief Executive Officer of the company from 2010 to 2014. He has worked with several steel companies in India and abroad during his long tenure of more than four decades. I am also delighted to introduce Mr. Rajiv Kumar, Chief Operating Officer. Mr. Kumar is a highly accomplished steel industry leader with over 35 years of experience spanning operations, manufacturing, project execution, and business leadership. A metallurgical engineer from BID Sendri, he brings deep expertise in integrated steel operations, product development, operational excellence, and the successful execution and scaling of large manufacturing facilities. Mr. Kumar served as CEO of the Aluminum Business of Vedanta prior to joining Jindal Steel. He has also had a distinguished career at Tata Steel in various areas. I am equally pleased to introduce Mr. Sandeep Modi, our Chief Financial Officer. Mr. Modi is an accomplished finance leader with over two decades of experience across the metals, mining, and power sectors. A Chartered Accountant and a Master of Commerce, he possesses extensive expertise in corporate finance, business strategy, treasury, taxation, commercial operations, capital markets, investor relations, and M&A, among other critical areas. He is an All India Rank Holder in his Chartered Accountancy examination and has received numerous recognitions for excellence in finance leadership. He was previously the Chief Financial Officer at Hindustan Singh and has spent more than 20 years with the Vedanta Group before joining Jindal Steel. I request you all to please join me in welcoming Mr. V. R. Sharma, Mr. Rajiv Kumar, and Mr. Sundeep Modi.

Good morning, ladies and gentlemen, and thank you, Shah, for the introduction. My name is V.R. Sharma. Full name is Vidya Radhan Sharma. I have more than four decades of experience in the steel and metal industry. It is a privilege to play in the steel once again. I was the managing director in the year 2019 to 2022. Thank you. A world-class organization driven by exceptional and outstanding professionals, what the company has chosen from different fields and different companies. All to Jindal Steel's Q1 FY27 earning with briefing, and thank you all for taking our time on weekly off, that is Saturday, to attend this. Let me begin with a brief overview of the global macroeconomics landscape. As you all know, the world has been passing through a very critical geopolitical situation. For the last four years, we are seeing that the Ukraine and the Russia war, which has shattered the economy, which has shattered not only the economy in Europe, but everywhere in the world. Now, for the last one year, there was a pulse and then a big fight in between America, Israel, together with Israel, and all Iran. So this has also created a lot of problems for the whole economy. The economy has dwindled. The fuel prices have grown up. The steel consumption, per se, at the moment, that is stable or little with a downtrend. But, you know, there is always a light after the end of tunnel. So, we are seeing that in times to come, or very soon, there will be a solution to both the problems, both the wars which are being fought in between within Europe and also within Middle East. So, at the moment, these two, we are looking great for the steel industry to come back and to supply steel worldwide. So, I would say that this is a good future which exists today. Here, the RBI projects GDP to grow at a rate of about 6.6% in FY27. Despite near-term uncertainties, India continues to remain the fastest-growing economy in the world, supported by strong domestic demand, sustained capital expenditures, and stable macroeconomics environment. Domestically, the steel industry witnessed seasonal softness. This always happens especially in the monsoon season during this quarter. India's crude steel production declined by 6% on quarter-on-quarter basis to 42 million tons, while Finnish steel consumption declined And by 7%, that is about 41.5 million, has announced a significant policy reset focused on capacity swap reforms to strengthen supply discipline. In China, the 50 to 60 million ton, whereas the demand has gone down by 100 million ton. So this has created a little surplus in the international market, but I'm sure the moment these two geopolitical situations or the war, this is settled, Thank you. China will again come back to supply more and more equipment, plant, machineries, and there will be good room available to the Indian industry, nations, and also to the rejoining countries. In the domestic market today, we are seeing that HRC prices have increased sequentially and remained firm throughout the quarter, while TMT, that is the E-bar crisis for the construction steel, they opened with a strong note, but after that, the demand during the confidant that in times to come, say from end of August onwards, when the monsoon is receding, the country will come back with again construction boom. It's supported by the government of India, and especially the Indian bankers, in terms of extending loans and funds for the capital infrastructure, as well as for the construction industry. So, we feel a very good future is offing today. As far as Jinder Steel Intuit overall plan is, I would like to highlight that today we have a strongest team available. And the strongest team consists of Mr. Rajiv Kumar. He is a veteran in the steel industry. He has a background of more than 35 years. He worked in Stata Steel, and also he has worked in Vedanta as a CEO. Then we have Mr. Sandeep Modi. He came from Vedanta, and he is a chartered accountant with Masters in Commerce, and he has joined us as a CFO and brought a very good experience to deal with the financial sector, financial team, and to deal with the numbers, basically. Then we have a very good team in the form of, we have recently hired a CHRO, Mr. Pasichan. He has come from Indigo. Prior to that, he has also worked in many other companies like Hurtel, etc. So that team is in place. We have Mr. Rupali, head of marketing. So who is with the company for the last many years, more than 20 years, And she will be taking care of the complete sales and marketing. So, in a nutshell, I would say that the team is already in place. We have two very senior directors that are living in the plant. One is Mr. W. Jyoti. He is head in the Rye Good plant, who hails again about 30 years of experience. And he also comes from Tata Steel. The other gentleman is Mr. Biju Nayar, who was with Arsadar Mittal. And he also has more than 30 years' experience, so he is adding the Angul plant. Similarly, the people at the other segments, basically the domain, they are all highly experienced, talented people. So I'm sure that the team will deliver much better results in time to come, times to come. I'm lucky to have such kind of team, and I'm lucky to lead such kind of team from front. And finally, we are committed to bring the company to a different scale in times to come. Our first and foremost focus is capacity utilization. The point is team, as I told you, led by Mr. Rajiv Kumarji, and he is adding the complete operations. So his specialty is how to control the costs with the best and best opportunity available today. So, I think we'll be in a position to control the cost also, which will add to the NSR, add to the EBITDA. Then, the next is, we already discussed with our bankers. We have negotiated very good rate of interest, the lowest one, and the financial cost, boring cost, will also come down in time to come. And this is what Mr. Sandeep Modi is on it, and he is doing it. Then, as far as the inventory is concerned, we are well within the limit. We have less than 10 or 11 days of total production as an inventory, which is, I would say, very lean and best in the industry available today. Then the product mix, what we have, that is one of the best in the world, I would say, because we are the only company who makes long products, flat products, and specialty flat products like plates and the coins and tempered plates. So, we make plates about 2 million tons today in a year. We are going to increase it to about 2.5 million tons. That is a very basic requirement for any capital goods industry. Then, we have a state-of-the-art hot strip mill, which we commissioned last year, and this mill can produce about 5.5 million tons hot rod coils in a year, and that too, value is a grade of coils. We are not in the race of putting more and more horse-tip mills or more and more commodity mills. We are here to utilize our mill to the best of its and produce more and more value-engineered products than a commodity product. Then, after that, we are the only company today in the private sector who produces rails, and fortunately, today, out of the 22 metro rails in the country, at least 18 to 19 metro They are already buying rails from us. These are called head-hardened rails. Nobody else supplies these rails to the country. In a way, it won't be much, I don't speak, that we are 100% supplier to the Indian retro rail services in the country, head-hardened rails, which is a specialty of ours. Then we produce round billets, which not many people produce in the world, and these round billets are specially used for the forging of the rail bills. Government of India is putting full effort so that we become self-reliant, Atam Nirvan in rail wheels. There are only one more company producers in the country, and this is a great business in terms of consumption and also for... So this is another product, which is a wonderful product. Then over and above, we have the products like sheet piles, which nobody does in the country today, and we are the only people, those who are doing it. And then some of the specialty angle airlines, So, the purpose is that wherever we have the technical superiority and the product mix superiority, so those products are to be manufactured on top priority so that this can add value to our system, this can add value to the bottom line, and this can also be treated as a value engineered product. Thanks to Government of India, they have, Government of India has given a full focus and trust on the defense industry. So, what we are doing, we are producing today the specialty plates which are tailor-made for the defense industry, especially for the submarines, for the warships, for the oxygen storage, for the nitrogen storage, for the hydrogen storage. So, these are the specialty steel products. So, our aim is to keep on adding more and more special steel products, not only through this normal plate milk, but there is a next process called, that is, heat-treated plates, that are quenched and tempered plates. So, these plates used to be imported in India. Now, the government of India has given an instruction, and I would say it has banned. The imports are concerned, yes, there is a concern. The flat products, which is a commodity today, so the hothold coil, since it is a commodity, yes, many, since the advanced license, they export also. So basically, it doesn't affect the overall scenario in the demand and supply, but it's a hothold coil, but it's a commodity coil. But whenever the prices or the imports are reflected, they are reflected as a commodity or total price. But whereas we are fully insulated from such kind of products because we are value engineered and value added products. So in this channel, I say that the company's future is excellent and the team is excellent in place. There have been some repulse in the past, but today, with the grace of God and with the decision taken by board of directors, So, we have brought the gems in the organization, and I'm sure the company will publish, and we will see that the results are coming, and our journey to reach to 100% capacity utilization, with minimizing the cost level, etc., everything, we will be in a position to be, again, a very vibrant company, though we are vibrant today also, but it will be much more vibrant in times to come. So, now I stop my speech. Thank you very much for listening me very patiently. In case of any question, we, myself, and my team, or my other colleagues, they'll be happy to answer your queries. Thank you very much. Now, I'll request my colleague, Mr. Modi. He will address Mr. Modi over to you.

