Speaker #1: PICI Securities Ltd. 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.
Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then 0 on your touchstone phone. Please note that this conference is being recorded.
Speaker #1: And I'll hand the conference over to Mr. Vikas Singh. Thank you, and over to you, sir.
Speaker #2: Thank you, Anam. A warm welcome to everybody. Good evening. we would like to thank the management to give us the opportunity to host them.
Speaker #2: Without taking any much time, I'll hand over to Vishal. For the management introduction. And opening the call. Over to you, Vishal.
Speaker #3: Thank you very much, Vikasz. Ladies and gentlemen, a very good afternoon. Thank you very much for joining us to discuss the Q2 FY27 earnings release of Jindal Steel.
Speaker #3: Joining us on today's call are members of our senior management team, Mr. V. R. Sharma, Managing Director; Mr. Rajiv Kumar, Chief Operating Officer; Mr. Sandeep Modi, CFO; Mr. Damodar Mittal, Whole Time Director; Mr. Devu Jyoti Roy, Executive Director, Raigur; and Ms. Rupali Mehra, Head of Sales and Marketing.
Speaker #3: I will now hand over the floor to Mr. V. R. Sharma for his opening remarks. Over to you, sir.
Speaker #2: Good afternoon, ladies and gentlemen. My friends, the well-wishers of our company, the media persons, I am delighted to invite you on today's introduction. It is not only an investor's meet or investors' discussion; this is a two-way exchange.
Speaker #2: We will be happy to take your questions after this particular session. The company has done wonderfully well in the last quarter. We have done a record sales, and in the history of this company, in many quarters, in the last so many years.
Speaker #2: That is 19,448 crores. So I think we are now on a path to reach 21 lakh crore rupees per year of sales. This is what our aim is.
Speaker #2: With 19,448, if we multiply by four quarters, that should be 80,000. But our aim is to reach 21 lakh crore as early as possible.
Speaker #2: The steel sales is up by 27%. EBITDA is up by 34%. Despite very bad weather, in Odisha a lot of rains were there, they are no mines were full of water.
Speaker #2: We could manage a fair liquid production. And we are now going to ramp up further. Our aim is to reach about 11 million ton production this financial year.
Speaker #2: This is what we targeted earlier. We have reached to a level of about 4.79 million in H1. And the next that is H2, we are aiming for 6 million ton.
Speaker #2: So this is the net steel, the gross steel may be about 11 million. The company is doing very well in terms of availability of the raw materials, whether it is cooking coal or it is iron ore, or availability of pallets through our internal resources, or other consumables.
Speaker #2: We have seen in the last three months' time very topsy-turvy situation. We found that there was a shortage of natural gas in the country, and there was a shortage of propane.
Speaker #2: And this was difficult time, basically, because of this hormones issue or the Iran and US war. So fortunately, we are having the coal gasification plant.
Speaker #2: And we switched over coal gas, that is sesame gas, for many of the reheating furnaces, galvanizing lines, color coating lines, and there was no impact on our productivity, production, and profitability.
Speaker #2: And still, we are continuing. We are not using propane or natural gas. We are using our coal gas that is called sim gas. Or you can say the coal, the gas through coal gasification route.
Speaker #2: Our DRI plant has also done well, and this is based on coal gas that is, again, we call it sim gas. We have two blast furnaces in Ambul and two blast furnaces in Raigur.
Speaker #2: So all four blast furnaces, they are doing well now. The new blast furnace, which we installed last year, that has reached to a level of about 10,000 tons per day.
Speaker #2: That is in Ambul. Hopefully, we will ramp it up in this particular month, say today is 23rd, so I think in seven days' time we should reach to about 10,500 tons per day.
Speaker #2: And in November, we are aiming for 11,000, and then December 12,000 tons per day. Availability of iron ore from OMC and NMDC is seamless.
Speaker #2: There is no problem. The problems related to landslide, from NMDC route to Angul route, those are over now. Railway is working. And the water from mines is already receded, so now the operations at OMC or late mines, they are working very well.
Speaker #2: So our own mine, Kasia Mines, that also it is being ramped up earlier, and we are sourcing material from our own mines also. We have two pallet plants, one in two pallet plants in Burbil.
Speaker #2: Both are running well. And the pallet plant in Angul is also running well. So by and large, I would say that the company is in very, very solid state.
Speaker #2: And we'll be making a record production in the Q3, which will be ending on December 2026. Q4, we are further looking very positive. And we feel that we'll be surpassing the records what we are going to make in Q3.
Speaker #2: I think Q4 will be much better. As for the market is concerned, the market is supporting very well. Though the input costs have gone up, but we could recover the entire input costs and we could make some positive impact in NSR while we compare on the input costs.
Speaker #2: So the steel scenario is very good. I think it is now 10% YOY basis. There is a growth. Though our production has gone up by 22%, the industry overall growth is about 10%.
Speaker #2: So we are aiming that we'll continue making such performance in the other two quarters also. That is Q3 and Q4. The exports are also picking up.
Speaker #2: We are doing about 100,000 tons of export every month, mainly hot road coils and plates. And some quantity in rails and the structures. We are hopeful the honorable finance minister, the commerce minister, Mr. Piyush Goel, he is already in Germany.
Speaker #2: And I think he is negotiating with the EU on the basis of the mother of all deal, what we signed as FTA. So I'm sure he is taking up with the government of the European EU Parliament how to give us a most favored steel suppliers status so hopefully this will be done and we are very sure.
Speaker #2: And the government is trying its best to utilize the FTAs in the interest of Indian engineering industry, Indian steel industry, Indian aluminum industry, and also for Indian garments and other industries.
Speaker #2: So we have seen a very positive impact from UK. And the moment the quota system by EU is relaxed for India, which we are very much hopeful, and the government of India is trying its best, then there will be another door opening to sell more and more steel to Europe.
Speaker #2: There is a steel deficit of about 28 million ton in Europe. And I think India stands the first chance to supply the right and good quality of steel to Europe.
Speaker #2: CBAM is an issue. Today, but overnight, the CBAM cannot be diluted. I think EU Parliament and government of India will find some solution how to meet out the demand of the local people there in Europe and they can enjoy the so sorry.
Speaker #2: There was a disconnection, and now I think I'm audible to everybody. So coming back on the interesting steel scenario, the outlook is very positive.
