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Gujarat Mineral Development Corporation Ltd
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Good morning, ladies and gentlemen. I'm Stephen, the moderator for this conference. Welcome to the conference call of Gujarat Mineral Development Corporation Limited, arranged by Concept Investor Relations, to discuss its results for the first quarter ended June 30, 2022.
We have with us today Shri Roopwant Singh, IAS Managing Director; Shri L. Kulshrestha, Chief General Manager and Chief Financial Officer; Shri H.K. Joshi, Senior General Manager, Technical; Shri Swagat Ray, General Manager, Project Planning and Development; Smt. A.K. Iyer, General Manager, Accounts; Shri Rajat Dash, General Manager, Marketing and Sales; Shri J. N. Dave, General Manager, Power, Shri P.R. Shah, General Manager, Geology; and Shri Joel Evans, Company Secretary. [Operator Instructions]. Please note that this conference is being recorded.
I would now like to hand the floor to Shri Roopwant Singh, Chairman and Managing Director. Thank you, and over to you, sir.
Good morning, friends. We welcome you all to this first conference of this financial year. The year has started well for GMDC. The company has been on a correction course for the past 3 quarters. And whatever results are visible now have been due to the concerted efforts of the entire team and a very supportive Board. And I would not like to repeat the results, they're evident and in front of you. We welcome you all for sparing time and we invite questions and queries from your side. Thank you so much.
[Operator Instructions] The first question is from the line of Amit Dikshit from Edelweiss.
First of all, congratulations team for a great set of numbers, again. I have three quick questions, if I may, sir. The first one is on realization. So while realization increased Q-o-Q for every mine, but for ) Mata No Madh for some reason, there was a slight decline. If you can explain that? That is the first question. The second question is essentially on our mining costs. So we have seen that mining cost has gone up maybe because diesel cost might have gone up or stripping cost might have gone up. So if there are some other elements to it and how do we look at it going ahead? And the third question is, if you can throw some light on the BCG draft report that was supposed to be tabled down this time? These are the questions, sir.
Okay, Amit. Thank you. We start with the Mata No Madh. Mata No Madh project is currently the backbone of the organization and is the largest contributor to the kitty of lignite that is available for supply to the energy sector and for market sales. This year, in this quarter, we have supplied a large amount to ATPS and KLTPS. The reason is ATPS was not doing well in the previous quarter compared to this Q1 of last year to this one. The performance there has improved and an essential requirement is regular and sustained supply of fuel.
And second is the KLTPS plant, which belongs to the state power utility, that was under a major repair and overhaul in the last financial year. That has also come into operation this year. So the supplies to both these plants have increased. The pricing for the fuel there is regulated by a government formula, which is very conservative. And though there is action underway to update that formula so that GMDC is able to get adequate realization or reimbursement for the efforts put in. But the realization from Mata No Madh being low is principally on account of more supply to the power sector.
As far as the mining cost is concerned, Amit, you are well aware, there has been a huge upward correction in the fuel prices. The fixed cost component for our lignite production is in the range of 9% only. The rest of it comes from the variable components that is work and diesel. Out of this, diesel accounts for more than 50% of the cost. There has been -- we are bulk consumers. So there has been a huge correction from INR 80 -- in the range of INR 80 to in excess of INR 120 for bulk supply. So that has had an impact on the mining cost, where you see the cost has gone up significantly.
BCG report, yes, their engagement with us is divided into three phases. Phase 1 was identifying opportunities and the subsequent phases are moving towards those opportunities. So Phase I has completed, and we have a report of actionable points. They can broadly be divided into improvement of processes and new initiatives at our level. But the larger initiatives would require more deep diving and we will be coming to you with those larger initiatives in the subsequent interactions with the investor community. But at the moment, you would see us acting on 3, 4 fronts.
There would be an effort towards greater digitization and automation of operations in the mining operations that we do, there's going to be a thrust on that. Our customer outreach and the entire customer experience, we seek to upgrade by regular interactions taking feedbacks. There is also a lot of discussion on reclassifying the customer base, which is very crudely classified into small and large, and there is an anguish from the smaller players that they do not get the benefits or they are treated at par with much larger players. So you will be seeing action on these immediately. The larger things would require deeper studies and those studies and those actions have been initiated, we shall be coming to you with those initiatives. We had spoken about those initiatives in our earlier con calls and discussions, we shall be updating you.