Thank you very much, Sharmaji. Good afternoon, everyone. I am delighted to join Jindaliskill at such an exciting phase of its journey. Over the past few weeks, I have had the opportunity to interact with our teams across the plant location. What stands out is the exceptional quality of our people, the speed of decision-making, strong capital cost discipline, deep adoption of the theory of conscience, and the growing use of AI and digital tools to improve operational and financial performance. General Steel today has one of the strongest integrated business models in the Indian steel industry, supported by world-class assets, captive raw material resources, discipline, capital allocation, and a clearly defined long-term growth strategy. The successful commissioning of our expansion projects has further strengthened this platform and positioned us well for sustainability and profitable growth. As I assume this responsibility, my priorities will remain maintaining capital discipline, improving return on capital employed, strengthening cash generation, preserving one of the strongest balance sheet in the sector, and creating sustainable long-term value for all shareholders. Let me provide you with a brief update on our financial performance for Q1 20. Consolidated revenue sequentially was around 8% down. It was largely due to the sales volume resulting from the planned maintenance shutdown, as Mr. Sharma had said. This was partly offset by around 7,500 rupees per year improvement in our average ASP, that's the average realization, supported by stronger steel prices and the share of value-added products in Q426 to 6 commission downstream facilities. Continue to ramp up, we expect the share of value-added products to increase further, enhancing both profitability and resilience across commodity price cycles. Despite a 15% sequential decline in the sales volume, EBITDA remains resilient, reflecting the strength of our product mix, higher realization, and discipline cost management. Consolidated adjusted EBITDA stood at 2,667 crore. Consolidated adjusted EBITDA per ton increased by 1,843 rupees per ton, taking it to total to 1,10937 per ton. This improvement was driven by increase in ASP, partly offset by a $23 per ton increase in cokey coal consumption cost, which is in line with our guidance of $20 to $25 per ton of coal, and the lower fixed cost absorption due to lower volume sequentially. Finance costs charged to the P&L increased to 548 crore, primarily due to the capitalization of the major expansion assets during Q426. Consequently, interest costs related to these assets are now being recognized through the P&L account for the first full quarter. These assets include the 1050 MW captive power plant, BOF3, CRM, and other associated facilities. Similarly, depreciation expenses increased during the quarter following capitalization of these newly commissioned assets. Consolidated profit after tax for the quarter stood at Rs. 844 crore. Our balance sheet remains one of our key strengths. Net debt stood at Rs. 15927 crore, translating to a net debt to EBITDA ratio of 1.71. With the ongoing ramp up of new facilities and continued focus on the cash generation, we remain confident of achieving the ratio below our stated threshold of 1.5x during Q2 27 And continue to help with the overall commodity cover the cycle, reinforcing our position as one of the strongest balance sheet in the industry. Our capital allocation continues to remain disciplined. Against our FI27 capex plan of approximately 8,500 crore, we have invested roughly 2,000 crore during Q1. Cumulative spend under our expansion program now stands at 37,457 crore out of the announced of Rs. 47,043 crore. Second quarter, our financial priorities remain unchanged, driving profitable growth, maximizing return for our expended asset base, stronger free cash flow, and preserving our balance sheet strength. We remain confident that these priorities will support sustainable value creation for our shareholders over the long term. With that, I will now open the floor for questions.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Amit Dikshad with Goldman Sachs.

