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Gujarat Mineral Development Corporation Ltd
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Ladies and gentlemen, good day, and welcome to Gujarat Mineral Development Corporation Limited Conference Call. Good afternoon, ladies and gentlemen. I am Michelle, the moderator of today's call. Welcome to the conference call of Gujarat Mineral Development Corporation Limited, arranged by Concept Investor Relations, to discuss its second quarter and half year ended September 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 over the floor to Shri Roopwant Singh, Chairman and Managing Director. Thank you, and over to you, sir.
Thank you so much, and we welcome all the participants whom we would be interacting with. We thank you for the interest in the second quarter earnings and the results shared so far.
Let us -- my request to the moderator, we may begin. Or do we need a round of introductions from all those who are in the room? I think.
Sir, as you say, if you want, we can begin with the Q&A session.
Let us begin, please.
[Operator Instructions] The first question is from the line of Amit Dixit from ICICI Securities.
Yes. I have 3 questions, if I may. The first one is with respect to the production/sales guidance. Now given that Q2 was a little bit subdued quarter because of heavy rainfall, would you be interested in revising your guidance downward for the year? That was the first question.
The second question is essentially on the other expenses part. So since now the prices of crude and derivatives are moderating, so do we expect that this cost on per tonne basis has peaked out?
Number three, on the rare earth opportunity, if you could shed some light on where we are, I mean, regarding the floated RFP. So what is the progress on that? That's it.
Amit, could you repeat the second question, please?
Yes. Sir, the second question was on other expenses essentially. So given that now prices of crude and derivatives are coming down,and our other expenses are dependent on these prices, so do you see that the other expenses per tonne have peaked out? I mean this is the peak cost that we even see, yes.
Noted. Well, Amit, thank you for the interest. I would not like to repeat what we have already said and what is already known regarding the muted second quarter because of the monsoon. Yes, it has had an effect on our ambitious plans to touch 10 million tonnes this year. There would be a downward revision, but you should expect something in excess of 9 million tonnes very comfortably.
Number two, as far as the other expenses are concerned, the fixed expenses do remain the same, but there is a positive correction in the variable expenses because of the easing of the crude prices, and that has had a beneficial effect. Production continues to remain high. Prices continue to remain stable. So that works in our advantage and to the advantage of customers and our contractors also.
As far as the RE opportunity is concerned, we had engaged Messrs McKinsey to prepare a strategic road map for taking this opportunity. That strategic growth map is ready. It is an internal document. I would not be able to share so much, but whatever the findings, the prognosis, the strategy, everything is very heartening and very positive. At the same time, the modality needs to be fine-tuned and approved by government. And we still need to secure the asset in the name of the [STD] which we seek to further equip.
And at the same time, the third development there is we are working on a scoping study, which is essentially a technical examination and evaluation of how this asset would be able to capture most value for us. You would have seen that RFP out in the open. It is on our website. The idea is to get one of the best international firm who does this kind of a scoping study. So that is in the final stages of being awarded. But we would be able to conclusively say something on this once we are able to get our strategy through from the government, hopefully, in this financial year.
[Operator Instructions] The next question is from the line of Venkatesh Subramanian from LogicTree Investment.
Nice performance actually despite subdued quarter. And what is heartening is to hear that you actually have a road map in place and we're on course. So 2 questions, sir, or actually the moderator says 1 question, so I'll ask one. It's a big picture question, sir, which is if GMDC is to perform at the same level where we are doing currently with all things being in the same place, what kind of road map or what kind of vision do we have over a 3- to 5-year period?
And if this rare earth opportunity materializes,and the lignite production also goes up according to the plans, what kind of scenario are we expecting, sir, basically? What kind of alpha are we generating from the current situation? Broad numbers, I'm not going to hold you on this, but just to understand what the management thinking is in terms of the next 3 to 5 years.
Venkatesh, let me answer your question by -- in a -- by putting the REE opportunity at the back.
Okay, sir.
Please judge us on what we are currently best at and our ambitious plans regarding that, which is lignite. Please also [Technical Difficulty] on our other opportunities in the mineral space beyond lignite, and I'm not talking of REE, to enable us to take a better view on this and to evolve our strategy, the management has embarked on a special project. The project's name is Project Shikhar. It's an internal strategic transformation initiative for the organization. Under this project, we have engaged Messrs Boston Consulting Group. The idea is to help us optimize our current lignite operations, improve processes, cut costs and improve the customer experience. At the same time plan to significantly expand our lignite production capacity in the coming 3 to 5 years. We plan to do groundbreaking in 6 mines in the coming 2 years. And in the 3 to 5 years, we expect them to reach a sustainable rate of production, probably not the peak rate but a sustainable rate of production.
