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Gujarat Mineral Development Corporation Ltd
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Good afternoon, ladies and gentlemen. I'm Shishi, the moderator for this conference. Welcome to the conference call of Gujarat Mineral Development Corporation Limited, arranged by Concept Investor Relations, to discuss its third quarter and 9 months ended December 31, 2022. We have with us today, Shri Roopwant Singh, IAS Managing Director; Shri L. Kulshrestha, CFO; Shri A.K. Makadia, Senior General Manager Tech; Shri R.K. Dash, General Manager, Marketing and Sales; Shri Swagat Ray, General Manager, Project Planning and Development; Smt A.K. Iyer, General Manager, Accounts; Shri J.N. Dave, General Manager, Power; Shri Arun Sharma, Adviser, Cement Sector and Shri Joel Evans, Company Secretary.
[Operator Instructions]
Please note this conference is 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. We welcome -- we thank Concept Investor Relations. And we thank all the guests who've joined in for this investor con call. GMDC has registered -- has shared the results for the third quarter for the current financial year. We are open to questions. We welcome you all.
[Operator Instructions] We have a first question from the line of Amit Dikshit from ICICI Securities.
Congratulations for a good set of numbers. I have two questions. The first one potentially on volume. So given the 9 months performance and January month operating performance as well, what kind of volumes are we looking for in FY '22? And what would be your target for FY '22? That is the first question.
Yes, please. And the second one, Amit?
Yes. The second one is if you can update us on the progress to milestone achieved with respect to the connected [indiscernible] and the cap of our [indiscernible] project?
Which projects, Amit, would you like to focus on?
Sir, rare earth and multi-metal.
So Amit we'll reply with the first question. We had begun this financial year with an ambitious target of trying to reach 10 million tonnes. But three unforeseen things have hit us this year. One was a very, very good monsoon across the state, affecting all our three geographical areas where our mines are located. So you must have seen quarter 2 was subdued. And some of its effect also floated to Q3.
Number two, in December, for the past 1 year, we have been facing issues with our Turkish project that is in Surat. The project used to make a lot of money for the company and used to cater to our most voluminous and active customer base, that is the Surat customer base. That project has not been doing well, and it is closed for the past few months because of safety issues, there has been a major sliding there. There is no loss of life.
The issue has to be solved on a technical level, and we hope it will take us 1.5 to 2 quarters to probably resolve it, but still we are unsure of what production we will achieve. So that has been the second hit.
Third challenge has been exhaustion of quantity in the Bhavnagar project, but that is a solution in progress. The new RFP has divided the mine into two packages. So the work will hence will be given to two contractors. We are in the final stages of award of the project. And you should see the results of increased production in the first quarter of next financial year. And we would like to, again, plan and touch 10 million tonnes in the coming year.
And as for the update on projects related to critical minerals. as regards to the multi-metal project, the year was spent in doing geological studies. And the results have been very encouraging. The base resource base, which was in excess of 10.5% has gone up by -- significantly by 1.5%. And next stage of exploration is planned now. The work is in an award stage. Once the geological data is solidified, we will move forward towards the other aspects of the project. As far as the rare earth is concerned, it is -- I'm not at liberty to share because it is in the critical minerals category. We are awaiting some approvals. If and when they come, we will share in full detail.
[Operator Instructions] We have our next question from the line of Shubham Agarwal from Equitas.
My first question is I wanted to understand what was our total volume of lignite sales externally for the quarter? And secondly, broadly, I wanted to understand if you can elaborate on our new capital budget, how are we planning to deploy the INR 2,500 crores? And if you can broadly explain how -- what will be the time line of various projects and the amount? That will be helpful for us.
Very elaborate question, Subham. Okay, Subham for the first question, I would request our General Manager of Marketing and Sales, Mr. Rajat Dash, who answered it fairly elaborately for you. For the second one, I'll answer it myself. Rajat, please.
Subham, good afternoon. So in quarter 3 actually the total sale to open market and our power plant is to the tune of 55.7 lakh metric tons. Out of this 55.7 lakh metric tons, 42.49 was sold to the open market and 13.29 was supplied to our own power track as well as the car plant of [indiscernible]. So that is the split up, 42 and 13, total 55.78.
And Subham for the capital budget, you must have seen compared to last year, the company has done well over the past 3, 4 quarters. Our reserves have gone up. And hence, we have come up with a very ambitious capital budget, which is 4x the capital budget, which was planned last year. The majority of this amount in excess of INR 1,500 crores goes towards land acquisition, one towards [indiscernible] asset, to towards [indiscernible] asset where we are planning expansion and resolution of certain issues. And the rest would go in the new Lignite projects.