Please go ahead.

Yeah, hi. Good afternoon, everyone, and thanks for the opportunity. First and foremost, I mean, I would like to welcome the entire leadership team, and it's great to have Mr. Sharma at the helm again, and Mr. Modi and, of course, Mr. Rajiv Koba. My question to Mr. Sharma would be, for last time when you were there, we actually had a, I mean, we went through debt reduction, the deleveraging happened during that time. So also the ramp up in the last one, that's the first last one, Mr. Dungul. Now, when you are there the second time, what would be your key focus areas? Let us say three to four focus areas that you might have thought of. If you can quantify them as well, you know, that would be great. And also, any thoughts around further expansion at Ango in terms of crude steel capacity? That is my first question.

Thank you very much. Thanks for remembering the previous dialogues. I'm back. And there's a reminder to me what is to be done. So, you asked the question, so I'm replying to you one by one. First of all, now the main focus is on the capacity utilization. Like, for example, we have 15.6 million tons of capacity already installed as the crude steel making capacity. So, how to reach to 15.6 million tons? This is one. Now, 15.6 million ton, our team, myself, we are not going to convert this 15.6 million ton in a commodity. Commodity means just making rebars or making hot oil coils. We are not interested in that. We want to do something new, something different. Of course, rebar has to be produced as rebars, except for some corrosion-resistant steel or something like that. But as far as the hot rod coils are concerned, we are not pushing our mills to produce a product which is a non-value-added grade product. We want to fetch the best of the best market, and we want to sell this hot rod coil not as a commodity, but as a product. So that is our next focus. My colleague, Mr. Rajiv Kumar, had been in Tata Steel, and he has developed more than 500 different grades in Tata Steel, which are truly evaluated grade steel. So now the agenda is how to utilize his skill and how to make all those grades which are available in the world, and they are treated not as a commodity, but treated as a value-added product or value-engineered products. So, the capacity, the total capacity today, as I told you, 15.3, that is installed steel, crude steel capacity. But there are some gaps because we are not going to make 15.6 million tons in the current financial year. We are going to end somewhere about 11 or around half million tons. So, where is that gap of three and a half million tons? You will ask the question maybe today or maybe next year. So, I am replying you right now. So, what we are aiming for, that we will be, because we are short of metallic today, so we will be bringing metallics in the form of HBI, DRI, and also in the form of scrap. So, then we will utilize our assets fully, so that we can reach to the level of 15.6 million tons, as we have the crude steel making capacity. So now, from our own internal resources, means internal glass furnace and electric car furnace, and also DRI, existing DRI, we can reach to maybe 11.5 million tons, and with the honing or with the readjustment of the glass furnaces as to the capacity is concerned, then we may want to reach to 12.5 million tons. And now the focus area, three. One, make only valued products. Two, how to reach to 15.6 million tons with a step in between, with a ladder, a half million tons and maybe 13 million tons. And that will be done from the existing sources available, existing glass furnaces, electric car furnaces in DRI, so that we can increase the production there. Then the next question here asked me that what is the next future? What are the expansion plans or something like that? So as I told you, we have a strict formula. Last time also, if you remember, I used to speak E and I, earn and invest. So we have decided that the management has decided that we will be working only on earn and invest. We are not going to burden our balance sheet with the borrowings. We do not want to take loans. We do not want to borrow the funds to expand in the commodity area. We will expand. We will do all those expansions which are required in the value-added products, value-added steel, value-engineered products. For that, if any investment has to be done, we will do. But we don't want to be a part of blood. We want to be a part of specialty products where people come to us, buy goods, they are happy, we are also happy. So our focus is what we have, myself, my team, everybody is aligned on that, that we want to grow not at the rate of tons, but at the spending rate of about 7,000 to 8,000 or maybe 10,000 crores per year. So how many tons will be that I cannot tell you today because if it is evaluated for maybe tons or less. So, our aim is spend management. So, we have a budget to spend whatever the earnings we have. We are sure we'll be having, God is kind on us, we'll be having much more earning than this. So, part of that earning we'll be spending on the CapEx. And wherever we feel that we are tight, we will not spend on CapEx. So we are not in a race of 30 million, 40 million, 50 million, and every morning we get up and we declare the project, we are not in that. We want to utilize the hard-earned money in the best way, and my colleague, Mr. Modi, will definitely keep a check on this so that we don't spend extra anywhere, extra bagginger is not done. So these are the long-term plans for all of us, and this is what we have taken an oath, or you can say this is the commitment, that we do not want to add commodity capacities. We want to be only and only and only value engineered products, and for that, we are going to spend about 8,000 to 10,000 crores year-on-year basis. So I hope I answered you.

Thank you, sir. A very elaborate answer. The second and the last question I have is on the current blast furnace utilization, and then we can ramp it up fully, and the status of a slurry pipeline. That's all from my side, sir.