And at the same time, there are a lot of missed or government opportunities which were there in the company. We have assets in manganese. We have assets in copper. We have an underperforming bauxite asset. We have huge reserves of limestone and silica sand. All these opportunities we want them to reach the logical conclusion. And if you watch us in the coming 3 quarters, you would see a lot of RFP on awarding new work to contractors for different minerals. And you would also see a lot of activity where the company is looking at the right kind of partners to help capture value in these minerals. Our resources that are at hand had for some minerals are modest. And then for some minerals, they are immense. So that is our vision.
In 5 to 7 years from now, we would be significantly larger lignite player, and we would have a bouquet of other minerals also, which will be contributing significantly to our top line and bottom line. Bottom line probably will take slightly more because a lot of CapEx will have to be pumped in, in these 3 to 5 years. In 7 years, the ambition is to ensure that besides lignite, we get at least 40% to 50% of our revenues from other opportunities.
So have I answered your question, Venkatesh?
Yes. Fantastic. I did -- in fact, I was looking forward to a quantification in terms of numbers, but I will skip that for a later point. But one supplementary question is that as GMDC -- I know that there's a lot of potential under the earth. As an organization, sir, considering that you have taken up the mantle, as an organization, do you think you have the human potential and the culture within the organization to take it to the next level?
Yes, you have touched a very sensitive point, and most of my colleagues who are sitting here, very senior general managers, all of them have a smile on their face. This is a challenge, and this will be a challenge as we expand to newer minerals where we do not have expertise. So that is our challenge.
In the coming quarters, we are going to develop this opportunity and look at partners. In the coming 2 years, we will build internal capacity so that we are able to handle these assets. So this is the plan. People don't grow on trees. People have to be recruited and nurtured. And the partners, yes, relatively they grow on trees, we have to find the right partner. So one thing we'll do early on.
And the second thing is an initiative which we should be kicking in, in the next financial year. We are focusing on growth at the moment. And the next financial year, we're going to focus on our core, that is our people, who we are. I think there are more smiles in the room.
The next question is from the line of Bajrang Bafna from Sunidhi Securities.
Congratulations to the company for the good performance despite monsoon headwinds and hope that in the next 2 quarters, we'll cover the most work we lost in the last quarter. Sir, my first question pertains to -- you have already tried to answer the long-term strategy for next 5, 7 years, how the company is going to look like. But so to say, if we try to understand from, let's say, next 2 years' perspective, apart from lignite, where you are going to expand in terms of next 6 mines, which are the low-hanging fruits where some work has already been done and we can see some sort of revenue flowing in or kicking in, like your multi-metal project or the limestone project or maybe bauxite or silica? So which -- could you give us some sort of fillip for the revenue as well as the bottom line. May not be FY '24, but if we can send something that we are confident enough to get something on FY '25 basis will be really helpful.
And my second question, sir, pertains to, we, of late, have seen that some sort of softening in the coal prices also, where the NLC and few of the companies have indicated that the auction volume has not been picked up, which has been done at the higher prices earlier. So how are you seeing that particular thing going precisely into next 2, 3 quarters where we are seeing some sort of softening in the crude also? So some sense on that will be really helpful, sir. So these are the 2 questions.
Thank you, Bajrang. Bajrang, let me answer your second question first. Yes, there has been a softening. But can I rephrase it? I think there is more maturity now compared to the highly volatile months in the previous financial year. Even there was a dip in prices in August but it has a slight correction, and I think there is maturity there. So that is why we have not taken a price rise in this financial year. But at the same time, what we have done is we have focused on better targeting the pricing structure to the needs of our customers.
From a simple 2 stage, small and large classification, we have moved to a micro, small, medium and large and super large category so that we are able to pass on the advantage of differential pricing to the right kind of enterprise. And the micro units, most of them are very small players. We have introduced a system of discount below the base price. So we have moved on to a consolidation phase with regards to the relationship with our customers. And even if there is a further correction in coal -- international coal prices, we are mindful of that. We routinely track them. We would not be averse to tweaking our prices depending on the production and the consumption centers.