The next question is from the line of Rabindra Nath from Sunidhi Securities. [Operator Instructions] As there is no response from the current participant, we move to the next question from the line of Vaibhav Badjatya from Honest and Integrity Investment.
So I just have two questions. One is on the pricing and the other is on the volume. So on the pricing front, we have seen a significant slowdown in our price hikes. So just in that context, I want to know that what is still the differential that you see. I don't want exact number, but broad differential that you see between imported coal and lignite based on Surat delivery, you can just broadly highlight what's the difference. And is the slowdown in price divisions driven by the hidden factor that there is the Russian [indiscernible] coming into Gujarat? Or there is some rethought from the new management that probably we should slow down due to inflation concern on the pricing front, that's the question on pricing.
And second question is on the volume front here. So we have seen Morbi area announcing significant 1 month shutdown. So is it likely to kind of change our volume outlook, which we have kind of targeted for 10 million tonnes for the year? So is there a risk to the volumes? Or do you expect that after Q2 probably from Q3 onwards, there will be sharp recovery? So just wanted your views on these two things.
On the pricing as we have discussed earlier, the pricing strategy, which was changed last year made the entire marketing and sales division, responsive to its main competitor that is imported coal. We had a target number that we were able to achieve, and we were holding on to a differential. And as you would have seen in March, the appropriately comparable imported coal price for INR 4,200 GCB stabilized. So we broadly stabilized near that level with a significant extension. And last month, there was a slight uptick. And so we made some minor corrections.
And now there is that price of imported coal has further eased. So we are sensitive to these needs. And as I have stated earlier, we are committed to our MSME sector. We shall be supplying them too at a differential cost. But we will, at the same time, not miss out on an opportunity. We are fully sensitive. The management is supportive, and the Board is very supportive of these efforts. And the volume, this quarter 1 we've held out good numbers, 2.5 million tonnes, although this quarter, monsoons have been extremely good, which does not usually turn out to be very good for lignite mining. There has been very good rain in all geographical reasons and in a very small period of time.
So there was a strain on supply. The stocks got exhausted and allocations went down. Morbi also took a month off. That was more on account of the supercharged imported coal prices rather than us. As far as the volume ramp-up is concerned, we are committed to that. And you would have seen RFPs for significantly expanding the capacity of Bhavnagar project which are live right now.
Yes. So that answers my question. But just to follow up on the volumes. So are you seeing -- because there's a lot of problem on the gas availability as well and the pricing of it as well, so are you seeing significant shift from there? And in terms of Kcal cost for the gas versus coal, are you seeing that it is becoming more viable for the customer to probably shift to coal by doing some CapEx?
Vaibhav, this shift industry keeps on taking every few years looking at their opportunities. And from what I have gathered, many of the larger plants have equipment to take care of both needs, but they shift occasionally. Like, for example, Surat cluster, a decade or ago and [ mass ]shifted to gas and then shifted back to solid fuel. So this is a call which they take because it's a very -- the margin they seek to maintain them. So at the moment, the shift is in favor of solid fuels, and now with solid fuel prices, imported fuel prices going up, they have still sustained with solid fuels. This is what our feedback says.
The next question is from the line of Parthiv Jhonsa from NVS Brokerage.
So first, Q1 performance is really excellent, so congratulations on that. Sir, I have just a very couple of broad-based questions. Sir, in Q1, your revenue was almost more than doubled with the excellent PAT. So I just wanted to know with the target of this 10 million tonnes this year, what is your perception of how the other remaining 3 quarters will be? So what is your overall view when you are saying whether you're foraying with that rare earth elements, mining and everything? And with this new couple of mines on the block, what will be the total overall opportunity for the company?