Speaker #2: The demand in the country is very good. I'm also pleased to inform you that 192 kilometer long salary pipeline is already commissioned. The commercial supplies to plant from Burbil to Angul will be starting I think in next two, three days' time.
Speaker #2: All trials are done. The first lot, first batch of iron salary has been dispatched and well received. So tomorrow again, we are going to restart and here after this will be continuous operation without any stoppage.
Speaker #2: We are now aiming to increase our overall product mix towards flat products though today also we are at a level of about 60/40. Now we'll be reaching somewhere about 65/35, 65% flat products including plates.
Speaker #2: And 35% will be long products. So this is what we are aiming for. Now I'll request my other colleagues, they will speak with you and they will give the numbers what we are already declared many of you must have seen.
Speaker #2: That the results are declared and already displayed to the media. Thank you very much.
Speaker #1: Good afternoon, sir. Myself Sandeep. Let me take you through Jindal Steel's consolidated financial performance for the Q2 FY27. We have delivered our highest ever quarterly gross revenue of 19,448 crore up 40.4% YOY while net revenue increased 43% YOY to record 16,704 crore.
Speaker #1: This was driven by the record Q2 sales volume as Mr. Sharma said of 2.38 million tons and higher average selling prices. Supported by a higher share of flats and a lower proportion of TMT within the long products.
Speaker #1: Domestic sales accounted for approximately 92% of total volume. Our existed EBITDA stood at 2,504 crore up 34% year on year while adjusted EBITDA per ton increased 5% YOY to 10,529 rupees per ton.
Speaker #1: The sequential moderation in EBITDA was primarily due to higher raw materials and operating cost notwithstanding the positive impact of higher volume and improved sales mix.
Speaker #1: Coming to the cost part, cooking coal was a key cost impact and it was within the guidance what we have given in the last call for 12 to 15 dollar per ton.
Speaker #1: Power and fuel as well as freight expenses especially ocean freight also increased sequentially. This impact was partly offset by better ASP our consolidated profit after tax was 771 crore compared with 844 crore in the preceding quarter our balance sheet strengthened during the quarter our consolidated net debt declined by 1,141 crore from 15,927 crore at the end of June to 14,786 crore as at September end.
Speaker #1: Net debt to EBITDA ratio improved from 1.71 to 1.51. Cash and cash equivalent stood at 7,237 crore providing substantial liquidity as we execute our growth program.
Speaker #1: Capex during Q2 FY27 was 1,228 crore and in the whole H1 was 3,187 crore. We remain continued to discipline capital allocation with investment directed towards our steel and supporting infrastructure businesses and a focus on return as the newly commissioned facilities ramp up.
Speaker #1: Our stated framework envisage annual growth capex of approximately 7,500 to 10,000 crore primarily funded through internal accruals while seeking to maintain net debt to EBITDA below 1.5 times through the cycle.
Speaker #1: For the second half, our priorities are clear: stabilize and ramp up the expanded facilities, improve product mix, cost competitiveness, working capital management, and maintain balance sheet discipline with that we can open the floor for questions.
Speaker #1: Thank you.
Speaker #3: Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone.
Speaker #3: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands while asking a question.
Speaker #3: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Akhilesh from MK Global.
Speaker #3: Please go ahead.
Speaker #2: Yeah, hi. Thanks for giving me the opportunity. So my first question is on the productions. So we have achieved already 4.8 million ton in the first half and now our run rate becomes quite steep of requiring 3 million ton for the second half per quarter, right?
Speaker #2: So how confident are we kind of achieving this guidance and also now since our flat mix has also increased, during this quarter, do we see it maintaining in the coming quarters and achieve 70/30 mix in FY28?
Speaker #1: So we are quite. We are quite confident that we'll be in a position to achieve this 3 million ton per quarter. So that means a million ton per month.
Speaker #1: To be very precise, the production planning is 0.96, that is 960,000 tons. Per month. As far as the mix is concerned, yes, you are right.
Speaker #1: We are aiming for 65/35. 65 will be the flat products which includes plates also. And 35 will be long products. The reason being for this particular shift from say 50/50 ratio or 55/45 to 60/40 or maybe 65/35 is that there is a better value addition, especially in plates.
Speaker #1: So plates are doing extremely well. And today we are undisputed leader in plates selling plates to the country. We produce more than 220,000 tons plates per month in both the locations.
Speaker #1: And thanks to Government of India's spending on defense. And also on the merchant vessels and merchant shipbuilding. So this is a good sign. The market for windmills is still very hot in India and also outside India.
Speaker #1: So we'll continue making more and more plates and supported by more and more hot old coils. So the hot old coils also we are aiming only for the valuated hot old coils.
Speaker #1: We are not manufacturing vanilla products in hot step mill. And either these are high carbon steel or medium carbon steel or something which is a niche markets but very highly remunerative products.
Speaker #1: That we are manufacturing. So maybe not 70/30 but yes, we'll try to maintain 65/35 including plates. Thank you.
Speaker #2: Got it. Got it. Got it. Sir, my second question is now on this slurry pipeline. So now since it has been commissioned, do we see any benefit of to accrue in the remaining of FY27 as well or the benefit will start to come in from FY28 onwards only?
Speaker #2: And also will there be any additional cost associated with the ramp up which could come as a surprise?
Speaker #1: No. There is no additional cost because this is a pumping station basically grinding and pumping station. So all the grinding machines are in place the pumping stations in place the water arrangement etcetera everything is in place.
Speaker #1: We are getting water from government. There is no problem. And this water when we make slurry we maintain a slurry in a particular density that is specific gravity.
Speaker #1: 1.8 to 2 level. And the water we recover at Angol. So in a way the water consumption in Angol that is reduced because this water when it goes there in Angol we filter it and we recycle it.
Speaker #1: We don't throw water outside because we have a zero liquid discharge policy. Then your next question is the cost impact. Yes. There will be benefit out of it because the RNO which is being transported through trucks mainly that will now be shifted to through slurry pipeline.
Speaker #1: So today we are receiving more than 700 trucks per day full of RNO that come from Mudville, Coenzier area and they come to Angol.
Speaker #1: So all these 700 trucks at least 500 trucks will be eliminated now. Only 200 trucks will come which are geographically in the area whether we take the RNO to Mudville or we take the RNO to Angol so the cost will be same.