And answering your first question, well, we are a mining company. We don't have any low-hanging fruits. We do not have any short-term remedies. We generally do not have quick fixes of the kind when it comes to looking at larger projects. But even if you say that the low-hanging fruits would be disposing the stock of bauxite that we have, disposing the huge stock of limestone that we have and disposing the inventory large stocks of silica that we have. To enable this, we have undertaken studies first, then extensive sampling and testing at international labs. And now we are going to roll out an exploratory method of beneficiation. If this works out, this will be rolled out at a better stage so that we are able to customize our product to the requirements of the customers. So this would be the low-hanging fruits. But in the coming 2 years, you would see the benchmarks being laid for the strategy that we -- I spoke to Mr. Venkatesh in the previous call. And please watch out for RFPs for awarding work and looking for partners in the coming 3 to 4 quarters.
The next question is from the line of Ashish Kejriwal from Nuvama Wealth Management.
My question is related to lignite. What we understand is on volume front, I think, 2 mines, Rajpardi and Tadkeshwar, they are going to be exhausted in the next 2 years. And I don't know whether at that time any new mines will come into operation or not. So my question is where we are going to peak out in terms of volumes for next 2 years and 5 years.
Okay. Only one question? Okay.
No, second question is I think in your previous question, you said that if global coal prices falls, we can tweak prices. So are we at parity to landed cost of imports? Or still we are at a discount, which normally is on a higher side as compared to earlier one?
And lastly, we have seen lots of to and fro in lignite power plant in terms of PLF, in terms of consistent profit making. We are not seeing that for the last decade or so. So what are the plants which we are having where we can give some confidence that it will be a consistent profit making in the future?
Okay. So the power plant things have improved. Daily cash burn has gone down. But the kind of improvement that we have envisioned is going to take 4 to 6 quarters because there has been a total lack of investment over the life period of the plant till now. So if we have to look at better performance, it needs a major overhaul, a significant CapEx and a change in the way the electricity regulator deals with us. Thankfully, there has been positive movement on all of these fronts. As we get a permission on capital infusion and a better relationship with the power regulator, you should see things happening. And at the same time, efforts to reduce the cash burn are under way.
As far as the parity issue is concerned, we are not at parity. We are -- in calorific value, we are an inferior product compared to [indiscernible]. But at the same time, lignite, with its physical formation and the way it is mined and directly delivered to the consumer, it has a lot of acceptance in our -- in the set of our consumers. So we maintain a parity, and we are -- currently, we're holding on to that parity.
And as far as Rajpardi and Tadkeshwar are concerned, Tadkeshwar is not going to exhaust Tadkeshwar had a major -- has safety issues, so because there was sliding in the mine in the month of December last year. So we have -- at the moment, we are going to engage the best of line consultants to ensure that we are able to take care of whatever happened and resume production to a higher level there. This mine was not going to get exhausted soon.
As far as Rajpardi is concerned, yes, volumes are low. This mine would go towards closure. But at the same time, by the time it goes in closure, there is going to be a project which goes by the name of Damlai, which is going to come up adjoining to this project. So we should not see an exhaustion or attrition of supplies from that place. The project will evolve from one into another. These are our plans, and our ambitious plans are, in coming 3 to 5 years, we seek to supply almost satisfy some of the needs of financial requirements of the State of Gujarat.
So sir, any number which you can provide that -- what the maximum which we can do, keeping in mind erosion of Rajpardi and coming of the mine numbers?
An initial view for the company in the coming 3 to 5 years is to reach a production of 13 million to 15 million tonnes.
And sir, lastly, is it possible to guide what kind of CapEx we have done in first half and the total estimated CapEx in FY '23?
Planned CapEx for which we have already incurred?
No, total CapEx which will come to our cash flow in FY '23 and first half what we have done.
We had an indicative plan of approximately slightly in excess of INR 600 crores, which will primarily be used for land acquisition and 2 lignite beneficiation plants. Coming year, if condition to our aggressive pursuing of the new lignite projects, this CapEx would go up significantly, can double also, and we can go beyond that also. We have sufficient results.
My question was what we have already done in the first half of FY '23.
No, no, nothing much has been done because we are waiting to do, hopefully, in the third to fourth quarter. Hopefully, this land acquisition issues would come to ahead and it would get clocked in there.
The next question is from the line of Subham Agarwal from Aequitas Investment.