Yes, please. So, we have two blast furnaces in Angul, and we have two blast furnaces in Ragut, and we have 10 DRI plants in Ragut, and we have one DRI plant in Angul. Now, the state is, and then apart from that, we have electric arc furnace in Angul, and we have three electric arc furnaces in Dryland. So, this is the overall setup. Now, your question is the new blast furnace. There is a state-of-the-art new blast furnace, which we have imported, and a similar blast furnace was commissioned just about 10 months ahead of us by Tata Steel, though Tata Steel took about five years to complete that blast furnace. Thanks to our team, the project team, and thanks to the overall guidelines given by Naveen Ji, our chairman, and we could reach to that commissioning time, we could do in, say, 28 to 30 months' time. So, this is a great achievement. And this particular blast from us can produce up to 13,000 tons per day hot metal. So, we have already reached to 11,000 tons per day. Our plan is that after this monsoon season, we will be in a position to ramp it up to 12,000 tons per day. And by the end of December, we will make it 13,000 tons per day. It will be 100% capacity utilization. Now, you may ask question that why 10,000, 11,000, then 12,000, and why monsoon season, and then 13,000, because during monsoon season, there are certain challenges, like, for example, about a week back, there was a very heavy rain, and this rain was more than 100 millimeters in one or two hours' time. So this has disrupted the complete water management, and also this has made the failure of the electrical grid and electrical system. So these kind of hiccups, they do come when we are passing through a very rough weather. It is like flying in a rough weather. So I think by August 10th, the monsoon will recede, and from September we'll start ramping up. Our team, led by Mr. Rajiv Kumar and by Mr. Bijun Ayer, and our ED project, Mr. Damodhan Mittal, they are the expert of steelmaking, ironmaking, and everything. So they are committed to bring it to a level of about 12,000 tons in the month of September, And 13,000 tons by December. The blast furnace number one is doing, again, extremely well. The capacity is 10,000 tons per day, but we are doing about 11,000 tons per day from that plant also. So put together 13,000 tons per day from the blast furnace number two and 11,000 tons per day from blast furnace number one. Total will be 24,000 tons per day. So, team is all on it, and we are sure that 24,000 tons of hot metal we will be doing every day from these two glass furnaces in Angul. Already, 4,200 tons from one furnace and another 2,600 tons of the furnace number one in Ryagad, that is 6,800 tons. That is being done under the leadership of Mr. Debujiyoti, who is the head of the ragged plant, and that is at 100% capacity utilization. So if you see put together, the ragged at 3.6 million tons is stable, and when we have 24,000 tons of hot metal, this will give us 24,000 tons of steel also, because whatever the yield loss is there, that would be substituting by scrap. So maybe 24,000, 25,000 tons per day steel we'll be making, and this is going to support it. The support will be from our DRI plant, which is at 5,000 tons per day, and the another electric car furnace. So put together our aim is to reach to a level of about 27,000 ton steelmaking after the monsoon, and then finally we'll reach one day to 30,000 ton steelmaking, and this is where we will be seeing that we are crossing the capacities. So, 6 million tons from Rygard, and our aim is 9 million tons from Angul. Before we add the scrap ore, we import the HBI or DRI. So, this is what our…

Yes, sir, just Slurry Pipeline sticker. That was the last one.

Sorry, Slurry Pipeline? Slurry Pipeline. Yeah, yeah, Slurry Pipeline, I'm pleased to inform you that it is all set. End-to-end, the Slurry Pipeline is late. Now, trials are going on. There are some special trials. We call it a pigging. Pigging means a real pig made of metal. It is passed through, and then we'll call our collaborators and the technical equipment suppliers. They are from Germany, and then we will take a trial, first by water and then by slurry. So, end-to-end, everything is in line. Hopefully, you will hear this news very soon, maybe in the first half of August. So, we will commission it. And once it is done, it is 20 million ton plant and 20 million ton capacity. This 20 million tons of taxi means this will reduce the overall burden of the logistics. Local transportation will be reduced, so this is not in our hands, controllable factors in life. Receiving station is made, end-to-end communication is in place, and the equipment, the pumps, tile, etc. are already done, and maybe end of August. So, in nutshell, this quarter, which is going on, the quarter of July, August, September, hopefully, with the grace of work, we will give good news to the nation. This is the longest pipeline, perhaps, in the country, and the largest capacity. 18 million tons is the capacity with 60% of effing and 30%, 40% of water. But if we can manage with less water, say about 30%, 32%, then this can even go to 20 million. So it depends upon the water and the iron ore ratio, because it depends upon the iron ore's specific gravity density and how iron ore behaves in a particular pipeline, because we are going to buy iron ore from the outside parties also. So thank you very much. Hope I answered this time.

Thanks a lot, sir, and all the best.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question comes from the line of Alok Deora with Motilal Oswal. Please go ahead.

Hi, good afternoon, and warm welcome to the new management and the best wishes ahead. So, sir, I just had a couple of questions. First is on the NSR movement. So, if you can just indicate what's the pricing like now versus the 4Q average versus the 1Q average, and where do we see the prices moving for the second quarter, if you can just indicate on that, because we are in a sharp correction in the long prices. So, just your thought on that, please.

My colleague, Rupali Mehra, will answer you, and in case anything else is required, I will come back. No problem. I'll be here with you.

Thank you. Hi. Thanks for your question. So, as we all know, TEAL works in a manner which is kind of seasonal. So, currently, if you look at the flat prices, for HRC, we have only looked at 800 rupees per ton, lower pricing, whether it be quarter one, twenty-seven. And if you look at TMT, we are looking at almost 8,000 on the index. But as I said earlier, this is a seasonal weakness, which should recover from us also.

Sure. Thanks for that. Is it okay?

Anything else?

Yeah. No, just wanted your thoughts, whether we could see further correction or they should kind of settle, because it's been a pretty sharp correction in the long stale. That was the question, actually.