Speaker #1: So it is better to bring that RNO to Angol in place of taking the RNO to Mudville. So Mudville grinding station is in place.
Speaker #1: And Mudville pumping house is in place. Now we have to run it on daily basis hopefully from day after tomorrow. This will continue. Nonstop till infinite time.
Speaker #1: There's no problem. And 700 rupees per ton will be saving on freight. And no additional expenses. So no surprise.
Speaker #2: Thank you so much, sir. That answers my question. Thank you.
Speaker #1: Thank you.
Speaker #3: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from the participants, in the conference, please limit your questions to one per participant.
Speaker #3: Should you have follow-up questions, please rejoin the queue. The next question is from the line of Amit Dixit from Goldman Sachs. Please go ahead.
Speaker #2: Yeah, hi. Thanks for the opportunity and congratulations for good performance. So I just wanted to get the update on captive coal mining. What was how much coal was mined this quarter and what is the opening plan for the other two mines?
Speaker #1: Yes, sir. So together in Ragad and Angol, we have total coal mining capacity of about total availability is about 15 million ton. And Garai Palma in Ragad is about 4 million.
Speaker #1: Approximate number I'm giving you. And the other mines are in Rutkul that is near to the plant in Angol. So today we are meeting out our 50, 55 percent of the requirement from our own mines.
Speaker #1: So the captive mines. There was some delay or you can say there was some stoppage because of very heavy rains. I think from 10th of October and worse everything is going very well.
Speaker #1: So we are aiming that we'll be reaching to a level about 65 to 70 percent of the total requirement we'll be meeting out from our coal mines.
Speaker #1: And it also depends upon the cost. We are sometimes getting very good deals from Coal India and so Manadi Coal Field and we try to avail that deal also.
Speaker #1: And sometimes we need vast coal for our coal gasification plant. If our washery is not doing well or if we need more washed coal.
Speaker #1: So that also we buy from outside. But by and large everything going very well. There is no problem. We'll be meeting out our entire requirement in the next year.
Speaker #1: From our old coal mines. And also depends upon the costing. If the cost is of course advantages are there to buy something from outside that will be blending and we'll be buying from outside.
Speaker #1: Thank you.
Speaker #2: Okay. Thank you, sir.
Speaker #3: Thank you. The next question is from the line of Parthiv Johnson from Anand Radhi. Please go ahead.
Speaker #2: Thank you so much for the opportunity. Just continuing to the previous participant's
Speaker #4: On captive mining, uh, what is the current iron ore, uh, you know, across, uh, especially the Roeda and, uh, say Kashia? What is the current on-term what we are getting.
Speaker #5: Uh, Kasia, I'll tell you first. Kasia, we are taking out 22,000 tons per day today, and we are going to bring it to level of 30,000 tons per day.
Speaker #5: Kasia is very rich in minerals in terms of battery content, so we use, use this as a sweetener. Uh, Roeda at the moment is not working.
Speaker #5: Because one right of way we have to obtain from Forest Department, and this will take a couple of months' time because there was no road available from mines to main highway.
Speaker #5: So we had 2 options, either to make a conveyor fly a flyover conveyor or a road. So then finally the government has taken us our request that yes, you can make a road, but this needs some, you know, tree transplantation, felling the trees, and then equivalent amount of land, whatever we are going to utilize, that land we have to take for afforestation.
Speaker #5: So this will be done soon. Soon means, say, by January we'll be in a position to do it, and then Roeda will be in operation fully.
Speaker #5: It was in operation, but This was suspended because the right of way was not available. And these are the formalities what we— Government of India, we are working.
Speaker #5: I'm sure by December end or January, we will be in a position to obtain it. And the rest of the ILO requirement, we are meeting out through OMC and NMDC.
Speaker #5: OMC, we have 13.5 million tonnes of long-term agreement and they are supporting us. Though there were problems in, in last month, especially last 2 months and during monsoon season, because most of their mines were full of water.
Speaker #5: And NMDC there was a stoppage because of landslide on a railway track. This took about 27 days to clear and to relay the railway line.
Speaker #5: So now it is working well, so no problem. So this quarter, the another 2 months would be superbly good, so no shortage. I hope I have answered.
Speaker #5: Kashiya, 40,000 tonnes today per day, and we are going to ramp it up to 30,000. If there is shortage, we can do it 50,000 tonnes per day also, but we are meeting the OMC and NMDC, they are supporting us.
Speaker #5: We are meeting out our requirement.
Speaker #4: Thank you so much. That was actually quite, quite elaborate, sir. Thank you so much for the elaborate answer. So my second question is pertaining to Angul.
Speaker #4: Now we believe that we draw water from Brahmani River as per your EC documents, right? And the current sanction what we have is about 59.1 billion liters on an annualized basis.
Speaker #4: You have applied for about 140 plus, but today it is at 59.1. Now, you know, considering Brahmani's, uh, you know, water reservoir level is quite short You know, it's about 12.5% below its normative level.
Speaker #4: And now when you have given that Q3 and Q4, you'll be doing like a record volume. Uh, wouldn't this, you know, water be at challenge because you require water across each and every step, right?
Speaker #4: Even if you consider whatever water you used last year, just multiply that, it's about 11% of recycling what you have done. Even after considering and putting everything, there would some— be some sensitivity you know, to the volumes, uh, in my understanding.
Speaker #5: Thank you, thank you for the concern, and thanks, you have done a very good study. So first of all, I'll tell you, we do not need 59 MLD now.
Speaker #5: We are using only 31, which is sufficient. And in next, next year we'll be using at least 15% less. Why? Because we are pumping water from Badbil.
Speaker #5: So this water will be surplus. So in a way, we are helping other people to utilize more and more water from the same dam where from we are connected at.
Speaker #5: So there is no issue. So water is not in short supply because of these 2 reasons, and God has been very kind. We had very good rains.
Speaker #5: All of the dams in the vicinity they are full and there is no problem. And I'm sure government is taking care of it. So no shortage of water.
Speaker #4: Oh, thank you so much. Thank you very much.
Speaker #6: Thank you. The next question is from the line of Penakin from HSBC. Please go ahead.
Speaker #4: Yeah, thank you very much. So my first question is on costs. Now there are more— a lot of moving parts in terms of coking coal, multiple projects coming on stream in the second half.