Besides this, we have had small victories for GMDC. We have got permission for a INR 300 crore CapEx pass-through for the thermal power plant, which has been underperforming. So that is another important CapEx item. Besides this, there are CapEx items, which are also not such high -- which are not such large numbers in the range of INR [ 15 ] crores, which are essentially beneficiation plants spread over our Lignite projects and metal projects. So that is the plan.
Okay. Sir, but broadly, if you can help us also understand the time line of various projects that would be very helpful?
Okay. Land acquisition, yes, work will start as soon as we would get board approval for land acquisition. We have started -- already started preparatory activities a quarter back. Now we would go for final go ahead for that. As far as the new project is concerned, again, preparatory activities have started, but the expenditure would be slightly -- would kick in a quarter or two later compared to our existing projects.
For the thermal power plant turnaround we have an aggressive time line of turning around the asset in 12 months. So you should see a lot of RFPs in two to three months from now, and we should see a lot of work happening in Q2 and Q3 at the power plant. And as far as the smaller beneficiation plants are concerned, we are going to time it along with the engagement of contractors, new contractors we need to time it along with that so that the fund is spent at the appropriate time.
We have a next question from the line of [ Shreyan Skatani ] from SG Securities.
I had a couple of questions. So the first one is on the coal mines that GMDC has bid for. So last call, you said that if we win certain mines, then it would change the targets -- target output by a very different number. So in the press release also, you mentioned that there have been certain mines that GMDC has bid for. So just wanted to get some input from you on that.
The second question is, I'm a little confused on the Bhavnagar project. So -- and -- is there like some issue that's going on, which caused exhaustion? Or that sudden exhaustion has come into the project, which is like not -- it was not preplanned or I'm still -- I'm not understanding why it would come to a standstill, like Turkish was there's some sort of an issue is something that I understand, but Bhavnagar is something that I wanted to know more about?
Okay. Sir, let me answer the first question. As far as the coal mine auction is concerned, we are currently midway. The bidding is to start. And if we are successful, it is -- it will -- we will need to change ourselves in so many ways on the project execution side, on production side, on the marketing and sales side. We would need to change considerably. Not that work is not going on there. A lot of thought is going into it. But if we win, we will be taking these projects very aggressively in a very time-bound manner. Because significant security will be at stake. And we will treat it as -- and any failure delay, we will treat it as a reputational loss.
So you should expect swift movement if we are successful in cold mines auction. Bhavnagar project, it is kind of the current pressure is linked to the crisis Tadkeshwar. Bhavnagar and Tadkeshwar would be essentially service South Gujarat and South Gujarat, the major portion is Surat. So Tadkeshwar was taking care of Surat. So we thought we had time to ramp up. But because of this Tadkeshwar collapse, the pressure came on Bhavnagar immediately to ramp up. Thankfully, we had good work in action. There is still time and quantity remaining for the existing contractor. But because of Tadkeshwar work, it looks more like a crisis, but we'll resolve it.
Got it. So when do we expect any results out of the auctions?
We should know in March, I believe.
Okay. Okay. Got it. And is there any size of output that if you win these blocks, is there any -- what kind of output are we looking at?
At the moment because it's a big deal, we can't really say. But we have a marketing strategy. We have an indicative list of customers, which we will be targeting. We have done our homework. The point is if we win, it will be -- implementing it will be the challenge.
Okay. Okay. Sorry, just one more question. On the RW project, so just on the time line. So since the last few quarters, we've been mentioning that there is work going on over there. So just wanted to know when we should expect something more concrete on that? I know that you already mentioned that there's a lot of progress that happen...
I'll have to repeat the same answer. Apologies on that.
We have a next question from the line of Ashish Kejriwal from Nuvama Institutional Equities.
Sir, a couple of questions. When we are talking about 10 million tonnes in next year, which is -- which are the mines where we can see incremental output in a major mine? Because Bhavnagar is the only mine, which we think that can give more output, but I'm not sure whether we can achieve that in next year? So if you can throw some light on that. That's the first question.
Second question is, besides these operating mines, we were now looking to open the new mine, which I think Lakhpat was the first one. So what's the target or was the estimate for opening in that? .
And two bookkeeping questions. What is the cash and cash equivalent as of third quarter end and CapEx, what we have done in 9 months and our target for FY '23 and '24?
Ashish, the thrust in production will come from Bhavnagar. The ramp-up will be very easy. We should see our sales crossing, we have planned for 3.3 million tonnes just from Bhavnagar. So we should see these volumes being achieved. And we hope to solve the Tadkeshwar issue also and probably get decent production from that project also.