Very briefly, we are chasing 10 million tonnes. Second quarter is going to be slightly lean because of excessive rains. The last 2 quarters, we will have to do a lot of catching up. To achieve that, I mentioned the Bhavnagar tender. These are two very large RFPs which have been floated, we will take care of entire of Northern Gujarat, Central Gujarat and Southern Gujarat once these become operational. New mines, yes, you should see operationalization of these mines within the next 2 financial years. And you would be seeing RFPs for MDUs or turnkey contracts, very very soon.
And sir, my last question is with this, the new coal is again firming up, how do you perceive the -- our prices lignite are going to firm up? Or are they already in a good space or just the movement of the pricing of the metal?
Parthiv, I didn't understand the question.
No, no. So just I wanted to understand how are the prices -- are the prices firming up now for the material for lignite or then they are same range bound? Or what is the current scenario, sir?
So like I said in the earlier question, in March, the prices for imported coal, our competitor has stabilized. So we leased a certain differential and we maintained it. There was a slight spurt recorded. Now those prices are easing. So we are watching and we are sensitive.
The next question is from the line of Rabindra Naik from Sunidhi Securities.
Sir, I have a few questions regarding this other plants like the plant for monetizing the bauxite and fluorspar and the lignite for core products. Any volume and value proposition for this impact on top line, bottom line for this year and next year, if we can guide something? And regarding this RE reserves, you have already good reserves of RE as per our understanding. And the reserves, is it pertaining to lithium or cerium or what is the time line for possible impact on top line for the bottom line on this? That's your second question. And regarding this, we have already appointed the strategic consultants for 6 months already. So what are the key suggestions you have and any broad suggestions they have made -- you can make some solutions then that would be helpful for our understanding.
Thank you, Rabindra Ji. So let me answer it in the reverse order this time. BCG has been onboarded. Phase 1 is over. Their recommendations for our organization can broadly be clubbed into two categories. One is improvement and the second is diversification and strategic play. The improvements are on processes, marketing, sales and internal governance mechanisms, that activity has already kicked into action. And we would see, hopefully, the results in the coming quarters because they are an evolving things. Some of these actions take a lot of time, but the activity has started.
The second and larger one, why they were here is for diversifying the company, taking it beyond lignite and making the company future proof from its reliance on a single fuel. There have been very good suggestions there, and they have advised on the wide area of opportunities that this company sits on, namely the reserves of limestone, silica sand, multimetal assets, et cetera. So those are things on which we have made our preliminary analysis.
And in the coming months, a lot of study and further research has begun on each of these. We shall be updating you on each of these initiatives because they are large initiatives subsequently. This would not be the right time for us to say on each of them.
As far as the RE initiative is concerned, yes, a study is underway. We had hoped it would be over and we would be able to give you answers. But it would still take some time. We will be -- but what I can say is the initial prognosis seems encouraging. We have -- as the key to the study that is underway, we are planning to further take up exploration in our Kadipani reserves also for these metals. You should see an RFP for that in some time.
Bauxite, yes, it was languishing. We were sitting on unsold assets. Recent initiatives include open auction-based sales. Number two, beneficiating the quality so that we are able to fine billing takers. Three, improving the relation and hand holding of our joint venture partners, so that the offtake goes up to maximum capacity. And similar initiatives are underway for a smaller, but again, important manganese asset also. Bauxite this year hopefully should end well and so for manganese also.
And sir, regarding this RE, again, referring on this topic. Is there any chance that government will -- central government will take part in your business or take over this business in future? Is there any chance for the company to divest to the holding in the RE business to central government or how we should look at it in the future? And what kind of reserves -- what kind of reserves, is it cerium reserves? Or if you can give some -- name of the reserves that we are having right now in the RE that would be helpful, sir.
I understood the second part of the question. What is the first part of the question?
First part is, whether the government -- only central government has got the Indian Rare Earth [indiscernible] company who is there in the central government stake. Whether that company can participate or in future, if RE business will become big and the central government will take that business from you or take part in some stake in the RE business. So if you can guide something on that.
Well, I can't guide you on something which has not happened and which may happen Rabindra, but it is a sector which is closely controlled by Government of India and Department of Atomic Energy. Whatever initiative that we take would be in consultation and directions from them. And as far as what kind of reserves are there, we have a good concentration of light rare earths. The metals and everything we shall be sharing subsequently.