Speaker #6: So at this point of time, what is the cost guidance for the second half, if you can break it up into coking coal and benefits from the multiple growth projects that are coming on stream?
Speaker #5: Thank you very much. Cost, you know, is always a concern, area of concern, and each management or manufacturing division, they always want to reduce the cost.
Speaker #5: So, uh, first of all, the point here is Uh, the coking coal, I will tell you. Yes, the coking coal, the last quarter we had an impact about $12 to $14, and now for the last couple of days the coking coal is very stable.
Speaker #5: We are not expecting too much of variation. Even if it comes, maybe some $10-$15 that you can absorb, no issue. Availability is not at all a problem.
Speaker #5: Then we are also having our coal mines in, uh, coking coal mines, you know, in Mozambique. So the Mozambique mine of ours is doing very well.
Speaker #5: And we are getting 2 vessels every month without, without fail. So that is supporting us. The another opening which I feel is likely to come, that is Russia.
Speaker #5: So hopefully now the time has come that this war will stop and Black Sea operations will be regular. The moment the Black Sea operations will be regular then I think Indian steel industry will not have shortage of coal.
Speaker #5: So already Indian steel industry has reduced its exposure on Australia from 75% to 78% to about only 50% today. And the Indian industry has shifted towards Mozambique, South Africa, Colombia, Venezuela, and also America and Canada.
Speaker #5: And now the new coal power country is Russia. They are not new, but new after 4 and a half years or 5 years. So the moment this war stops, the war ends, then everybody will be comfortable.
Speaker #5: And I'm sure if this is done in next 1 or 2 months' time, and they sign a treaty protocol that they will not attack on the vessels, then I think coal prices, coking coal prices may come down.
Speaker #5: in December and January. So hope I answered your question.
Speaker #6: And so what are the benefits from the various— I'm sorry to interrupt you, sir.
Speaker #4: I'm sorry to interrupt you, sir. If you have follow-up questions, please rejoin the queue.
Speaker #6: Okay, madam, let him, let him complete this. Okay, sure. What were the benefits? What are the benefits that if you can quantify from the various growth projects that, uh, the company is bringing on stream, like the Saliputlari pipeline and ramp-up of the other mines?
Speaker #5: You see, as I told you, the Saliputlari pipeline is going to give us ₹700 per ton on 20,000 tons per day. So this is a direct impact.
Speaker #5: So this would be a net profit, and this will definitely recover our cost. So the ROI will be very fast. This is a big benefit.
Speaker #5: And over and above this particular financial benefit, the other benefit is to the public, because all these 700 trucks coming to Plang every day.
Speaker #5: So in pipeline, there are 2,000 trucks. So 700 trucks in our company, 700 to 1,000 trucks, they are on the road. Another 700 or 600 trucks are for loading.
Speaker #5: So the 2,000 trucks will be off the road. So, you know, the accidents and the fuel consumption, the diesel consumption, the pollution, air pollution, then horn pollution.
Speaker #5: Because in India everybody blows horn, so all the sound pollution, you can say, that will be reduced. This is social cause. Government of India is also supporting these particular projects for these regions.
Speaker #5: Now the other area is, you know, look, you know, the most of the railway rakes today, as per the directives or as per the requirement of power plants, and they are engaged in transporting coal from coal belts to different parts of the country so that the power availability in the country is stable and there is no increase in the tariff, power tariff, because the whole world today is struggling on power tariffs.
Speaker #5: Like, for example, the, the electricity cost in Europe today for a domestic user, household user, or industrial user that is ranging from Indian rupees 12 to 15 or sometimes 18 rupees per kilowatt hour per unit, whereas the Government of India has maintained the overall price level for the domestic users or the commercial institutions to a level of less than ₹8 and maximum maybe ₹10.
Speaker #5: And there is upper cap also. So I think it's a good cause. So more and more coal going to power plants means more and more industrial growth and more and more, I would say, helpful to obtain a better life.
Speaker #5: So we are a very small part of that, that we are trying to reduce the diesel consumption. And we are also trying to make railway racks spare so that government can utilize these railway racks to basically to transport coal.
Speaker #5: to, to different destinations in the country. Thank you. Thank you.
Speaker #7: Thank you, ladies and gentlemen. In order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to one per participant.
Speaker #7: Should you have follow-up questions, please rejoin the queue. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Speaker #5: Yeah, hi, uh, good evening and thanks for the opportunity. Uh, so firstly on, uh, the cost inflation, I think in the last quarter you had spelled out about ₹2,000 a ton cost inflation due to West Asia conflict.
Speaker #5: Um, so sorry, I think it was ₹1,200-1,300 per ton. So could you kind of give that— give the same number for Q2?
Speaker #6: So Sandeep, here, uh, for the coking coal prices, we expect an increase of $20 to $25 per ton.
Speaker #5: I think the answer— yeah, yeah, please, please go ahead. Please, please ask your question again. No, so in the previous, uh, Q1 call, uh, you had mentioned that due to the West Asia conflict, there was a cost inflation of $12 to $13 tons.
Speaker #5: 1200 ton. So yeah, could you give another number for this quarter? Mr. Sandeep is replying you.
Speaker #6: So I will give you the last quarter, we actually say $12. This quarter we are saying $20 per ton, which will be— we expect an impact on account of the coal cost.
Speaker #6: Sure, uh, and, uh, this is beyond the coking coal inflation, right? Uh, just to be sure. No, no, coking coal, I have said $20 to $25.
Speaker #6: And for the West Asia conflict, which I think you are reflecting more on the diesel and other part That was— I think we did not give $1,200, $1,300.
Speaker #6: We said around $4 to $5, and that continued around $4 to $5 per ton. Yes, so basically what Sandeep is telling
Speaker #5: From West Asia, what we are bringing, we are bringing the fuel only, either crude or maybe LPG or propane. Okay, that impact was a little less for us because we continued working through coal gasification.
Speaker #5: Yes, the coal, coking coal, there is no control on that. So that was a loss basically, or cost in input cost had increased. Now, uh, it all depends upon the geopolitical situation.
Speaker #5: If you feel that United States, they ease out the, uh, the supply of crude from Iran and also from Russia, then I think the oil prices may come down.