As far as new mines are concerned, the first one to roll off, you should see you should see Lakhpat. And you should see one more project, say, groundbreaking again in [indiscernible]. We are aggressive on for two projects in South Gujarat also. You should see award of all these projects in the current -- in the coming financial year and groundbreaking in three to four of them. And production for the rest in the coming financial year. We are going to move very aggressively there.
As far as cash reserves on Q3 and current CapEx, this status and what is our plan? I would request Mr. Anupma Iyer, General Manager Accounts to please engage.
As on 31st December, we have cash of around INR 2,500 crores with us full cash results with us. During the current financial year, from CapEx, we have not to spent too much because major CapEx was planned for land only, and that work is going on. And everything is being prepared, so we have taken that through the negative budget. And next year's CapEx budget are around INR 2,500 crores. Out of that major is towards land only, towards land and renovation of our [indiscernible] power station.
So how much we have spent in FY '23?
FY '23, no major CapEx is spend.
Okay. So entire INR 2,500 crores, you are seeing that we can spend in FY '24? .
Yes, in FY '24, it is a major CapEx plan because preliminary cost of CapEx has been done in FY '23, so we'll be able to spend during that year.
Okay. So again, to take it forward. So is this the main reason because of which our dividend distribution is low compared to other PSUs? That is one. And when, sir, you talked about Bhavnagar 3.3 million tonnes, are we targeting that in FY '24 itself or should be in FY '25?
Yes, yes. Yes, then we give good dividend. Ashish, you know that. We've given record dividend last year.
Sir, actually, when we are talking about from the face value, it looks good, but when we are comparing with the yield, it looks very low, especially when we have INR 2,500 crore cash?
I believe the investor community should have faith in us and allow us to support us in this CapEx expenditure so that the company goes to newer levels. And the entire -- the way the investor community sees us that totally changes. That is what our aspiration is.
Yes. That's fair. So sir, just on Bhavnagar thing, we are doing 1.3 million, 1.4 million tonnes. So from 1.4 million to 3.3 million in a particular year, we have to do something really different than only we can do it in a year's time. Run rate, I don't know when we are going to achieve that kind of run rate, at least for a particular month. So how confident we are for 3.3 million in FY '24?
So I will give you two or three things, the way we are doing things differently there. One, instead of one mining contractor, there are two mining contractors who will be doing the job. So there are two packages. So two parties will hit the ground. Production should be better.
Number two, for the current projects, the major CapEx is going towards Bhavnagar. And three, we are -- we will also explore. Now this is a work in progress. We will explore newer ways of evacuation from Bhavnagar to South Gujarat. That is a work in progress, we will hopefully let you know because the object would not be just to produce, the project would be -- ensure that it is consumed.
Understood. So sir, just to get into more sense on Bhavnagar, is this just mining contractor issue or we have to acquire further land also in order to increase our mining limit over there?
There is no issue. Acquisition of land is conditional because if you have to say two packages, two contractors there, a large number of areas would have to be. There is no issue there. We had planned for expansion slightly later, but Tadkeshwar collapsed. So the thing has to be fast tracked. That's it.
We have a next question from the line of Jiten Parmar from Aurum Capital.
We move to the next question from the line of Pritesh Chheda from Lucky Investment Managers.
So there was a realization of INR 1,500, INR 1,600 that we were getting, and there was no price increase incurred for FY '23. So that realization continues or there is any changes in realization? And what is your call on realization for FY '24 when you would have your next round of price circular?
Okay. I would like to request General Manager, Marketing and Sales, Mr. Rajat Dash, to answer the first question on the current realization.
The current realization per metric tonne is around INR 4,200. And for next year's realization, that depends actually because we are operating in an environment where outcome -- our immediate competitor is imported coal from Indonesian origin. So field time actually, we are able to penetrate the market and sustain the price. And I think that, that will be a question to answer in future years to come.
Is there any change in this INR 4,200 since the last two quarters? Or it's a similar number?
By and large, it is similar because we are maintaining the prices since April. There is a minor correction during February, during the first part of February, but that's a very minor correction.
Okay. And on the volume side, now what kind of volumes would you do in FY '22, will you do 8 million or less than that?
We are targeting to match the production what was achieved during last year. So it will be close -- it will be beyond 8 million. We are targeting...
I think last year, we did...
8.5.
8.5. So you'll try and match that.
Changing that...
You have stopped to sell that extra stock. That's why you will be able to match it you would likely mine it?
No, actually, here, we don't have any stock actually because we produce and we used to sell. So in that case, the -- so there are capacities and we are changing to match the production to the tune of last year's production. That's our ambition.
And lastly, this INR 2,400 crore CapEx that we are calling out, i.e., where are we spending this INR 2,400 crores? So entire -- so I heard land and innovation of the premium regard come power plant. Is this -- yes, we see if you could give some...