Sir, my first question is with respect to the volume. So on the basis of various operational and statutory constraint that you mentioned, I wanted to understand what is the maximum that we can produce per month currently. And secondly, I mean, you touched on Damlai coming up once Rajpardi goes out. So what's the rated capacity of that? And what will be the next mine after Damlai bagged is expected to come up? And if you can also mention the time when it will happen.
Okay. So the first thing that you should see happening is the capacity ramp-up in Bhavnagar. Those RFPs are live, and we would go up to 5 million tonnes a year from Bhavnagar. This would be a significant production raise, number one. Second, you should look at -- which should come into production is Lakhpat mine in Kutch. Thereafter, you should expect Damlai to come into production. Thereafter, 2 more projects in South Gujarat. We are yet to stagger their operationalization. This is how it is going to roll out. And then after that, 2 more projects in Kutch district.
And I would not be able to do justice to your question of per month because, mine to mine, the way the geology is, the way the mineral gets exposed, there are challenges and changes. But if -- please look at our annual figures, we shall be exceeding what we did last year. And like I said earlier, please look at us in excess of 9 million tonnes this year.
Okay. Okay. Sir, and my second question was on realization. So you have already touched it briefly, but I further wanted to understand. So basis the current availability of coal from various international and domestic market in your addressable sector, how do you view -- or what's your view on the realization for rest of the year?
Supposing things stay as it is, this current delta continues. So the realizations -- a better benchmark would not be the second quarter, but judge us on how we performed during the first quarter, so that is the kind of performance we should be looking at.
The next question is from the line of [Hitesh Chadha] from Lucky Investment Managers.
Sir, one clarification and one question. To one of the participants did you mention the vision for 5 year of 13 million to 15 million tonnes or 30 million to 50 million? The line was not audible.
13 million to 15 million.
Okay. My second question is, could you give us the trend in realizations on lignite blended realization for quarter 1 and quarter 2 and what are they running at now? And the slope versus the imported coal for the same calorific value, how much discount we are still running at?
So for the discount and delta, there is not -- there's no straightforward answer because production center and consumption centers are different, but it ranges in the range of almost 1 point -- if you look at kilocalorie-wise, so the imported coal landed price would be in excess of INR 2 a kilocalorie. And our product would be in the range of INR 1.5 to INR 1.7.
INR 1.7 divided by INR 2.
This is landed cost, so this is not the realization that is to us, but this is what ultimately the customer pays. But if you look at only fuel, the delta would further increase by 20, 25 basis points.
Okay. And the realization gradient, if you could just tell us quarter 1, quarter 2 and now.
So it is the same. The realization is broadly in the same range. It is in the range of around INR 1,500.
So you haven't taken any price increase. What was the last price circular that you had sent?
This was in the last financial year. This year, what we have focused on is not price rises. We have focused on better customer segmentation and improving our relations for a long term.
But that circular segment -- customer segmentation did not result in any realization benefit?
No, that was not the intention. We have to onboard the customers to the new regime. While some people would have got an advantage of moving to a lower bracket, many others move to the higher bracket, so we did not figure out price at that time.
So all price increases taken in FY '22, the realization is about INR 1,500 to INR 1,600 per tonne.
Yes.
And this 13 million to 15 million tonne production target, that factors the production rise from Bhavnagar, Lakhpat, Damlai, any of those mines coming in and production peaking out, at for the right?
Yes, please.
And this is a 3-year number, right, or a 5-year number.
3 to 5 years.
The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investments.
Just 2 questions that I have. One is that Gujarat, there will be elections in Gujarat very soon. So just wanted to understand in the model code of conduct will -- will be applicable to price hike that we take or on the price changes that we take or it will not be applicable, that is the first question.
Second would be I just wanted to understand that on the supply of lignite side, which specific mines are -- or were impacted a lot last quarter, basically, the quarter ending September. So just wanted to understand these 2 things.
Second question, there was some disturbance. Could you please repeat the second question?
Yes. Sir, the second question was I just wanted to understand, due to the excessive rain, which mines -- which specific mines were impacted due to rains?
I am sorry to interrupt. Mr. Badjatya, could you please keep your mouthpiece little far away from your mouth and speak.
Okay. So I wanted to understand that under -- which mines were impacted due to rains, which specific mines?