Okay. So magnetic rare earth, we don't have in our reserves. That is correct?
Rabindra, please note, we have light rare earths.
The next question is from the line of Deepak Poddar from Sapphire Capital.
Sir, I just wanted to understand more on your EBITDA per tonne. I mean, quite fantastic EBITDA per tonne close to about INR 1,800 to INR 1,900 per tonne this quarter. So can you suggest or can you indicate the sustainability, how sustainable is that?
That's one question. Any other?
No, no, no. That's it from my side.
Just one. Well Deepak, I'll repeat again. We were working towards a stable differential from the imported coal. We arrived at it. At the moment, the prices seem to be easing up. So we are watchful and what our internal analysis and market analysis says, that in the proximate future, we see imported coal holding some price and we hope to sustain that differential.
Okay. So if that differential is sustained, ideally our EBITDA per tonne is also likely to sustain, right?
This is 91% of our revenues, lignite.
The next question is from the line of Rishabh Shah from RS Capital.
I just want to understand the thought process. I understand in a government company and then going forward, there might be changes, certain changes to the top management level. So what is the thought process behind ensuring to the company [ how to live with people ] that the current momentum continues for a longer period?
Anything else, Rishabh?
Second thing, I believe in the last call, you mentioned that the total market is around 25 to 28 metric tonnes. So is this primarily the major market for imported coal only? And the third question is, is there a possibility or opportunity to cater to a market outside Gujarat also? And my last question is, I believe we have some investments in some -- certain listed companies. So what is the plan of that, are you going to monetize or that is going to be there for eternity?
I'll answer your first question last because I don't have an answer to it, and it would not be fair for me to speak on it. The Gujarat demand for solid fuel stands at around approximately 26 million tonnes. We have currently limited ourselves to Gujarat because the demand is significantly large, and we are a Gujarat-based company. But in the coming 3 to 4 years, you should see our production going up to 14 million to 15 million tonnes, then we will definitely be [ looking at bit ] beyond Gujarat.
As far as our investment in listed companies is concerned, at the moment, we are holding, but they are part of our strategic transformation plan that we are doing in partnership with BCG. So based on our capital requirements and the timing, we shall be taking a call on them. That is a very relevant point, and we are mindful of these investments. As far as the management is concerned, I would not be the right person to comment. But it is a very fantastic Board. It is very supportive and very forward-looking. That is all I can say, Rishabh.
The next question is from the line of Hemanth, an Investor.
Congratulations on a very, very good set of numbers. We have seen extremely good results in Q1. So apart from Q2, do we see the momentum continuing in this financial year? What kind of -- I mean, annual revenue you are targeting for FY '23 as well as margins?
Okay. What else Hemanth?
Just one only.
Okay. So I'll probably repeat myself what we said at Q2, because of the heavy rains spread out all over the state of Gujarat, please expect a slight moderation because the quantity available has gone down. We shall be doing a lot of catching up in Q3 and Q4. And hopefully, we are able to ramp up our capacity. So we are hopeful of good numbers this year. I can't share anything specific regarding numbers, but we should expect good numbers by the end of this year.
Sir, even if you can share a specific number, any broad range?
I'm not at liberty. Please look at our pricing. Please look at our volumes.
Will it be better than FY '22?
We are hoping for better.
Any range 10%, 15%, 20%? Any range, 10% to 20%, can I expect?
Hemanth, please do the numbers, our quantity as we have shared, our goals and our pricing we have shared. There are too few numbers, a few calculations.
Okay, sir, sir, just one follow-up question. What will be the EBITDA per tonne, we can expect for the entire fiscal year?
It will be better than last year, it will better than last year, provided the price differential holds.
The next question is from the line of Keshav Garg from CCIPL.
Sir, firstly, I wanted to thank you on behalf of all the shareholders for the excellent performance and for all your efforts for the transformation of this company, and you are saving this country a great deal of Forex exchange. So thank you very much for that. And sir, I wanted to understand, sir, that are we thinking of putting up any lignite washery? Does it make sense? And sir, secondly, I wanted to understand sir that we have a huge amount of cash reserves that we have lent to the state government at, I think, 5.25%, so which is below the rate of inflation. So it will be far better if you could do a share buyback and return the money to the state government, instead of just the real value of our cash reserves falling? And sir, so those are my 2 questions.