This is broad numbers, INR 2,500 crores, INR 1,500 crores goes into land acquisition. Out of this, 40% goes into brownfield projects, 60% goes into greenfield projects. Beyond that, there is a significant CapEx of INR 600 crores in capital machinery. Out of that, 50% goes into the thermal power plant, rest goes into small beneficiation plants. Besides whatever is left is developing new colonies for assets, refurbishing old assets, refurbishing dead assets, dead cost centers, every money that is going to be spent has to get some return. So that is the ambition.
And any progress on the rare earth?
Pritesh, I'll have to repeat my same answer, which is a critical mineral, there is certain secrecy involved and give full details.
No. And lastly, when will the Forli start decelerating in volume and have we taken enough care that whenever [indiscernible] in volume, there is some other mine, which will pick up?
Pritesh, what mine? [indiscernible]. Okay. [indiscernible] is the mine, which is -- you can say it is on its death bed. We may see production for a year or we may see a closure earlier also. So we are not big there. But the intention is to squeeze the last bit of water out during the last drop of water out of the clot player.
And how much volumes come from there?
Marginal. A few left in it is very good that the ambition there is there is [indiscernible] project, which is adjacent to Rajpardi. So you would have seen the RFP, which has been floated for [indiscernible]. That is what we seek to close soon, and we expect groundbreaking in FY '24. That again is product, which is as good as Rajpardi and Rajpardi our best product. But limited at the moment.
So bet on [indiscernible], which is adjusted to that Rajpardi.
Groundbreaking mean start producing and selling or the starting to...
Groundbreaking means lot of mobilization, expanded and very minimal production.
So Bhavnagar is already in ground growth and all that is done?
That is a brownfield project.
We have a next question from the line of Jiten Parmar from Aurum Capital.
Congratulations on a very good set of numbers. My question is regarding the cash, INR 2,500 crores of cash, which we have talked about, end of last financial year, I think it was around INR 1,400 crores. And obviously, we have done well in the 9 months, so it is around INR 2,500 crores. Can you give a breakup of how the cash -- how that particular cash is deployed? And what is the yield on that?
Well, Jiten, our cash reserves are with our banker, which is the state government's banker also for this kind of reserve, which is GSF, which is a nonbanking finance company. The yield is pretty good. I would request our CFO, Mr. Kulshrestha, to shed light there. And...
We have deposited our cash surplus in GSF, where we are getting interest at the rate of 6.5%. So you can say our yield at 6.5% on cash control.
Okay. Now there was one particular entry about balance sheet boring authorities about INR 122 crores or something. What could that be? And is it interest bearing?
That is not interest bearing.
Okay. So balance with government authorities, I would like to know, I mean, what is that? And why we have kept that in?
My GM Accounts will explain.
Balance in the government authority is the royalty advance, which you have paid to the CG market because royalty, we have to pay in the advance that we show as a balance sheet government authorities.
We have a next question from the line of Rahul Jain from Systematics.
So I just want to get a more clearer picture. So we are doing this massive CapEx in Bhavnagar. So what is the road map on what we [indiscernible] probably ending up with 7 million to 8 million tonnes, is that not -- am I mistaken? And how do you see volumes shaping up over the next 2 years and 5 years? So first is that.
Secondly, on the coal prices, so this year was quite unusual. Obviously, we've seen a very large prices. So you may not have a similar kind of price increase prevailing -- that would probably if some correction happens. So how do we see our cash flow mismatch? So do we intend to continue with it even when we see a big scenario?
Well, Rahul, I'll answer the second question first. Well, price increases were needed because certain projects were bleeding, and we wanted to prevent plant marketing and at the same time, ensure better realization for the company. So price corrections were done with that intention. Now -- and while we were doing those price corrections, we were mindful that this -- the entire marketing and sales strategy would be dynamic.
And from taking cues from the market, we have -- we will soften the prices if there is softening in the imported coal price. At the same time, our booking amounts have improved since January. Since we have ensured better customer engagement. You would have -- kindly visit our website, we have launched a new initiative, whereby we grade our customers, and it is known as Customer Engagement Index. It is a public index where customers are engaged on their interaction with the company. and the better engaged customers are there, it is a dynamic score. And the ones who do better are given additional allocation. This one initiative has ensured 10% more bookings in the month of January.
So from cruise implements, like price rises in the previous quarters, we are moving towards finer implements and we are open to price corrections. But at the same time, sustaining sales and avoid any buildup of the inventory. So that would be our goal.
And sir, on the volume outlook, like for this year and 2 years, 3 years...