Well, however all mines, all throughout the 3 months. Some more, some less, but all -- the degrees of more and less are when compared with severely affected. So all mines are affected. And yes, this, us as a listed company, but still 74% is held by the government of Gujarat. It is a PSU and it is owned by the government of Gujarat. We will -- not only will the model code of conduct apply on us, we will be mindful of the code during the elections.
But as it is, prices have more or less stabilized. And we are operating at a comfortable differential. So -- and this exercise would last for 4 weeks. So it should not have -- and this -- the model code does not affect operations in any way at all.
Right. Sir, just a small follow-up. So as you said, due to rain, most of the mines were impacted. But if you see the percentage-wise, fall in the mine-wise sales volume, it's been excessive for the Surat cluster. The mines which supply to Surat cluster, there has been excessive, very hard downfall there. So do you think that there is a demand issue as well that the Surat cluster is facing or otherwise alongside there would be a very sharp decline in Surat cluster and not the [indiscernible] cluster?
Yes. Surat was affected most critically because 50% of the product goes there. And if you look at Surat and its vicinities, the percentage goes beyond 60%. So whatever happens will have an overwhelming effect on Surat. So that is how it was, and things were pretty grave. The production was very low. And if the mines -- and I now speak with the hat on where I seek the welfare and safety of my staff, my officers and my contractors, things were very unsafe during these 3 months, but we have passed them with acceptable rate of production with no incident at all.
The next question is from the line of Aman Madrecha from Augmenta Research Private Limited.
Sir, as you mentioned that you have moved into grades and supplying to large and micro-level organization. And you mentioned that you've introduced discount below the base price. Sir, just can you help us understand like what percentage of the lignite goes at discount below the base price and like what percentage goes to the large or the larger organization, if you have that breakup?
Yes, it is there. Can I request my General Manager, Marketing and Sales, to give you a perspective on what goes to the micro sector and what goes to the 2 large categories. Mr. Rajat Dash?
Actually, by virtue of this segmentation, a maximum volume goes to the micro sector. And thereafter, that will be followed by small and medium. And large 1 and large 2 are the top brackets. And we are actually -- the industries which is having higher lignite consumption capacities. So, this classification was basically followed with respect to the government guideline of MSME segmentation. So that's why it was a long-pending reform, and that was undertaken during the last few months. So I think I can able to answer your question.
Yes. And sir, in addition to this, I just wanted to understand like what is the difference in the realization if you are supplying to a larger player as compared to a micro player because if you're looking at the dip in the realization like in quarter 1, we did a realization on a gentle level of around INR 4,600 to INR 4,700 per tonne. And this quarter, the realizations dipped down to around INR 3,500 per tonne. So it might be a factor of monsoon and the price is softening down. But can it be a factor because we are supplying to medium and micro level organization at a discount below the base price?
So actually, there is a difference of around INR 120 between micro and the largest segment that is held to customers. And small, medium and large ones fall in between. So the difference is around INR 120 per metric tonne.
Okay. The difference is just around INR 120 per metric tonne. Okay. Okay. That's all from my side.
There is a follow-up question from the line of Venkatesh Subramanian from LogicTree Investment.
Yes. Sir, just taking off from a previous participant's question on the realization, so is it fair to assume, sir, if I only take the current lignite volumes and the other minerals as it comes along, it's a bonus. If I take it at 10 million tonnes and the realization at INR 1,500 per tonne, so are we expected to continue to post similar kind of operating profits over the next few quarters? And -- that's my first question.
And second, out of this, how much will -- how much CapEx would you need, sir, for the next 2, 3 years? I'm just trying to figure out whether we will be able to maintain the same dividend payout.
Well, at the moment, lignite is a hot commodity, so whatever you produce gets sold. Our challenge with bauxite is slightly different. What we were producing was not getting sold, so we will start producing that which gets sold. So that would also contribute to volumes. CapEx, whatever estimation we've made this year is very modest because many of the preparatory activities, the lion's share would go to land acquisition. The -- as you know, the entire process is fairly long run out, and the process was initiated during these financial years only. So you should see it clocking in towards the end of this year and a lot of it in the next financial year. So it would easily be double of what we are.
And it also depends on our progress on onboarding new contractors and fitting ground in the other projects. So that will -- that is another positive uncertainty to which we would have an answer by the end of fourth quarter. We have ample reserves and our -- we have our own planning, but we have onboarded BCG to help us to vet our capital plans and to prioritize them also. So you have a competent team of experienced general managers from GMDC to do this capital planning. And you have a team from the best consulting firm in the world, one of the best consulting firms, to vet it and help that team prioritize it.