Yes, actually, this season it happens, but we fortunately, we are insulated to a great extent. Why? Because when the TMT prices go down, we start increasing production in the other areas. So the segments, because we have multiple segments, we produce nine different products. So if one product is little weak, then definitely we can find a place for that material to be sold to the other channels. But yes, you are right. The monsoon season, it is very less construction, but, you know, this also brings a lot of opportunities in future, though I should not be happy with it. There is a very situation is because one cannot say on this, but there are opportunities, like if you have a lot of floods, then more construction is likely to come in future. If there are no floods, but still there is a water logging, then the government, they spend a lot of money. So that next year, there should not be any water logging. So that means more steel, more cement is going to be consumed in times to come. So, but this is recoverable. We can recover it.

Got it. And also on the coal cost, if you can just indicate the coal cost for 1Q and what are the coal cost assumptions or guidance for the second quarter?

So, I'll tell you. The coal is basically, you know, there are two different things. I think you are discussing coking coal or you are discussing…

Right, right, coking coal. Yeah, coking coal.

So, coking coal is again, you know, again a demand supply. Today we are seeing that maybe $15 will be the total increase, about $15,500 in coking coal. But, you know, it also depends upon the Chinese factor. What is China factor? If the Chinese consumption or Chinese steel production go down, then immediately the coal prices will also come down. So, but yes, you are right, there is a pressure in India because most of the steel mills in India, they are through the blasphemous route, steel making, so they are buying a lot of coal. And nowadays, more than coal, people are importing coke. If you see the data in the last three to four months' time, the Indian steel mills, they have imported a lot of coke from Indonesia and from some other different countries. But yes, $15, you can factor it, but we will see that how we can minimize the cost in terms of blending it properly. When the coal is available, it is also available in different forms. So, different blends are also available. So, the glass furnaces are very, you know, capable and flexible in using different code. We'll try to blend it so that we are totally, you know, we are not outpriced in the market.

Sure. Just last question, sir. So, volume, based on what we have done in the first quarter, The full-year guidance remains the same of 10.5 to 11 million tonne of sales volume in FI27.

Yes, yes, all right. We are about to see. We will maintain the run rate, rather we will increase the run rate, because we have taken the shutdown in the quarter one. Why we have taken the shutdown? Because the shutdown basically, it is not in our hands. We see how many heats we have taken out from a particular vessel, like BOF vessel. So the beaver vessel gives a heat, life of about 9,000 heats to 10,000 heats. So whenever it is more than 9,000 heats, we have to stop it to avoid any puncture in the vessel, otherwise that will be a disaster, so that there is no safety bypassed. So we found that in this last quarter, we had to take a shutdown, because we produced more number of heats in less number of time. So that means, because it depends upon the number of heats. Each year is 250 tons. So you can say about 2.5 million, 2.2 million, if you produce, then we have to change the refractory. So the refractory timing came in this particular first quarter. So we cannot wait for the second quarter. So we have to do it. And this is how we are going to do in the future. So now we have four in Angul that we are discussing. We have four melt ports. I would say very simple language. One is electric arc. Then there was a BOF1, which is existing since 2011-12. And then we had two more ports. These are called BOF2 and BOF3. There is, again, I've got six months back together. Before March, we did it. And these two parts are pretty new. So, there 10,000 heats or 9,000 heats will take more time. Till that time, we don't have to take initial down. So, I'm sure we'll be in a position to recover whatever 300,000 tons of hot metal loss we have done in the quarter one, that we will recover in the subsequent quarters.

Got it. Got it. Yeah, that's all from my side. Thank you and all the best.

Thank you so much. Ladies and gentlemen, any other questions left?

I don't want that my Samudhi colleagues say that I have not answered. We can sit for another five minutes, no problem. But if there is any question, please ask.

Yes, sir. Ladies and gentlemen, in the interest of time, I would request you to please limit your questions to one per participant. The next question comes from the line of Amit Murarka with Access Capital. Please go ahead.

Yeah, hi.

Good afternoon, and welcome back, Mr. Sharma. So, just the first question on NSR movement in Q1.

How much was the movement in flats and longs, and was there sale of metallics that you did in Q1?

Just could you specify that? The same of metallics we have not done in the Q1. So whatever metallics sometimes we produce also, that is for in-house. So it is consumed. The other point, what we always see that a ratio in between price and cost, the steel prices, they go up, go down, and within a gap of four to six weeks' time, you find that if the prices have gone up, the input price also increases. So that band is only for four to six weeks' time. So losing or gaining. Sometimes we say that the prices are going up, whereas the input prices are not going up. So that band is also for about four to six weeks. And sometimes you feel the prices are going down, but the input cost, that has not gone down. That particular window is also for four to six weeks' time. So this is a normal behavior of steel business, but yes, you're right, 1,000 rupees to 4,000 rupees was the reduction in different products, but not in the products like rail, rounds, specialty angle channels, beam structures, heavy-duty structures, prefabricated structures, and the specialty plates, the evaluated plates, quench and temper, it was not there. So, I would say by and large in terms of TNT, and whereas we could maintain and retain the price in the other segments. So, the price change, if you see the per metric ton, that was ranging even 5,000 rupees a ton.

Can be clear, just to conclude the NSR movement, in case of the flat was around 7,000 rupees per ton, and in case of long, around 4,500 rupees per ton. I think that's what you are questioning on the quarter-on-quarter basis.

Longs was up, you mean 4,500 per ton?

Yeah, yeah, all are up. Everything was up. All are up.

Thank you, sir. Please go ahead. Mr. Amit, I would request you to please come back in the queue for further questions.

Yeah.

The next question comes from the line of Jasandeep Singh Chadda with Nomura.