This year, you should look at above 8 million, say, 8.5 billion. And next year, we would have a target of touching 10 million. And a few years from now, the number should be much, much better.
So the expansion, the INR 2,500 crores at the capital allocation we're doing. So what kind of numbers are we going to see from that? Because in the past, where I'm coming from, a lot of our investments have been below par. For example, the power plant and many other [indiscernible]?
In the past our projects haven't really been to the mark. So I just want to be or in sense what kind of longevity and numbers are we seeing for this new expansion that we're doing?
Rahul, when we are spending money this time, besides the land acquisition that I believe is a more straightforward exercise. Besides that, whatever CapEx is going to be happening now is going to be more surefooted and would have a better governance system than in the past. As you would know, we have got permission for a INR 300 crore CapEx pass-through from Gujarat Energy Regulatory Commission. that is a big confidence booster for GMDC.
Along with that pass-through, our control of GNL has also agreed to rebook the PPA terms. So these are big victories, and they are all conditional to better governance and better deployment of capital. And you shall see that in the current year, in the coming financial years.
Right. Sir, just can you give a number into what kind of volume INR 2,500 corresponds to how much of additional [indiscernible] over 5 years down the line?
I didn't follow your question, Rahul?
No, I'm just trying to get a bridge to you are pending INR 2,500 crores. So how much additional lignite should we expect in 3 years or 5 years whenever the project is complete?
So the expansion is gradual. In 2 to 3 years from now, you should see us standing at 30 million to 15 million tonnes.
We have a next question from the line of Falguni Dutta from Jet Age Securities Private Limited.
I just had one question. Just wanted to confirm the volume -- sales volume, external sales volume for the quarter 2, 3, is it 1.65 million tonnes? And how much is the decline versus same time last year?
Rajat, could you answer that question, please.
Falguni, and yes, of course, there is a decline. This time, actually, we produced around 19.38 lakh metric tonne. That translates into 1.93 million metric tonnes. And during the corresponding period of last year, the production was 2.2 million metric tonnes. So of course, there is a decline. There is a decline to the 30%.
And sir, is this number of mine correct. The sale -- external sales 1.65 million tonnes for the quarter?
I do not follow you.
I mean sales, excluding the sales to our own power plant. I just wanted to clarify, that's how we would get our realization. If we need to exclude this from the sales volume, the sales to our own captive power plant and remove the -- correspondingly removed the sales value also to get the realization. That's how we would do it, right?
Yes, of course. Again, the supply to our own power plant and to the [indiscernible] power plant is to the tune of 3 lakh to 4 lakhs, so a minus 6 from 19.38.
But how much did you say 3 point...
3 to INR 4 lakhs.
3 to 4 lakhs, 0.3 million, okay? And sir, 1 more question that's on the power plant. When do we expect things to improve there? And what is the big hindrance there in terms of performance improvement?
No hindrance. All hindrances been removed. We just need one year to put things back in order. So please expect improvement from February '24 onwards.
We have a next question from the line of Nalin Shah from NVS Brokerage Private Limited.
At the outset, let me congratulate the management for a bumper kind of performance which you have put up, excellent performance. I have a few questions. First is that current year, looking to the 9 months figure and the last year performance, I feel that we are going to be somewhere close to INR 3,700 crores to INR 4,000 crores on top line. On the top of that, we are incurring the CapEx of another INR 2,400 crores, INR 2,500 crores over the next 12 to 18 months. So my question is that when do you see the company going to $1 billion kind of a top line in next whether 2, 3, 4, 5 years? That's my first question.
Okay. Nalin, this is -- it's a big question right. Any other questions. Any other questions?
Yes. Second question is, sir, that you are saying that you are declaring a very good dividend. But in terms of, I mean, shareholders reward policy, are we going to have some kind of existing distribution policy that, okay, whatever the profits we realize will distribute 20% or 25% or 30% of the profits for the shareholders and balance will be for whatever growth and expansion, et cetera?
Nalin, second question first. I'll answer both together. If we need to be a $1 billion company we need to plow back every piece of money at our hand, okay? At the same time, projects that we are flying back into have a phenomenally good IRR ratios, correct? So investors should feel rest assured, and we have faith in the company for the coming 2 to 3 financial years where the company would be in an expansion mode and new things would be opening up.
And you should see a lot of -- award of a lot of work and a lot of groundbreaking in the coming financial year.
Okay? Okay. But sir, can you give some idea about $1 billion top line kind of distinct position?
By God, we never knew we had such good friends like you have work so much is enough.
But you created the sale during your last about 2.5, 3 years' performance that it has done wonderfully well.
Nalin, please have faith in this company. The company should be 3 or 4 times itself, provided it goes on the same trajectory in the coming 5 to 6 years.