Keshav, lignite washery is merely a washery name. It is dry beneficiation of lignite to two ends; one, remove pyrite from our Bhavnagar resources and remove ash from our Mata No Madh asset resources. This is a step which is vital towards our movement and our commitment towards meeting our ESG goals. Yes, we are yet to formulate a full strategy, but these are our first steps in that direction. Improved quality of lignite from Mata No Madh will significantly decrease the pollution and hugely improve the efficiency of our thermal power plant and also of the state utility thermal power plant.
Second, we have -- there is no money given to government. It is lent at an interest rate, which is better than whatever was prevailing at that point of time with GSFS. It is a nonbanking finance company, but it is owned by the government of Gujarat. So when it's not parked with government, it is merely an instrumentality. And as far as the cash reserves are concerned, we don't have any plans of buyback because we are in an expansive and aggressive mode. We are going to open six new Iignite projects and develop further lines of business which we are doing in consultation with BCG, and we shall be updating you on each of these initiatives subsequently. So there is no plan for buyback. We are on expansion journey.
Sir, I also wanted to understand that Power Division has -- is now making profits. So is this -- so basically, will it sustain going forward?
Keshav, sorry, correction, it's not making profit, the losses are down. Last quarter, it was neck and neck. There was no loss. This year, the loss compared to last year has come down. We had hired A T Kearney to critically look at this asset. Issue has gone to the Board and the Board has responded positively. Hopefully, if these corrections come through, we should be making some money from this division also.
The next question is from the line of Rabindra Nath from Sunidhi Securities.
Yes, this is Vaishnav. Actually, I think my name has been wrongly recorded. So yes, congratulations for a good set of numbers to the entire team of GMDC. Sir, my first question pertains to the improvement that we are expecting on the power side, apart from thermal power I believe that there are some movement which is also happening towards renewable side. But if you could update us on that will be really helpful?
And my second question pertains to the movement towards rare earth side, we believe that McKinsey has been dropped in for taking this to the next level. And there were some articles which have been publicized, where we are looking for some strategic partner also to go into that direction. So if you could update us, what is the movement on that side? And when can we see some sort of announcement or some development which could take us to the next level. I think it is a long journey for us, but we are also looking for hiring some professional person who have an understanding of these minerals, which was also published. So if you could update on that side will be really appreciated.
This is Vaishnav, right. So as far as thermal power asset is concerned, I think I spoke about that just now. So I'll not speak on that. As far as the nonconventional energy is concerned, we are making efforts to develop our in-house system to strengthen our governance of these assets. Capital in the range of INR 1,200 crores to INR 1,300 crores over a period of a decade was invested in these nonconventional assets. And we have not developed the kind of in-house capabilities that are needed to monitor these assets so that they are able to deliver well, so we are currently in that exercise, you would have seen advertisements for recruitment of experts on these brands.
Hopefully, we'll be able to squeeze out more juice from these assets because it is more of a governance and less of a technical issue. So please expect improvements on these fronts in the coming months. As far as the rare earth journey is concerned, yes, McKinsey has been onboarded. Yes, their study is underway. Hopefully, it is in the right direction, but it will still take some time. We have not floated any advertisement for onboarding a partner. But yes, we are going to hire professionals who will be able to analyze the ores and the other aspects better so that we develop in-house capabilities towards -- moving towards this direction.
You should see some advertisements for further studies and further exploration of these assets by GMDC in the coming weeks. And we shall be coming forward with more clarity as this is an emerging area and our studies get concluded.
Okay. Got it, sir. And just one quick question on that side. Recently, we have heard the government that they will allow some private miners to enter into lithium mining in our country as well. And very recently, MMTC has announced that they will start exploring these minerals in the Karnataka and maybe outside India also. So any ballpark assessment that we are also getting some more from the government to explore this opportunity as well in our country?