Please go ahead. Hello. Thank you for the opportunity. I hope I am audible. And first of all, I say welcome to the team and welcome back, Sharmaji. So my first question is, you know, largely directed to Mittal, sir, and also Sharmaji. So given that the industry, you know, typically benefits from stable leadership and long-term management tenure, These, you know, relatively frequent changes in the senior management, you know, team stands out from Jindal, right? So should investors be concerned about the impact of these transitions on strategic, you know, continuity and long-term value creation? And how do you ensure that execution against your long-term

objective remains unaffected? So this is my first question, sir.

Sorry, sorry, sorry. I missed your basic question. Can I request you to kindly repeat? Yes, sir. So, largely, you know, the industry normally benefits, and industry is known for long-term, you know, stable management, but there have been, you know, frequent changes at the top level at general. So, should the investors be worried about the impact of these transitions on strategy continuity and, you know, long-term value creation? And how are you ensuring that all the long-term objectives are, you know, remains uninspected despite these changes that are happening? Yeah, thank you very much. You see, as far as the movement of senior persons, yes, it is always an area of concern, and we must see that why the people, they take a change or move. Many times, it is a personal decision by an individual. But we have 30,000 people working in the organization, I would say. And the top level we call CG1 or CG0. So, if you see that there are only 20 people. We have very strong upper, middle, and senior management team, so up to vice president level. So we don't find any movement there, which is not normal. It's always acceptable, as per the industry standard is not a problem. Some people, they do retire also. But at the senior positions, yes, they are a very vital resource, and they drive the business. They come to the organization to take the decisions. For that, we have an advisory board also, and we always put some tasks to advisory board to advise us at that time if there is a need, and advisory board also guide us time to time. But I agree with you that the movement is frequent or more. That is a question of concern. And we are addressing it. And this is the reason today you have seen the board has brought at least eight new faces. And out of these eight are the new persons, those who have come at a very senior level, right from CFO to CHRO to our vice president HR. So they have come. Then we have our COO for the entire operations. He has come from Tudor Steel, Mr. Rajeev. And we have Mr. Bijun Nair from AMNS, not AMNS, I would say Arsadur Mittal, and Europe. He came from there. Then we have a very senior person, Mr. Devo Jyoti Roy. He has also come, he's a big strategist as well as the plant manager. So he's heading to the Niagara. Then we have also brought some people in-house from our other group companies, like we have brought people from Oman, we have brought people from Czech Republic, And they are at a level where they head their domain. And we are confident that we are a stable organization since at least 1,800 to 2,000 people are in the upper middle level team. And these people is a very strong force, strong team. They do it. They are the doers. So they are very much stable and unsure for a longer time. And yes, unless there are 1,800 people, those who are in the upper middle level, say from manager to GM or assistant vice president or vice president, they are pretty stable. And they are the force.

Thank you, sir. Our next question comes from the line of Shubh Mangal, Nevetia, with Kotak Securities. Please go ahead.

Yeah, good afternoon, and best wishes to the new management team. Sir, my first question is on the cost. If you see quarter-on-quarter, there's a very sharp increase in cost, almost 5,500 rupees. If you could break up into top three, four areas of increase. And for the next quarter, we heard about cooking coal, but overall, how should we see cost shaping up in the next one or two quarters, as a lot of startup real rate costs will start receding. And then also, if you can give the update on the coal mix today, when is Utkal B2 expected? And when do we expect to commission the DRI second plant? Yeah, thanks.

My colleague, Mr. Modi will speak to you.

That put together, the cost increase is there, which has been translated as the overall quarter-on-quarter cost increase.

Yes, yes. Thanks, Salih. Just wanted to know how do we see these cost items shaping up in the next one or two quarters?

So, as Mr. Sharma has already said that from the cooking coal cost point of view, while there will be a $12 to $15 cost increase is expected, However, given the scale of economy and the better production, which we will get into the Q2, given that last year, Q2, there was a shutdown, which now has been there because of the refractory life in the Q1. So with that production increase, the operating leverage, which was around 2,000 rupees per turn in the Q1, that should not be there. And, of course, Middle East conflict impact, I think that's still going on. So we need to be watchful about it.

Thank you, sir. Our next question comes from the line of Rahul Gupta with Morgan Stanley. Please go ahead.

Hi, thanks for taking my question. So, let me just continue on the previous question. What kind of cost savings can we expect from the management over the next couple of years with all the initiatives that may play out, whether it is coal mine commissioning, DRA plants, slurry pipelines, conveyor belts? And also, you talked about in your opening remarks that you are having renewed relationship with financial institutions. So, what kind of interest cost savings can we expect from here on? Thank you.

So, one of the key cost savings will come from the Sredi pipeline, which I think we have already told in the market about 700 rupees per 10 benefits. That, as Mr. Sharma has said, is coming from the Q2 that you should see a saving. Secondly, I am talking more about the compared to this quarter. Second is, as I said earlier in the earlier question about the operating leverage, that will also help us to reduce the cost. We already have this time a coal mix of our own captive mines around 50%, and that will also go up with the Uthkal B1 getting ramped up and Uthkal B2 coming. That will also help us to reduce the cost. We also have good news to share about the start-up of the first loading at the Jindal port, which also has started and that will also give us savings. I will not be able to quantify at this point of time, but already two vessels have been unloaded and one vessel is already going loading as we speak currently. That will also help us. So put together all these things, I think we're in a really right shape to get the better cost structure. And even in the case of iron ore, we are going more and more backward integration. So last quarter, we were around 16%. With this, currently, we are around 28% in this quarter. And the full year basis, we should be around 40% on an exit basis. So that will give us also a strategic benefit in terms of the cost structure.

That's what we are trying to understand, what kind of quantified benefits that may come up maybe by year-end or over the next two years. I'm not talking about next quarter. What could be the benefit that may come over the next two years is what we are trying to understand.

I think this is Vishal here. If you look at our, you know, while we cannot give you the individual project-by-project cost savings right now for two reasons. One, obviously, the savings will accrue through the quarters, and at the full wrap-up state, they would be at a different level. Secondly, if you look at our capital allocation framework, where we have clearly mentioned that we will deliver about 18% to 20% ROCE, and you add the nominal depreciation back, you get the guided, or our desired beta from these projects. From that, you can obviously back-calculate what is the kind of run rate that we are expecting from these projects.