Okay. Okay. My next question is, sir, that what is anything other than Lignite, is going to be any other items of mining products, which are going to add a lot of value to our company like bauxite or any other things, which are there? Because in your annual report, I see a lot many items which are listed down. Maybe these are not very significant in terms of value, volume and value, but are we expecting something big to come up?
Our aspiration is to have at least half our revenues coming from beyond Lignite. This is easier said than done. I guess, it is a very difficult task to open a coal or Lignite mine and to run it. open and run a metal mine or a raw Lignite mine is even tougher. So we have big returns on our hand. And hopefully, in the coming 2 to 3 years, we expect to move on it. But we expect to move on it more surefootedly, better estimation of reserves, and that is the plan.
Okay. And my last question is, you already said something, but I just want to put it differently. On these rare earth elements, what we want to understand is, is -- this is the product or item, which is like in a normal mining operations is comes out or whether some kind of identification, some kind of R&D lab testing, et cetera, needs to be done to find out whether it is rare items or not? And what kind of potential because we have heard in the past that rare earth is, I mean, something very, very unimaginable kind of advantages and in terms of consumption or pricing, whether it is in domestic market or export market, if you can just give us some idea about this entire segment?
We'll not give you some idea. We'll give you a detailed idea, but not now.
Once again, my heartiest congratulations on your wonderful performance.
We have a next question from the line of Keshav Garg from Counter Cyclical PMS.
Sir, just wanted to understand that it was mentioned sometime back that we have some amount of bauxite and fluorospar that we can pursue the bauxite that we can just auction after some benefaction, et cetera. So when can the basically revenues from the disposal of bauxite can we expect, can they be expected in next financial year?
Our team, our Metals Technical division led by Mr. Makadia is on the job. He is here at the moment. And we are going to come in a pilot project on beneficiation, Mr. Makadia?
The disposal of the stoke has already begun. We plan to commence our pilot by end of this February. And you will see a lot of improvement in case of bauxite very soon, maybe probably in this financial year as a proof-of-concept and next financials, you will see the boom in the bauxite division.
Sir, and if you could just quantify, give us some idea that in next financial year, sir, can it be like 1 million tonnes of bauxite or can it be any rough idea?
Probably, we will be targeting around 0.88 million tonnes of the bauxite displays during next financial year.
Sir, that is very encouraging to know. And sir, any movement on the fluoropar site?
Certainly, we have started our refurbishing our plant. And hopefully, we want to make a dry run by 15th of August 2023 and commenced the production by Q4.
Great, sir. That's really great. And sir, lastly, just wanted, sir, in your judgment for the next financial year, sir, what kind of Lignite volumes you think that we can achieve in FY '24?
So the Lignite volume expected in next financial year is 10 million tonnes.
We have our next question from the line of Vinayak Anawalika, a Retail Investor.
This a follow-up question, which has been already asked. No, I'm not going to ask you about the time lines. But in the last con call, you had mentioned about two initiatives. One was the Project SHIKHAR wherein you had engaged Mosten Consulting Group for opportunities beyond Lignite and rare earth elements?
And the second one was, of course, [indiscernible], which was to prepare a strategic road map for [indiscernible] opportunity. I just wanted to know if these reports have been submitted to you, what is the status of these initiatives? I'm not talking in terms of actual mining or actual finding what is the content. But have these consulting groups submitted the report? And are you doing as per their time line? That's my first question.
Any other question, please?
My second question would be, you said that out of 6.28 million tonnes of IMS deposits, 10% approximately would be the metal content. And just a while ago, you also said that you are expecting 1.5% growth in metal content as per the revised estimate. So should we consider it at 11.5% metal content in IHMS deposits at [indiscernible]?
Okay. Let me answer your first question first. As far as BCG work is concerned, Project SHIKHAR is under implementation. The consulting firm has done a commendable job of assessing the opportunities, big tickets, small ticket, where gains have to be made and it is a work in progress. They have critically analyzed all our business streams. And the result has been good. It has been able to direct our efforts in the direction where significant gain is there.
And as far as the question on [indiscernible], I would request Mr. Makadia again to respond to that.
I think there was some confusion in our understanding or answering the question I'm trying to answer the questions. The 1.5% increase you were talking about was in a multi-metal project margin. The initial resources was expected to get a metal content of 10.5%. But after the desktop study is being carried out and in the world of completion within 3, 4 months, we see an improvement in the metal content in the ore, and that is 1.5% is at multi-metal project.
Okay. Any other question?
Yes. I have another question. You had talked about INR 300 crores CapEx for thermal power plant. So sorry if I missed this. Is this a greenfield project or a brownfield expansion or refurbishment of the existing [indiscernible] power plant?