Speaker #5: If oil prices come, come down, then industry as a whole will get benefit. But just for, for the factor of safety, we are considering that maybe if this prolongs and there is no decision taken by superpowers the 2 superpowers, I would say, to end this war and to, to relax the sanctions on Iran and/or on Russia, then there may be an impact of another $20 in times to come.
Speaker #5: But let us see, because overnight situation changes. As the moment we know that the war is going to end, then I think the availability of oil and the gas will increase or will ease up.
Speaker #5: Next question, please. And the coking coal $20 is for Q3, the, the jump that you're talking about, or actually— yes.
Speaker #6: Q2.
Speaker #5: Okay, sure. And the 700 per ton from the slurry pipeline, um, by when will it get fully realized? I am from tomorrow. Because tomorrow we are going to start the commercial production.
Speaker #5: So as you mentioned, that full volume will start flowing immediately. Yeah, it is a— it is a— I told you, 20,000 tons per day will bring.
Speaker #5: So on ₹20,700, we'll be selling per ton. Okay, okay, sure, got it. Thank you. That's all from me. Thank you.
Speaker #7: The next question is from the line of Darshan Mehta from Tolat Capital. Please go ahead.
Speaker #6: Uh, thanks for giving me the opportunity. Uh, so just wanted to understand whether we would have seen any cost benefit this quarter because of moving from Uh, propane to coal gasifier.
Speaker #6: Cool. Hello.
Speaker #5: Yeah, yeah, I'll tell you, uh, right question. Yeah, have you completed the question or yet to be? Yeah, I, I have other questions, but, uh, you can, uh, you can give answer of this question.
Speaker #5: Yes, yes, yes. You see, the propane prices have gone up to a level of about ₹100 per kilo. And equivalent, when we make a coal gas, that is called syngas, then equivalent we were getting in ₹30 a kilo.
Speaker #5: So that advantage was ₹70 a kilo. And that is for the reheating furnaces, especially for the downstream industry. We have the cold rolling mills, galvanizing lines, color coating lines.
Speaker #5: So these lines, they got benefit out of it.
Speaker #6: Okay, okay. And in terms of, uh, steel, uh, sales, I mean, on per ton basis, can you quantify this?
Speaker #8: Will it be possible for you?
Speaker #5: No, no, no, it will be very difficult because the balance sheet is consolidated. It is on the balance sheet. Yeah, so very difficult. But I told you, uh, that whatever consumption we were doing, so we are getting an advantage of ₹70 per
Speaker #6: Okay, but at some point you will again move to propane. Well, let's say, let's say if things, uh, normalize, you would again like to move, move to propane being a cleaner fuel.
Speaker #6: Is the understanding correct or
Speaker #5: No, we will not move to now propane. We have taken the taste of a better chocolate, so we will not leave it. Okay, because we have done all those changes.
Speaker #5: It is not one-to-one replacement that we switch on, switch off. We have done all those changes in our burner system, automation system. So that we can accommodate the coal gas, or you can say syngas.
Speaker #5: So now again going back, again going back on propane, then you know it will take shutdown and then we have to incur cost and then try to use the heavy fuels, heavy fuel, heavy-priced fuel.
Speaker #5: And all these fossil fuels like propane, LPG, these will always be— or natural gas always be imported in the country. I think the country's domestic users, they need it more than what we need it today.
Speaker #5: Understood, sir. Understood. Thank you.
Speaker #7: Thank you. The next question is from the line of Rajesh Majumdar from 361 Capital. Please go ahead.
Speaker #4: Yeah, good evening and thanks for the opportunity. Uh, so I just wanted to know a couple of things. One is, what is the proportion of TMT bars you've sold in the quarter?
Speaker #4: What is the drop in the realization thereof? And what is the impact on the pricing change in the last 1 month in TMT bars?
Speaker #4: That was the first question.
Speaker #5: Yeah, so first question, let me reply. So, you know, historically we were doing about 20% of our total production, we were selling through TMT route.
Speaker #5: So TMT was not doing very good in last quarter, so we increased the volume of hot rolled coil and reduced the volume of TMT.
Speaker #5: So TMT now we are selling only to the major projects. And we are not selling for the retail market, uh, in that proportion that we used to do it.
Speaker #5: So I would say that now we are making only 120,000 tons per month of TMT, and earlier we were making 220,000 tons. So 100,000 tons TMT, then whatever the steel was going to be utilized for TMT that we are now utilizing in flat products, that is for plates as well as for hot rolled coils.
Speaker #4: So what was your next question? Sorry. Yeah, so my second question was, uh, since your ASP has generally been, uh, unchanged largely due to the higher share of flats, the last month increase in realizations we've seen in the mostly in the rebar side will not impact significantly in the coming quarter, or would you— do you feel that
Speaker #5: this quarter realizations can improve a little bit, uh, sequentially. Yeah, yes, we feel that quarter 3 and quarter 4 will be better. Historically, quarter 2 used to be very bad.
Speaker #5: Because of rainy season, constructions were at very low level. So cement and steel, I mean the rebars, they always suffer in Q2. But now Q3 is very optimistic.
Speaker #5: It's a festival season. The building construction in the country going very well. We had seen and experienced very good rains. That means more and more construction steel will be utilized.
Speaker #5: So, and now the prices are also— I would say if any compare construction steel, that is rebar and hot rolled coil, so they are almost similar, maybe ₹1,000 here and there.
Speaker #5: There's not much of difference. So I think Q3 and Q4 will be much better. Uh, in terms of EBITDA per ton, because of, uh, overall cost.
Speaker #5: Yeah, yeah, in terms of, yeah, in terms of EBITDA per ton, in terms of EBITDA per ton.
Speaker #4: Okay, thank you so much. Thank you. Thank you.
Speaker #7: The next question is from the line of Rashi from Citi. Please go ahead. Thank you. Just on the realizations, how did the flat realizations move in the last quarter and how did the long realizations move?
Speaker #5: Rashi. Rashi? Yes. Yes, so there is a first question from a lady and then the first answer also from lady. So our Chief of Marketing, Miss Rupali, will reply you.
Speaker #5: Please.
Speaker #6: Hi Rashi, thanks for the question. So in terms of TMT, uh, while the realizations were down, um, because monsoon, as also our MD just mentioned, that Q2 is typically not a good season for TMT sales because of lower construction.