The next question is from the line of Falguni Dutta from Jet Age Securities.
Sir, I have 2 questions. First is on the realization, which you mentioned is around INR 1,500 per tonne. But if we divide the value of lignite with volumes, we come at -- and excluding this captive sales to the thermal power plant, we come to a realization of INR 4,300 per tonne about. So why this difference in the number?
Ma'am, there are -- I think this is -- I think what we have quoted was the margin. This is the total realization. I believe that, that is what is the understanding gap that we have between us. So you are right. And what we quoted was the realization for the company. And your second question...
No. Sir, INR 4,300 was the -- is the realization, right?
Yes.
What is this number of INR 1,500?
It is our margin per tonne, which is not flat, which we have said it is approximately INR 1,500 depending on mine, depending on center, it varies.
Okay, sir. And sir, second question is on your rare earth opportunity. By when would you be able to give a broad quantitative number on the -- of the top line that you could be doing from this rare earth opportunity of yours?
I can only say at this moment our strategy report confirms very good numbers, very impressive numbers, but it is conditional to a slew of privileges or permissions that we need from the government in securing that asset and taking it forward. So we will be -- I will not be able to -- I would not like to present a rosy picture of mirage, which is too far away. We think it is in our draft and -- but allow me some time to share those numbers with you. We have those numbers. They are very good.
Fine, sir. And sir, one final question is on the pricing of coal that we follow to set our price for our lignite. So how has that behaved over the last 1 month, our benchmark against which we benchmark our lignite?
Our benchmark, ma'am, we -- what we are following is a landed cost approach because the production center and the consumption centers are spread over the entire State of Gujarat. So among the rationalizations that we did in the previous quarters was to ensure that the landed cost goes down by ensuring better allocation from the nearest mine. So that was one-off, which work to the advantage of both the customer and the company more stock started getting lifted. So that was what we did.
This year, we started focusing on better targeting so that in future, if we have to take corrections in prices, it can be upward, it can be downward. And we have to sustain or generate revenues for our future growth strategy. We have used these -- this quarter of lull in production to -- for better segmentation.
Understood. This realization that we have INR 4,300-odd, which is the value which we show for -- across mine, so that excludes transportation cost, right? That is the ex mine realization, I presume.
Yes. Yes.
And sir, please, if you could permit me one more question, which is on the -- do we have a plan or -- in minds that we would be giving so and so percentage discount to the micro customers of us? I mean do we have a particular percentage number in mind? Or how does it work?
Ma'am, percentage [Foreign Language] now per tonne, it is at INR 10 to the base price.
The next question is from the line of Riken Gopani from Capri Global.
I have 2 questions, sir. First one is on the existing realizations that we have disclosed. I see that the volatility in realizations of the Mata No Madh mine is over the last 2 quarters very different compared to the other mine. Can you help understand that why is it seeing that kind of a swing in realization? And what is the way forward for that?
Please allow me to share this question -- forward this question to Mrs. Anupama Iyer, General Manager, Accounts.
Mr. Gopani, it is Anupama Iyer. At Mata No Madh -- for Mata No Madh mine [indiscernible] our power plant as well as power plant of [indiscernible] also. Depending on their requirements, our -- and we supply them on a concessional basis. If their requirements are more our realizations come down from Mata No Madh mine. And if the requirement is less and we're supplying the market more, the realization become better. There is a change in realization of Mata No Madh project.
Okay. So this quarter, basically, there would have been less supply to the power plant, which is why the realization has improved. But on an overall annualized basis, of the -- I mean, last year, we did about 3.5 million tonnes from this mine, which is external supplies. Is there a number that you can share as to how much can it go up or down for the power plant supplies?
It depends on the -- how much power plant runs because our power plant is also in this one, and...
Can I answer that? Well, Mr. Gopani, the plant, hopefully, in the coming quarters would be taking periodic breaks for getting healthy and ready so that it could run at sprinting speed in 5 to 6 quarters from now. So that would affect -- that would -- that is, in fact, an opportunity to realize, capture value from customers.
Understood. Okay. Just one follow-up question to the comment you made in the earlier section about the CapEx that might need to be done for the power plant, which you said that could be significant. If you could outline what this could be and by when would you be sort of ready to spend this CapEx on the power plant.