The power plant is a brownfield project. It's already in the presence. The INR 300 crores CapEx is a pass-through approved by [indiscernible] and will be deployed maybe from the quarter 2 or quarter 3 and you see the results from February 2024.
Okay. And one last question from my side, sir. Are you doing anything to streamline your operations, like if you have so much of reserves, even considering extended monsoon extended what you can say, strikes or agitations can you not have a sustained growth year-on-year basis or quarter-on-quarter basis as far as production is concerned and specifically talking of Lignite? Like this year, you are actually doing less -- almost less than what you did last year, will be can you put in some things in place improvements in place where in potential year-on-year growth.
Two things. One, natural disasters or disasters beyond control of the company. These are unfortunate incidents, and we cannot plan. Number two, natural phenomenon like excessive heavy rain. These are things which we again cannot control. Number three, as far as production of Lignite is concerned, we produce and sell it directly. We do not stock. Stocking leads to additional costs and diminishing the returns from the outset.
While I have said all these three things, I would also like to say we have -- we are going to embark on a process of digitizing our mines to ensure greater efficiency of mining operations and which would result in a national saving of resources, where we seek to -- through digitization of operations and use of Internet devices, IoT devices, we would seek to control our variable costs, which would be significant. So in the coming year, you should see action on that, and we'll be sharing details of that.
We have a next question from the line of Govind Lal Gilada, an individual investor.
I have got two suggestions and data point questions. So on the satisfaction or the length like all that. I refer you to give timely announcement to exchange. So we should not know from other sources. This information was circulated in not WhatsApp group. I don't know very [indiscernible] this information. Second suggestion is best release should have some uniformity in giving data points of production, all that. So this time, you have given 9 months production. Sometimes we give quarterly production at all. So this time we have not given. So we can keep track.
Now coming to my data point question, sir. Tadkeshwar I want to know, sir, December landslide how much production you last in December, otherwise, what is the regular quarterly capacity of Tadkeshwar? That is one thing.
Then last question is on this 8.5 million we are guiding. So 9 months, we have done 5.73. So in 1 quarter, 2.77 million. And is it possible, sir, because Tadkeshwar you told that all this quarter will not be available, it will take one to two quarters. So Tadkeshwar are totally going out there. So how this matter is 2.77 million tonne doing in?
Last question is on realization, sir, again, your last question. This coal imported prices have gone down something like 25%, 30%. And how just minor correction in [indiscernible] are holding prices? That's all from my side.
Suggestions are noted. As far as the volume is concerned, we are chasing 8.5%. Hopefully, we should get there. So these are ambitions. Yes, corrections upwards and downwards. When we spoke of dynamic prices, when the prices soften, we will make tactical changes. The idea is to upload and ensure continuous flow of resource and continuity of operations.
As far as Tadkeshwar is concerned, I would request Mr. Swagat Ray to share what they were producing.
In Tadkeshwar, because of this land sliding, unfortunately in the month of December and prior to that, in the last quarter also, it occurred previously. So for the two continuous land sliding production has gone down by around 35% that would have been better if we would be able to continue the production in the practitioner and our overall market could have been achieved.
Is it clear to you?
Okay. So this data point of 9 months of 5.73 production that we have given. First quarter was 2.33. Third quarter neutrally, 1.93, is it right?
Yes.
So second quarter on, it means 1.47 second...
Yes. Yes.
We have our next question from the line of Somnath Paul, an individual investor.
A couple of questions. One is that given the great deal that you have with you who are driving the company to next growth. So I see key management personnel as a major risk given the growth trajectory we are planning. So how do you go with these thoughts? And I mean, has there been some thought on how should we proceed?
And secondly, sir, I wanted to know what is with the Lignite, the industry who we serve, vis-a-vis the propane and the natural gas consumers in the sense of there's a trust for green energy usage and a lot of them are converting to protein-based. So in terms of cost per calorific value availability. So some broader light on that? And do you see that as a threat in terms of compressing?
For the key management personnel, I can say this with a lot of pride that the second run of leadership just below the general manager level is very good. And as we open new projects, we have very good people who can be moved into leadership positions. So it is a sense of pride for me as Managing Director and for the top management that very good people have been going in the second run, and when the company expands, they will take over for more critical responsibilities.
As far as the propane is concerned. At the moment, that is not an issue we factor in while making our marketing and sales decisions. But thank you for the suggestions. We will take both of it, and we will be mindful of it.
Sir, could you throw some broader light on the general industries we saw compared to some clusters, which we suppose [indiscernible] and other clusters, which use propane and natural gas based inputs and some broader sense of kind of industries consumption was vis-a-vis there?