Government of Gujarat this year has made the provision to set up a special lab dedicated towards the RE exploration analysis and to set up a core library for the same. The government is very well aware and they are moving in that direction. I can speak for our government. The initiative of government of India to broad base the number of players in this sector is a welcome step because this is a pioneering field, more mines, more technology will lead to better results and a better strategic position for our nation in the global space.
The next question is from the line of a Vaibhav Badjatya from Honest and Integrity Investments.
So all of us understand second quarters because historically as well, there has been seasonality during rating season of our performance. So it's quite expected. But on the second half, so on the pricing front because there will be a winter in Europe and they are also trying to restart their coal plants. How do you see this outlook for the pricing differential? So because there can be quite severe situation internationally in the second half. So I just wanted your views on that.
And secondly, this specific grade of 4,200 Kcal is what you're talking about, so if I compare that with some of the other grades, there is a difference in movement. So most of the other grades have moved up or at least have remained same. So what is driving that difference in movement? And do you expect that grade also to catch up with other grade that if you can highlight on these two parts, that would be helpful.
Okay. Well, Vaibhav international geopolitics is much beyond our scope to answer. And what I can say is, like I said earlier, I'd repeat, I can speak about our customers. During the past 3 quarters, the number of customers have gone up. We have a better relationship with them, I think they are better satisfied. To fine tune it, we have started customer feedback surveys, and we are getting ourselves, the company assessed on 7 to 8 parameters, and we are going to address each of these parameters. Amongst these, there will be a question that what is their fuel preference within solid fuels, beyond solid fuels. Many of these larger players, I believe, has the capacity to accommodate gas and the solid fuel both and they frequently shift to whichever is a better opportunity.
At the moment, I don't see gas emerging there. So there should be decent demand for our product within our state provided we keep it at the right differential. As far as the grade wise prices are concerned, yes, I mentioned 4,200, but we track others also. And we usually look at the prices which are closer to ours in GCB and which are available in the market because certain prices are advertised, but that grade is not available. And the differential that we talk of is not fuel price per se. It is landed cost. So we are mindful of what our customers incur in transporting it to its place. And we are also looking at it in terms of per GCB cost as to how much does it actually cost him in terms of energy costs. So that is how we look at these numbers. At the moment 4,200 is available. The larger grades, they are available with a slightly longer waiting period. that is why we have benchmarked it with this one.
The next question is from the line of Satyan Wadhwa from ProFusion Investment Advisers.
You've been taking price hikes periodically and very pleased to see that. Can you just shed some light on what the current realization is versus what it was in 1Q? I might have missed that, I joined the call a few minutes late.
Okay. What else?
And has the cost gone up in terms of [indiscernible] and any other sort of nonemployee type costs for mining directly because diesel prices have been on [indiscernible], but now moderating. So just wanted to get a handle on what the cost structure is looking like viz-a-viz last quarter?
Fixed cost has, in fact, Satyan, gone down, it was 10 -- around 10% last year has gone down to 9% this year. Variable costs, yes, it has increased because of the wild rise in diesel prices, which is almost slightly more than 50% of our variable cost. So what was the first question?
The first question was that you've been taking price hikes pretty regularly. So just trying to get a sense of what is the average realization looking like now versus first quarter, the June quarter because by hikes have been coming through, so just trying to get a sense of if you don't take any more hikes, I think today, what will -- like the second quarter pricing realization be versus the first quarter?
Our weighted average price for last year was in the range of close to INR 3,000 last year. And this year, it is in excess of INR 4,000. So even if there's -- even if imported coal prices ease up, and we are made -- we are taking a decision of slightly downward correction, I think we are sitting on comfortable margins.
Okay. And versus first quarter pricing realization in the second quarter should be higher, right?
It is but the volumes would be tighter, this...
That's fair. Volumes will be lower. So I'm not trying to ask you about EBITDA guidance. I'm just asking about realization only.
Per tonne realization should be better.
Okay. And one last question for me. When you think of -- like typically, like Newcastle coal is, I think, [ 5,500 to 6,000 Kcal ]. And your average Kcal is what, about 3,000 plus or minus a bit?
You can put it around between 32 and 34.