Thank you, sir. Yes, sir, please go ahead.

We have a management. So now, any other question, if there is, then we can go.

Yes, sir. Our next question comes from the line of Ritesh Shah with Investec. Please go ahead.

Hi, sir. Thanks for the opportunity. Sharmaji, glad you are back. Thank you so much. So just two questions. I think I'll just take the Rahul's question. I'll just follow it up. Yeah, we heard Vishal's answer. But Sharma, if you could put some number on the cost savings, knowing you, you definitely would have some number in mind over the next two years, three years. If it's not possible to bifurcate between iron ore, coal, port assets, slurry, pipe conveyor, any headline comments with some quantification will definitely help. That's one. And secondly, at the general level, there has been a lot of announcements, MOUs with different states, including thermal, nuclear, steelmaking. How should we look at that in conjunction with the capital allocation framework that you already laid out? Thank you.

Very good. So thank you for remembering me. Yes, I'm also glad to interact with you once again. Okay. So two questions. One is cost. There are two costs. One is cost part of it. The other is the cost impact in terms of incoming material or input cost. So we have today three specialists sitting in this meeting, Mr. Rajiv and Mr. Viju Nayar and Mr. Devo Jyoti. Today, they are the fast, not only fast bowlers, they are the all-rounders. They are the batsmen. So their main specialty is how to keep cost under control. So we cannot control the input cost like my colleague Sandeep told that today there is a war situation, tomorrow where the crude oil will reach, where the coal prices will reach. We are unable to address that because that is out of our hands. Or uncontrollable factors. Iron ore is also uncontrollable for us because NMDC and OMC primarily, they decide the prices. So that is also uncontrollable. What is controllable? The controllable is electricity cost, electricity consumption, oil consumption, coal consumption, coke consumption, the blasphemous, oxygen consumption, then how to avoid wastages, how to increase yield, Today, the yield is 98%. How can we bring it to 98, 0.5%? Because even 0.5% plays a very vital role. And for this, the specialist, all these three specialists what we have today, perhaps they are the best team available today in the country who can work on this particular cost reduction campaign. They have already taken up. I think there is a chance of roughly figures not to be – I'm not committing something, but roughly, because I had to talk to my colleagues also, at least 1,000 rupees per ton reduction is possible in terms of cost, and this is what we'll strive at. But as far as the input cost are concerned, like oil, coal, the energy in any form, that will be difficult to comment because these are uncontrollable factors. Your next question was on MOUs. As you know, we entered in MOU as a management

with the government of Jharkhand.

We are existing in Jharkhand since 2006, and there is a plant called Patratu. So, 2006, we took over it from Birla Group, and that was a rolling mill. So, we scrapped those old rolling mills, new rolling mills, we commissioned in 2010, and these two mills are still existing, and one of the mills is for wire rod, and the other mill is for the rebars and rounds also. So, we can make rebars, we can make rounds. So, nowadays, for example, rebar is not a preferred product, so we are making rounds. So, rounds gives us another value addition of 5,000 to 6,000 rupees, then more than 300 acres, and we can immediately put up a plant of 3 million ton. So, what we told to comment through the MOU, that if you make the environment which is truly suitable or which is truly supportive to the investments, then we have to add just a steel making behind our mills. It is not a full, we have two mills done easily, maybe more than 2.2 million tons. So what we'll do, we'll put a blast furnace of 2.5, 2.7 million ton capacity, and we will feed these two mills from our own blast furnace. So, this is what we discussed with the government of Jharkhand. But for that, there is a condition or request we have made to them. An area, a rich iron ore block available there. Actually, we had been working in 2010, 2011, 2012, up to 2014, to start the Geraldabroo mines. But due to environment ministry, this was not allowed. So, we are now requesting to government that if you can support us getting at mines, Then, either through auction or a location, whatever way, but then we can definitely do this project, and what we have to do? We already have the finishing area, so we have to put the backward area, and there it is easy to put the backward area. We have the space available, land available, water available, electricity available, everything is available. If we make, the government allows us to mine or we get the iron ore from government, then we can immediately put up this plant. So this is what our condition is. But it is an MOU only. We have not committed any investment till these requirements are met out. The moment these requirements are met out, then we will come to a thorough calculation. We will discuss with our board, and we will see that how can we put up this plan and where from the funding will be done. But we will be maintaining our mantra of E&I, earn and invest. We will not deviate from that. We don't want to burden our balance sheet. So I hope I answered you.

Sure, sir. Thank you so much. All the very best. Thank you. The next question comes from the line.

Any other colleague want to ask anything? We have another five to six minutes. If somebody is not given chance or doesn't speak something because of any reason, then kindly send a mail to Vishal.

We will be happy to reply. And if anyone of you wants to speak to me, again speak to Vishal.

He can arrange a WhatsApp call or a telephone call with me if any clarification is required. We need your support. We need your full blessings on this company, and we want to create a company of value engineering company, I would say, to create wealth for the investors and to create wealth for the nation.

No more questions?

Can we move on to the next panelist quickly?

Yeah. The next question comes from the line of Rajesh Ravi with HDFC Securities. Please go ahead.

Hi, sir. Good afternoon to the team. So my question pertains to you have already covered most of the questions related to your cost savings programs. Just a short term Q2 when we are talking about 8,000 correctional long prices and flats are also around 1,000 rupees. If the prices were to remain steady at current levels, and even with the cost reductions and better operating, most of the maintenance are down now over. Can we say that our cost reductions in Q2 versus Q1 will largely cover up for the loss in realization, and margins would largely be plattish at around 12,000, which we have seen in Q1?