Okay. I would request Mr. Rajat Dash to give a flavor on major consumption area, the kind of unrestricted areas and everything.
Basically, we used to serve 3 to 4 clusters. One is Surat, we are basically having textile industries. And they account for around 41% of our total sales volume. Apart from that, the reason makes cluster at more, and they used to produce there having a ceramic industry. And another cluster is close to Ahmedabad. It is a big kind of industry and predominantly takes time and some other industries are also, they are close to Ahmedabad cluster. So in terms of the use of solid fuel or fuel in these kind of clusters and in particular kind of industries. So as far as our knowledge is concerned, in the extent that they use to the huge lignite and imported coal as a mix to cater their trends.
And at Ahmedabad trend is the same. But at [indiscernible], actually, there are two processes because they used to have two kind of process to produce this ceramic tiles or ceramic products. So in the initial process, they used to have their -- they used to -- their huge Lignite as well as imported coal [indiscernible]. And in the downstream process, they use gas. So this is the kind of fuel that has been used in different clusters and different type of industries.
Okay. So the risk I thought of making the team aware was that there could be a regulatory notice and probably the demand might be affected in terms of shipment some part of consumption to cleaner pools.
Because of those regulatory restrictions, they use to use those gases in the downstream processes in ceramic clusters.
Does that answer your question, Mr. Paul?
I'm done.
We have our next question from the line of Alpesh Sheth from Mphasis.
Firstly, thanks for the excellent results posted this quarter. To be frank, we are seeing now this happening very much in a consistent manner, which as an investor, I was not able to see or it was not happening in the past. So again congratulations on the results. Sir, my questions are a little bit related to the earlier participant. So we are taking many new and bold steps towards the growth of the company, which I totally understood and like we are positive, but they are everything is skewed towards fossil fuel generation correct. Now situation is very dynamic and agile. Nobody knows what's in the future, so any due diligence are we parallelly doing if there are ban on some of deals or there are some regulatory like moving towards green? So in that case. Yes.
Okay. Anything else, Alpesh?
Yes. The second thing was on -- I think we have some partnership with [indiscernible] that is more towards like a good solutions or some EV-related solutions or moving towards green. So I just wanted to know something more about it because I saw like we are a partner to that?
Okay. Yes, we are extremely concerned and mindful of the fact that we are a leader in fossil fuel production. And at the same time, we are mindful of the finite life of this fuel. And that is the reason why you would have seen we have engaged the best advice to take us forward on developing our assets, which are beyond Lignite. But at the same time, while we are developing these assets and it could take some time.
We would be capitalizing on the assets that lie with us ensure that they give full gain to the company and fuel our needs of capital which would be needed to take us towards the next stage in the growth of the company, that is beyond fossil fuels. As far as [indiscernible] is concerned, it's an autonomous body. Our relationship is broadly limited to our contribution in setting it up. It is run by an autonomous Board I think we are not the right people to comment there. But since I'm personally on the Board, I see very good work being done there.
So on continuation of the same thing, can we also derive some value from them in the future for the EV side or from towards green?
At the same time, we have our own institute, which goes by the name of iCEM, Institution Center for Excellence in Mining. We want to develop it so that it is besides the training institute it emerges as a solution provider to many of our needs. Hopefully, in the coming two to three quarters, we should see movement there. At the moment, we're looking for a good CEO. If you have a good CV, please ask him to contact us that. We'll definitely look at it.
Sure. The only worry for the fossil fuels, sir, was something happened somewhere in 2018, '19 in Morbi and we had like coupled a huge production somewhere in the past.
Yes, we are mindful. We will not go mindlessly expanding. We will produce only that much what we can sell. We will expand the capacity to produce only what is required.
As there are no more questions, I now hand over the call to management for closing comments. Over to you, sir.
I would like to thank all the participants for their insightful questions. And as always, it is a pleasure to know that there are people who know us so much better than us. And this -- I mean, in a way of complement, which helps us towards newer levels of awareness in improving the performance of the company.
Yes, this year till now has been very good. And point to be noted is we have -- our PBT figures have crossed the best ever results for an entire year in the history of the company. So this is a moment of great pride for the team working at the corporate office and each projects, which are currently running and towards those projects which are going to be set up. And finally, those projects which were left for the dead, they are going to also be revived. So compliments to all of them, and thanks to all of you.
Thank you. Thank you all for being part of the conference call. If you need any further information or clarification, please email Gaurav, that is gaurav.g@conceptpr.com. Ladies and gentlemen, this concludes your conference for today. Thank you for using Chorus Call conferencing services. You may now disconnect your lines. Thank you, and have a pleasant day.