So given that you have high moisture content and a buyer typically is only buying Kcal, so you need to buy 2 tonnes, roughly 2 tonnes or 1.8 tonnes instead of 1 tonne of imported coal. What discount to imported coal would a buyer be happy buying lignite at, 50%, 80%? I'm just trying to get a sense.
Satyan, that is -- in fact, that is a question that is for which there is no definite answer. And the two -- because it is a different product and our product varies from project to project. So the product from our Rajpardi mine is almost at par with imported coal. But yes, it gets classified as Iignite. But yes, and our product from Bhavnagar project has a very good calorific value, INR 3,800, INR 3,600, but it has pyrites. So it is a very amorphous set of products that we have.
So I can't give a very specific answer to it. That is why we price our lignite project from different products differentially. And as an end consumer, from what we have been able to learn from our customers is they have a requirement for both because the imported coal is broadly powered and not in a lumpy form and ours is in a lumpy form. So what ideally suits their boilers is a mix of both. So this is what we have been able to learn, and that is why that the sustained demand for our product also.
But yes, it is a reality. This is lignite. This is not coal. This is not very high calorific intensity coal. So we have to keep it at a differential price. But there is no one answer. Yes, the differential in Rajpardi will be less. Yes, the differential in Bhavnagar would be more.
Okay. Sorry, I'm just going to ask one last question, I know there are people waiting. But see, current coal price of imported coal is between $350 and $400. And your coal price is $50 right now. If I just convert, say, INR 4,000 to INR 80. So you are at you're almost at 12.5% of imported coal. So on a Kcal basis, you are very, very cheap. That's why I'm trying to ask that question, what is warranted discount, 55%, 60%, 65%? I'm sure 85% is probably not the best discount.
Satyan, please add one more thing to your calculations. The landed cost. That will make the entire picture clear for you. Our product is produced in Western Kutch, which is 300 -- more than 400 kilometers away from Surat, it's one of the consumption centers. It is produced in Bhavnagar, which is 250 to 300 kilometers away from Surat, but only 100 kilometers from Morbi. So what we calculate is which mine caters to which area and what is its landed cost. And what is the landed cost for imported coal also because they broadly comes at 2 to 3 ports. And we have an idea of which traders or big trader sells it were. So what is their freight cost. So if you look at these figures, then the differential is slightly less. But your analysis is right, but there is one gap.
Right. Okay. But if you've taken imported coal, freight, plus port charges, plus inland freight that will still amount to maybe more than the amount of freight you have to pay even if you have to ship two tonnes instead of one. Is that correct?
Their landed cost is slightly lesser than ours because ours has to travel large distances, except for the one which is produced in Rajpardi and Tadkeshwar and goes to Surat. For the rest of it, there is a significant transportation cost.
Okay. Okay. So it's fair enough. So your transportation cost would be in the tune of INR 1,200 to INR 1,500, which is going back up. Is that a fair assessment?
Mr. Dash, could you comment on these prices? Transportation cost tonne?
[Audio Gap]
[Operator Instructions]
Satyan, I'll give you an idea of fuel costs and you take a call on it. If you transport it from the South Gujarat mines to Surat, so you're looking at the amount which ranges from INR 500 to INR 700. And if you transport it from Bhavnagar to Surat, you're looking -- please add INR 1,000 there. And if you are transporting it from Kutch, please add INR 3,000 there.
How much?
INR 3,000 to the original one.
[Operator Instructions] The next question is from the line of Rabindra Nayak from Sunidhi Securities.
Sir, can you just guide us on what is the contribution of revenue this year beyond lignite and power this year and next year?
Revenue besides lignite?
Besides lignite and power; power includes the renewable power.
So revenue at the moment, 91% is coming from lignite. And the rest breakups, Mr. Kulshreshtha, would you like to say something?
Maximum revenue comes from lignite 91%. From power it is around 7% and remaining 2% is from other minerals like bauxite.
What is your guidance for this year and next year?
This year we're expecting revenue from lignite that would be around 90% and then 3% from bauxite and [indiscernible] or 6% or 7% from power, remaining from the other minerals, miner minerals.