To spend money on the plant, we need -- we have -- we need to seek permission of the electricity regulator. We have submitted a petition for CapEx in the range of INR 300 crores. Most of it will be a pass-through for the company. So once that petition gets approved, that cap rates infusion would start, but it would not have an effect on our bottom line because it would be a pass-through for us.
Understood, sir. And just one last question with regards to the mines that you've mentioned will come up in the next few years, which is Bhavnagar, Lakhpat and the Damlai mine. Would -- I mean, I see that you have very differentiated quality of coal and, therefore, realization vary significantly between Mata No Madh to Rajpardi to all. So the newer mines which are coming up, what is your assessment of the quality? And therefore, how does it influence our overall realization over the next 3 years?
I can't have my view on the quality. So this is geology. And whatever quality -- I broadly integrate -- Bhavnagar is not a new project, but Bhavnagar is going for a major expansion. So there is no new asset there. We are going to work on the quality of that lignite. It is fairly good calorific value, but it has infusion of pyrite, which we will seek to do. As far as the assets which are going to come up in Kutch, so the calorific value is more or less at par with the existing projects that is Mata No Madh, the ones which are going to come up in South Gujarat are bordering our existing mines, so they would be in that quality. So happy news, one is adjacent to Rajpardi, which is our best product. And the second is adjacent to Tadkeshwar, which is again a good product. And there's another product there, which is between the 2, so we will get good quality there.
The next question is from the line of [Shreyansh] from FG Securities.
I had a few questions. So the first one was on the power plant. So I actually see the concessional core -- lignite that is supplied to the power plant. Now we want to reduce the cash burn to zero, like you said. But if I see the opportunity cost lost, it is much higher than the fixed cost. So even if we -- on a single project basis, if we look at zero cash burn, that we are losing more money by not selling it into the market at this kind of realizations, so I just wanted your view on that.
The second question was, in the annual report, you mentioned about -- in your letter to shareholders that we're in the process of bidding for commercial coal and lignite blocks outside the home State. So just wanted any clarification on that because we've not heard anything on that area. And also, you mentioned of downstream integration areas like cement. I remember in the previous calls, you mentioned that we won't be directly involved in manufacturing of cement but just supplying limestone to a partner or something like that. And the last was any update on the fluorspar beneficiation plant that had an RFP a while ago.
Okay. So a very valid cost -- a very valid question on opportunity cost. So this issue we are trying to resolve with the electricity regulator and energy department. Hopefully, you should see some positivity there. we have asked to move a much simpler formula which allows GMDC to do sustainable operations and the regulator also to get cheaper power there. Once this is done, we would see the realizations improve in the coming quarters.
Coal auctions, yes, we bid at a few places. Yes, auctions for Ministry of Coal did not go so well. I believe they're going to be re-auctioning them. And with our knowledge and experience that we have gathered now, I believe we should be in a better position to again capture value there. We -- at some places, ours is the only bid, hence, the block got canceled. And at other places, the blocks that we examined, they, I believe, would go under significant redesigning because there were no takers there. And downstream integration cement, please wait for our expression of interest looking for partners in the coming quarters. You should see a sizable movement there. That is all I have to say.
So the 13 million to 15 million tonne target, so that does not involve any of these blocks that you would be bidding for and potentially the numbers, right?
13 million to 15 million tonne is based on our existing resources and the blocks that we were allotted a few years ago which we are going to operationalize now. If that comes, then these numbers change, our customer mix also changes, and our strategy will undergo a radical change.
Okay. And just the fluorspar beneficiation plant, any progress on that?
We will update you in the coming quarters.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you so much. I would like to close this conference with a deep sense of gratitude towards all the participants and their incisive and deep questions. We have been having this conference for, say, about a year now, and I believe there is -- I believe the questions and answers have all matured and moved to the next level. Hopefully, we continue this exercise and the questions and answers move to a further refined level and the company moves towards greater professionalism. I again thank Shri Amit, Shri Venkatesh, Shri Bajrang, Shri Ashish, Shri Subham, Shri Hitesh, Shri Vaibhav, Shri Amit again, Falguni Ji, Mr. Bhukhani and Shri Srinath. Thank you so much.
Thank you all for being a part of the conference call. If you need any further information or clarification, please email gaurav.g@conceptpr.com. Ladies and gentlemen, this concludes your conference for today. Thank you for joining us. Thank you for using Chorus Call Conferencing Services. You may now disconnect your lines. Thank you, and have a pleasant day.