Speaker #6: Uh, the, uh, the prices in HRC had strengthened, but that strengthening had come towards the end of the quarter too, which was primarily August and September.
Speaker #6: So we would see better realization impact in the Q3. As far as TMT is concerned, as again you just got to know that TMT prices also are now at a similar, uh, price level to HRC at this point in time, but the construction will pick up And, uh, the overall change of TMT went from 52,000 to 59,000, and that of HRC went from 51,000 to 60,000.
Speaker #6: That was the kind of change that we saw in Q2. Would you be able to quantify the, um, spot versus 2Q average for both?
Speaker #6: See, uh, in terms of the spot prices today, we are doing spot of HRC and TMT around 60. That's the spot prices. HRC is little over 60.
Speaker #6: And TMT has just reached there. But in terms of Q1, uh, if you were to compare the spot prices in Q1, actually ranged— actually ranged, uh, in HRC uh, for about 54 to 53, which is now towards September at 59.
Speaker #6: For TMT, the spot prices actually in the beginning of Q1 were around 56 and came down all the way to 45, now which is at around 60 this time.
Speaker #6: You, you meant quarter 2, right? 56. Yeah, quarter 2 now. Yeah. Okay.
Speaker #7: Got it. Okay, thank you. Thank you. Any other question, please? Uh, the next question is from the line of Manav Gogia from Aditya Birla Capital Limited.
Speaker #5: Please go ahead.
Speaker #4: Yeah, hi, uh, good evening. Thanks for the opportunity. So first question is on the other expenses. If you take a look, uh, there's a 13% quarter-on-quarter jump.
Speaker #4: Would it be possible for you to let me know what the major reasons were behind this and how should one take a look at for the rest of the year?
Speaker #9: I know the other expenses includes, uh, like, uh, while we— just to give the background, we have a coking coal and iron ore which got classified into raw material.
Speaker #9: Other expenses by nature looks like other expenditure, but if you see the total P&L, almost 30% is sitting in the other expenditure. Other expenditure largely comprised of, uh, your store spare, repair maintenance, operational maintenance, freight, sailing expenditure— all these are there.
Speaker #9: And, and accordingly, in the— as I said in my opening remarks as well, there has been increase in the freight expenditure, especially on the Middle East crisis, and the diesel increase.
Speaker #9: That is also one of the key buckets for the increase in the— my overall other expenditure. And O&M and repair maintenance float spread has been in line with my volume.
Speaker #9: And if you see, the techno-economics remain in the quarter 2, bit, uh, on account of monsoon, bit higher consumption, that has also impacted our other expenditure.
Speaker #9: I think it will get rationalized as we see the monsoon behind it in the Q3. So it should not be as elevated as has been this quarter.
Speaker #9: It should be normalized in the subsequent quarters.
Speaker #4: Understood. So basically you've paid accounting for the majority of it, right?
Speaker #9: Yeah, perfect. Power and tool also, which has been a major bucket into that.
Speaker #8: Got it. Uh, so the other question is, will it be possible to give me what was the value-added mix for this quarter? I think the presentation doesn't mention it.
Speaker #8: Last quarter we did 66%, if I'm not wrong.
Speaker #9: 57% was the value-added product mix during this quarter.
Speaker #8: 57 or 67, sorry.
Speaker #5: 5-7. Okay, yeah, I will tell you, I'll tell you, you're also right and my colleague Sandeep is also right. 57%, uh, because when we compare apple to apple.
Speaker #5: But when we moved from a low-priced PMT to high-priced other products, then it is more than 65%.
Speaker #4: Understood. Yeah, thank you so much. All the best.
Speaker #7: Thank you. The next question is from the line of Arvind Chidambaram from Inam Holdings. Please go ahead.
Speaker #8: Uh, yeah, good evening, sir. Uh, so just a few questions. Uh, first on what is the current pellet production, uh, run rate at the company?
Speaker #8: And do we sell any merchant pellets in the market? Because I think in the past we used to give that data, but now since this data is not available Uh, if you can highlight on that.
Speaker #8: And I believe there was one pellet plant also was supposed to get commissioned this fiscal, so what's the status on that?
Speaker #5: Yes, thank you. Uh, your memory is correct, we used to sell a lot of pellets, but after having installed the blast furnace number 2, we are short of metallics now.
Speaker #5: So we make about 18,000 to 20,000 tons in Badvel from 2 plants, and we make about 14,000 tons from our Angul plant. So in a way, we are making about 33,000 tons pellets every day.
Speaker #5: And all these 33,000 pellets is consumed in-house. There is no problem, so we don't sell anything. Rather, sometimes we buy pellets from market. So it is other way around.
Speaker #5: So like, for example, last month, since most of the iron ore mines were drenched into water, it was difficult to do the mining. So we have bought pellets from the market.
Speaker #5: Then the next, all the 3 plants are doing extremely well. So we are making good quality of pellets, which is helping us in taking out good production.
Speaker #5: And as far as the new pellet plant is concerned, yes, it is on the way. On the way means it has come up. Hopefully by, uh, June next year, this will be fully commissioned.
Speaker #5: So by March, we will be doing the complete installation. And maybe end of March or early, early April, we'll start our trials, and June it should be in commercial production.
Speaker #7: Hope everything is answered. Yeah, my second question, uh, I'm sorry to interrupt you, sir. If you have follow-up questions, please rejoin the queue.
Speaker #8: Okay, just one more if I can go about it. Please go ahead. Uh, yeah, my second question was on the difference between the consolidated results and the standalone results.
Speaker #8: Both on the turnover and the EBITDA, the console was much higher than the normal run rate what we see in the past quarters. So what is the incremental on the turnover side as well as the EBITDA side in the consolidated numbers?
Speaker #9: So you see, we have a 100% subsidiary, Jindal Steel Odisha Limited, and as the major of the projects got commissioned in the Jaspur, their turnover and EBITDA both have been an increasing trend.
Speaker #9: And you will see this difference getting increased as we go to the quarters because their EBITDA and volume both will keep increasing. At the same time, our overseas subsidiary in Mozambique also had a better EBITDA compared to the last year, why, given the better coal prices?
Speaker #7: Okay, thank you. Thank you. The next question is from the line of Ashish Kejuriwal from Nuama Institutional Equities. Please go ahead.