I think we are going to make a perfect balance in between two, and as I told you, whenever the prices are going down, to slowly, gradually, in four to six weeks of time lag, we get the input cost also down. So this is what is going to happen, but there is an exception in the month of, in the monsoon area, like mid of July or up to August end. I think after August This problem will not happen, but I'm sure we will not be losing anything in terms of costing, and we'll be gaining, basically. As I told you, our aim is, Mr. Rajiv and his team, they've already taken aim to reduce cost by 1,000 rupees per ton, and we will be in a position to reduce it. So, we'll be the ultimate gainer in terms of costs.

Continuing on this cost, when you talk about 700 rupees per ton savings on the, you know, slurry pipeline movement of the iron ore, just if you start operating with a full 20 million ton utilization, on an absolute basis, how much cost saving would that translate into? This will be on a full year basis, you are talking?

Yeah, yeah, on full year basis. I mean, 1.5 million ton salary we will transport per month. So, say about 18 million a year, for example. So, we have the now capacity to consume this 1.5 million, but as I told you, that the reflection of this will come from September onwards.

Can we just quickly add, this 18 million tonne has been designed not to meet the current round of expansion, but also to meet our future round of expansions. So we will not be consuming this entirely in the current year.

Okay, so for next year, what sort of utilization are you looking at, assuming it will be fully sterilized?

Very simple math, I'll tell you, so that you understand this point very clearly. So we have one pellet plant today, which capacity is 5 to 5.5 million or 6 million ton this can produce. We are adding another pellet plant of 6 million ton, so total will be 12 million ton. So, this 12 million ton pellet plant means we can consume about 12.2, 12.3 million ton of iron ore fines through the slurry pipeline. Then, after that, we are going to put up a, we are going to enhance our capacity of this central plant, and there will be another central plant coming in, and this central plant will be 5 million ton. So, another 5 million ton will be consumed. So, put together, so 12 plus 5, 17 million ton. So, this 17 million ton or 18 million ton, this is the math. So, hope I have cleared you.

Thank you, sir. Our next question comes from the line of Patanjali Srinivasan with Sundaram Mutual. Please go ahead. Hello, sir.

I'm joining back.

I have two questions.

Firstly, our share of value-added products and slats have been going up. The only disconnect is how come our unique profitability...

Repeat, please. I think it was not audible. So, what exactly you asked, actually, is not clear. So, may I ask you to reply, please?

Yes, sir. Am I audible now?

Yeah, better.

Yes, sir. So, our share of value-added products and our share of flags on our overall sales has been increasing consistently. But when I look at our EBITDA per ton, that is not reflecting that. So, could you explain what could be the one or two reasons for this?

Yes, I'll tell you. The share of value-added products, actually, I think you don't have the access to our product-wise EBITDA. So, that is different, basically, because you get the EBITDA overall as EBITDA, but the product-wise, like quench and temper, what is the EBITDA? Plates, what is the EBITDA? Heavy duty plates, what is the EBITDA? That is not published, basically. It is our internal document. And, like, what is the EBITDA? So, that is also not revealed in the balance sheet. So, because it comes in the overall computation that how much is the total EBITDA. So, somewhere we earn as high as 25,000 reviews of EBITDA, somewhere we earn only 7,000 reviews of EBITDA. So, but the aim is today that 50% of the products are high EBITDA products, high NSR, high EBITDA, and the other 50% are the low EBITDA products. So now we want to switch off from the other 50% of the time. So the 50% of low EBITDA, out of that 30%, means say 50% if it is 4 million or 5 million, then out of that 30% of that, say about 1.5, 2 million, will be on, again, high EBITDA products. This is called the Value Engineer Valuated Products. So this is what we are aiming, and our team is working on this. Under our operation head, Mr. Rajiv Kumarji, he is on it, and his main aim is how to develop all those grades which are available in the world from our mill and the capacity, what the mill is having, 6 million ton. So, our aim is not to produce 6 million ton commodity. Our aim is to produce at least 4 million ton out of 6 million ton as the true value-added steel, where we get much more value than what we incur to produce that product. So, this is what our aim is.

Thank you so much, sir. Any other questions, please? No, sir. Thank you.

Thank you. Thank you so much. We have a few minutes only now. Over. Yes, sir.

That was the last question, sir. You can go ahead.

Okay, last question, please.

So, I think we are running very much out of the key.

Last question, please.

That was the last question. That was the last question. Okay, okay. Okay, thank you. So, I would request Sharma, sir, to give us closing remarks. What do you think?

So, thank you, friends, ladies and gentlemen. Thank you for listening to us very patiently. And I am interacting with you after a long time of four years. And it was a pleasure to speak to you, to interact with you. We will be meeting more frequently, not only on investors' meet after the quarter. So, you are welcome to visit our plants. You are welcome to discuss with us. You are welcome to see what we are doing. You are welcome to visit our websites. So, I request you, please, be part of this company as a partner, as an investor partner, and let us create an environment of positivity everywhere. This is my request, humble request to all of you. And keep us guiding. Your questions, they always give us a strength, basically, and sometimes we feel that something we are not touching in our management side, from our management side or our patients, then when you ask the questions, you all are the financial specialists. You know the numbers well. You can compute well. You can calculate well. You can understand well. So when you convert your thoughts into numbers and numbers into actions, then this gives us a big sport, and this gives us a big strength to revisit our own working and correct ourselves if you are getting wrong somewhere. So, keep on guiding us like this, and keep on asking any kind of question where you feel that we need to be changed, or we need to make some amendment alteration. Please, all these questions always. Not only the investors meet, you can always write also. Write to Vishal, and this will come to our complete committee, our board, our senior person, those who are sitting in the present in this particular meeting, so that we will take the corrective measures immediately. So, we take your feedback as a very healthy feedback, and this is how we can create value for the shareholders, and we can create value for the company and for the country. So, once again, my sincere thanks to all of you, and namaskar. Thank you.

Thank you, sir. On behalf of Jindal Steel Limited and Anandarati Shares and Stockbookers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.