Okay. So next year, any idea, sir?
I'm talking about '22, '23.
Yes. '24?
Next year, things would improve as our new projects come. We shall be sharing those details as our tenders and strategy formalize.
Okay. Sir, second question, our cash position is almost 50% of our reserves. And we have hired a consultant for improving our business further, so it is going to become better in coming periods. So in this context, one question is, is it unfair to the -- for the shareholder to expect a bonus issue kind of thing from the Board at this juncture? Or it is -- can you please say something on this?
I won't be able to do something on it, and we have a very generous Board. Let us see what they say.
The next question is from the line of Deepak Poddar from Sapphire Capital.
I just have one question on the tax rate. I mean, I just wanted to understand why our tax rate was on the higher side last year? And how do we see that going forward?
Well we made a correction in that, and we've moved ourselves to a lower slab. And I would request our General Manager, Accounts to please comment on that.
This is Anupma. Last year, we have moved from old regime to new regime. But due to changing from old regime to new regime, we have to make some adjustment in our deferred tax, which we were carrying. So last year, effective tax rate was higher. But this year onwards, it will be as per new regime and will be around 25% to 26%. It would be in that range of 25% to 26%.
The next question is from the line of Keshav Garg from CCIPL.
So just wanted to understand that we have around half a dozen of associates and joint ventures. So is there any activity in these or they dormant? And sir, when can we expect revenues to start from these joint venture and associates and also from bauxite and basically non-power non-lignite streams that we are looking at, when can we expect revenues to start coming?
Keshav, very directly plan. Only two of these joint ventures are operational. One is for bauxite and one is for manganese. You should see an improvement in the offtake that they are going to take in the current year. Bauxite, we are going to benefit from the quality so that they readily are able to absorb it and use it. Manganese, we are also working on looking at multifarious aspects to improve the returns that are there. Not a lot, but still. Rest of them, some of them are nonstarters and many of them are in the closure phase. So request only to focus on these two. But if our studies and work on advice of BCG and McKinsey come through, you should look at larger joint ventures, more robust, with a better governance structure in the coming year.
Great, sir. And sir, also, when can revenues start coming in from bauxite and manganese?
You should see an improvement this year.
The next question is from the line of Keval Kumar, an individual investor.
I have a question. Are there any plans for diversification in metal sector for mining or manufacturing? And my second question is company while having a huge stock of bauxite at the end of last financial year. And whether company has taken any steps for liquidation of bauxite stock and whether the company is profitable in bauxite mining or not? And that's all my two questions only.
I'll start with the bauxite. We were sitting on stock of bauxite in excess of 1 million tonnes of 8 to 9 years old. There has been significant degradation in this stock. We made open efforts to auction part of it, auction was partly successful. Some of it has found takers. At the same time, this old stock is going to be beneficiated and you should see an RFP for some trials in a few days. Once it is beneficiated, brought up the level of what customers want, you should see offtake there. We are not very aggressive on mining bauxites, but we are aggressive on offtake and beneficiation of our existing stock, which is huge and which is locked capital for us.
And your second question was -- first question was for -- on diversification in metals. Yes, work is going on, as you're aware on manganese and bauxite also and rare earths that we spoke of but we will be able to speak about them conclusively and with more confidence in the coming quarters.
As there are no further questions, I now hand the conference over to the management for their closing comments. Over to you, sir.
I thank all the gentlemen who participated with these insightful questions. And we thank them for these questions because it helps us look at ourselves more critically and helps us perform better. And the management learns from these interactions and is able to arise to new levels. I have a few names in front of me who we spoke to, I thank them, I thank Amit Ji, I thank Rabindra Ji. I thank Vaibhav, Parthiv, Deepak, Rishabh, Hemanth, Keshav, Satyan and Keval Kumar ji. Thank you so much, and I thank you -- I thank the moderator, for organizing this conference. Regards.
Thank you, members of the management. Ladies and gentlemen, if you need any further information or clarification, please e-mail at gaurav.g@conceptpr.com. This concludes your conference call for today. Thank you for choosing Chorus Call conferencing services. You may now disconnect your lines. Thank you, and have a pleasant day.