Speaker #4: Yeah, hi, thanks for the opportunity. So 2 questions quick. Uh, one, is it possible to share what's the blended price increase for a quarter-on-quarter?
Speaker #4: And, uh, How much power we have sold in this quarter? Because, you know, we have commissioned 1,050 megawatt power plant, and, uh, though we have surplus power available So is it possible to quantify some numbers on our sale as well as a price increase in this one?
Speaker #4: And secondly, in October, are we seeing a sales volume run rate of around 1 million tonnes because that is what is required to achieve our lower end of the sales volume guidance of something like 10.5 million tonnes.
Speaker #4: Thank you.
Speaker #9: Ashish, I will answer the first question. I think, uh, whatever the information we give in the ASP, which can be, uh, is given in the investor deck, we will continue to stick to it.
Speaker #9: And as for the second question, I think you asked 3 questions, but within the first A, A, B, I have only A, A I have given.
Speaker #9: A, B answer about your power, any steel plant will have the power capacity and at the same time, when the steel production takes the shutdown plan and other things, they will keep having the surplus power.
Speaker #9: So that surplus power will anyway get in the, uh, basically, uh, sold in the market. But in the overall scheme of things, of my life, almost ₹1 lakh crore of the revenue which Sanjay ji said will going to be achieved, in that's the minuscule number.
Speaker #9: So I think that we should factor into. Second, at this your run rate which you are saying for the achieving for the next quarter and the remaining part of the year, uh, for the getting the lower end of the guidance, we should— on the saleable basis, it should be 9 lakh tonnes to 9.5 lakh tonnes.
Speaker #9: per month. So we should be able to achieve the guidance, and we are very, very sure and comfortable to achieve those guidance given the monsoon season and everything gone behind us.
Speaker #9: All the plants are fully ramped up. Uh, like Sanjay ji always make you count for the day basis, and you have been answering on the day basis, and I'm still learning in the steel industry.
Speaker #9: On a day basis, we are actually yesterday also exceeded our or near to the design capacity. So I think it gives us the confidence that we should be in the mid-range of the guidance.
Speaker #9: I hope you recall me and remember me. And yeah, obviously. Okay, thank you so much for this. Thank you.
Speaker #5: So we can take few more questions available. So we are already time, but we can take few more questions if it is there.
Speaker #7: Yes, so the next question is from the line of Sumangal from Kotak Securities. Please go ahead.
Speaker #4: Uh, yeah, good evening. Uh, so my first question is, uh, if you could update us with the status of the 2 million tonne DRI plan which is expected to come, uh, timeline.
Speaker #4: Uh, Utkal B2 mine, I think that is the last mine which is yet to be commissioned. So where are the approvals and the timeline?
Speaker #4: And lastly, uh, we got the answer of spot prices which is around ₹60,000. Just want to understand what is the average which we saw in 2Q.
Speaker #4: Because we shared the range of prices from starting to end of the quarter, but average would help us to kind of understand how the spot is versus average.
Speaker #7: Thanks. Yes.
Speaker #5: So DRI plant first. The DRI plant will be commissioned again in June 2027. This has already come up. So there are certain equipments which are imported.
Speaker #5: So because of, you know, the shipping issues and all these things, so this way this may delay.
Speaker #4: Uh, but June, yes, will be in production. And, uh, the next question was ASP, this overall NSR average versus the spot prices. The spot prices, you know,
Speaker #5: Though it is very difficult to, uh, to tell because when we compare with the index in the country like Big Mint or Fast Markets So, you know, those are the numbers, and all these people, they are reporting the numbers.
Speaker #5: So telling exact price will be difficult. on a public platform because it attracts, you know, something unethical practices. Because the market picks up those numbers and whether up or down, and the market starts behaving accordingly.
Speaker #5: So average we have already given you. That in last 3 months time what we have done, HR coil from 51,000 to 60,000, the TNT was somewhere about again 52,000 to 60,000.
Speaker #5: The structure was ranging from 60,000 to 65,000. Rails were more than 70,000. So these are the some approximate numbers which on a public platform we can share.
Speaker #5: Sorry, we cannot tell the exact numbers today. That will be against the policy of company and against the interest of our customers.
Speaker #4: Sure, and what about the Utkal B2 coal mine?
Speaker #5: This is, uh, now the procedure is going on. I cannot say the date because, you know, sometimes many things are in the hands of government.
Speaker #5: So we have to— there's no, no obstacles. There are certain clearances what we have to obtain. I think it should come in this financial year.
Speaker #5: What a problem.
Speaker #4: Understood. Thank you, sir, and all the best. Thank you.
Speaker #7: Thank you. The next question is from the line of Ritesh Shah from Investec India. Please go ahead.
Speaker #9: Hi sir, uh, thanks for the opportunity. As a first is on external power sales, would it be possible to quantify the number at the EBITDA level, uh, just to better appreciate our operating profits?
Speaker #9: Uh, that's one clarification. Uh, second, uh, Sharma ji, if you can highlight something on DRI, uh, the next phase. Uh, I would presume that there will be a CGP Uh, backed along with it.
Speaker #9: Uh, are we getting any specific linkages, uh, from the government? And there is a government scheme, I think ₹37,500 crores Uh, is, is this project a part of it?
Speaker #9: If yes, uh, what is the element of incentive or subsidy do we expect from the government? Thank you.
Speaker #5: Okay, on power sale, our CFO will reply you, but on the other part, other points, CGP and DRI, yes, first of all, we are getting benefit from central government on, uh, on this project.
Speaker #5: So for the installation of DRI plant as well as coal-based DRI plant, coal gas-based, and as well as for coal gasification. So we are expanding our capacity, coal gasification.
Speaker #5: So 3 more gasifiers, which is, uh, the capacity— having capacity of 35,000 Nm³ per hour each. That means 105,000, uh, Nmq per hour that is being installed.
Speaker #5: And fortunately, this time all these gasification plant is being done at least 95% with the indigenous components. So I would say it is all made in India project, nothing imported, barring some 5-7% of very, very critical components.
Speaker #5: which India does not manufacture. So this is what we are aiming, and the gasifiers are being built in India. One of the gasifiers is being built in our company itself.
Speaker #5: That is in Raipur Machinery Division, and other 2 gasifiers we are building in Godrej, Mumbai. So this is what we are aiming to And hopefully these will be commissioned by June, and the DRI also will be commissioned by June.
Speaker #5: On power sales, I request our CFO to reply.
Speaker #9: Hi, so as I replied to Ashish as well, in case of any large steel company, there will be a power generation from the captive power plant and there will be the opportunity for selling in the market depending upon the steel production demand and the supply.
Speaker #9: However, these are on the ₹1 lakh crore kind of turnover company. It is a very, very minuscule number to be taken into Sure, Sandeep.
Speaker #9: Uh, Sharma ji, any update on linkage, if at all, from the government? Because I presume government is open encouraging gasifiers, so will you be a beneficiary over there?
Speaker #9: And if not for this linkage, what is, uh, what is the plan for the feed?
Speaker #5: No problem. First of all, yeah, there's no problem. First of all, yes, you're right, government is open to provide coal and with the exemption of 50% of royalty.
Speaker #5: So this is one. And secondly, from our own mines also, we'll be in a position to feed, to feed the coal gasification. No problem.
Speaker #5: Yeah, thank you so much. All the very best.
Speaker #7: Thank you. The next question is from the line of Pallava Garwans from Antique Stock Broking. Please go ahead.
Speaker #4: Yeah, good evening, sir. Um, so, uh, this question was, you know, on the— or more of a request for on the annual report disclosures.
Speaker #4: So I think, you know, we are not— we are just giving one line at the moment. for raw materials consumed. So, uh, you know, some of the other companies actually don't give up on more breakup of the iron ore coking coal.
Speaker #4: So it would be helpful for us, you know, if could probably share that in the next, you know, annual report going ahead. Uh, the reason I'm saying this is
Speaker #9: Yeah, sorry, you're saying something. I mean, thanks for your suggestion, and, uh, you may connect offline with— for Vishal, Vishal, for getting the actual details.
Speaker #9: However, we take your point and we'll do a better— this— or more disclosures, uh, in case of any other annual report.
Speaker #4: Sure, yeah, thanks for that. The reason I'm asking is because, you know, in the footnotes to the raw material consumed, uh, the captive royalty— I mean, royalty premium amount is pretty significant.
Speaker #4: So, uh, you know, so just, you know, wanted to understand whether, you know, the benefits of lower, you know, captive coal, part of that is offset by, you know, higher auction premium or royalty premium that we pay.
Speaker #4: So net-net, are we still better off with captive coal compared to external sources, or is the difference not very material?
Speaker #9: So I, I can give you the directionally answer. We are better off compared to that because in the earlier call, Councilman mentioned 2% of the SLS cost level.
Speaker #9: We are benefiting, we have a benefit compared for the on account of the captive coal mine. That is a directionally I am giving the whole part number.
Speaker #9: And at the same time, for the iron ore captive iron ore mines, I think there are 2 ways to look at. One, you are looking at the financial impact number.
Speaker #9: Second is to having the backward integration and having the raw material security. As Mr. Sharma was saying, when there was a heavy monsoon, heavy rainfalls, and the sliding in case of other OMC mines, we were not able to get materials.
Speaker #9: The Kasia, our own mines, only helped us to continue the production. And that's how you see during this quarter, Kasia consumption was 33% compared to last quarter, 25%.
Speaker #9: But that has helped us to improve the overall steel production and earn the better EBITDA. And we record the best ever quarterly revenue and second best, uh, on the quarter-on-quarter basis.
Speaker #9: So I think that part has to be balanced rather than looking just on the per ton of financial number.
Speaker #4: Sure, that point is well appreciated. And so lastly, if you could just give an idea what is the balance CapEx. You know, we already incurred a significant portion, so out of our total CapEx plan of about ₹47,000 crores, how much is now left?
Speaker #9: So on the ₹47,000 crore of the CapEx number, we have around ₹8,000 to ₹9,000 crore available for the remaining, uh, like, uh, plant CRI 2 and other things to be complete.
Speaker #9: And at the same time, some pending payments which will be linked to the performance. So that is a number available. But for this year, we continue to remain in the stated guidance of ₹7,500 crore to ₹10,000 crore.
Speaker #9: And during the H1, we were— as I said, ₹3,400 crore was spent.
Speaker #4: Sure, yeah, thank you so much. Thank you.
Speaker #7: Thank you. That was the last question for today. I now hand the conference over to the management for closing comments.
Speaker #5: So thank you, ladies and gentlemen, and thank you for all of the people, those who are attending this particular conference. So we have tried our best to give the answers of each and every question.
Speaker #5: Uh, may not be 100%, maybe 90% or 92%. But in case there is any other question, you may reach to Vishal and he can reply by mail because each and everything cannot be clarified.
Speaker #5: Uh, but one thing which is missing, but you will see in our balance sheet, that our debt-to-EBITDA ratio has now come down to 1.5.
Speaker #5: So perhaps this is one of the best ratio in the industry today. And, you know, people used to have somewhere 4:1, 3:1, 2.5:1. And last quarter we were at level about 1.7, 1.21, and now it is 1.5.
Speaker #5: So this is a remarkable achievement. Uh, the company is today, the grace of God and with this support of our employees, people, and the support of our board.
Speaker #5: So we are today cash surplus, there is no issue. And we are not in— again, I repeat, we are not in the race of putting millions of tons of plant overnight.
Speaker #5: We are still following the same philosophy, earn and invest. So we don't want to invest money unless we reach to our 100% capacity utilization.
Speaker #5: And the moment we are near to 100% capacity utilization, then we will review within our management whether we have to do something or not.
Speaker #5: Until that time, we want to maintain our health. And we want to continue as a responsible steel conglomerate or business house. The manpower is stable.
Speaker #5: Uh, there are no churning. Uh, the people from the middle management and upper middle management, those who were at a level about AGM, DGM, general managers AVPs, Assistant Vice Presidents, they are being elevated to take the higher responsibilities, and there is very positive atmosphere in the organization.
Speaker #5: And fortunately, in last couple of months, there is no exodus from the organization. And the people are very much stable. But yes, of course, uh, some people will always leave the organization, and that is natural, and some new people will always come, but we have no issue.
Speaker #5: On, on account of any manpower shortage. This is what I wanted to assure you, and with the support of all of you, we are very much confident that in times to come we'll do much more better and we may exceed your expectations.
Speaker #5: So thank you for your support always. Thank you. Thank you, sir.
