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Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of Jindal Steel & Power Limited hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vishal Chandak from Motilal Oswal Financial Services. Thank you. And over to you, sir.
Thank you very much, Rupisha. Good evening, ladies and gentlemen, and welcome to the First Quarter FY '23 Earnings Call of Jindal Steel & Power. I would like to thank the management of JSPL for giving us the opportunity to host the call for this quarter.
We have with us the senior management from JSP comprising Mr. V R Sharma, the Managing Director; Mr. Ramkumar Ramaswamy, the CFO; and Mr. Nishant Baranwal, heading the IR. So I would hand over the floor to Mr. Nishant for his remarks. Over to you, sir.
Thanks, Vishal. Thanks, Rupisha. Good day, everyone. We are pleased to welcome you all to this conference call to discuss our first quarter FY '23 financial results.
First of all, I'd like to apologize for the delay. Since our results, there was a delay in publishing our results. We thought it's better that we give a few minutes before starting the call so that everybody can go through it. This time to be able to take more question and answers and give ample time for it, we decided to dive straight into the financial commentary, which will be given by our CFO, Mr. Ramkumar Ramaswamy. And thereafter, we'll take the Q&A and the entire management, including our MD, Mr. V. R. Sharma, and our CFO, Mr. Ramkumar Ramaswamy, are there for that.
So over to you, our CFO.
Thank you, Nishant. Good day, and good evening, everyone. I would like to take you through the details of the financial performance of JSP for the quarter ended 30th June.
Let's start with the production volumes. Our production during the quarter was 1.99 million tonnes. This was lower over the previous quarter by around 6 percentage. The primary drivers for this was, one, at our Raigarh plant, there was a maintenance shutdown in our placement. And number two, at our Angul plant, we had a lower DRI production due to thermal coal availability.
I'll talk about sales. Our sales volume during the quarter was 1.74 million tonnes, that's steel sales. This was lower by around 16% over the previous quarter. As you know, this quarter, we had challenging market conditions. We started off with a soft April. And then during May, we had the imposition of the export duty. Both our domestic and export volumes have been impacted during the quarter. Our domestic volumes were lower by around 12 percentage and our export volumes were lower by around 28 percentage during the quarter.
In terms of realization, our realizations were higher by around 12% over the previous quarter, primarily driven by healthy realizations in April and May. After the imposition of the export duty, we've seen a significant softening of both our domestic and export realizations in June, and we see that continuing in July as well. We see a softening to the extent of 15%, 16% in terms of realizations in June and July.
In terms of our costs, our costs have gone up by around 10 percentage, primarily driven by a coking coal cost increase of around 33 percentage and a thermal coal cost increase of around 27 percentage. As many of you would know, we are seeing a softening of prices currently for all of these. And we expect the benefit of this to flow through in the subsequent quarters.
I will now quickly move on to our gross total income. Our gross total income during the quarter was INR 14,561 crores. This was 7 -- this declined by around 7% over the previous quarter for the reasons that I just detailed, in terms of a volume decline, offset by higher realizations. The GST that we collected during the quarter was around INR 1,692 crores and our net income was INR 12,869 crores.
Let me quickly move on to EBITDA or adjusted EBITDA. Our adjusted EBITDA during the quarter was INR 2,865 crores. This is an 8% increase over the last quarter. Again, the primary drivers for this, as I mentioned, was driven by healthy realization and offset by lower volumes and increased costs. So EBITDA was INR 2,865 crores -- adjusted EBITDA.
In terms of profit after tax, again, our adjusted profit after tax is INR 1,626 crores. This is a 28% growth over the last quarter, again, for reasons that I detailed earlier, so INR 1,626 crores is our adjusted PAT.
In terms of just a quick overview of our consolidated numbers and our performance of subsidiaries, I think we had a very, very good performance during this quarter of the subsidiary. Our Mozambique, South African and Australian businesses had positive EBITDA after a very long time, maybe the first time. Our Mozambique subsidiary had a EBITDA of around INR 334 crores. Our South African subsidiary had a EBITDA of INR 84 crores. And our Australian subsidiary turned positive at INR 24 crore EBITDA.
Let me also quickly give our overview in terms of our debt position. Our stand-alone net debt is INR 7,413 crores, which is at 0.54x EBITDA, again, very, very healthy trends. This is close to INR 1,000 crore reduction over last quarter, primarily driven by long-term group loan repayments and lower short-term debt as well.
A quick update on our credit rating. Our credit rating stands unchanged at AA-. And with strong financial performances, we expect that there would be improvements in credit rating.
This is a quick summary of our financial and operational performance.
With this, I hand it over to Nishant.
Thank you, sir. Now we'll dive straight into the Q&A. As always, we request all of you to kindly ask more strategic questions. We and IR team, including myself, Rajesh and Gaurav, are always there to give you the data points. With that, I probably hand over to the operator.
[Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss.
Congratulations for the good performance. I have 2 questions. The first one is essentially on your maintenance plans for this quarter. So what kind of maintenance plans you have for this quarter, both at Angul and Raigarh? And particularly, thermal coal availability and prices, both are high. So can we see some kind of intermittent shutdown at your [indiscernible] plant? So that is the first question I have.
Yes. Thank you very much. I'm V. R. Sharma, Managing Director. So first of all, we are not taking any long maintenance shutdown. So rather we are going for the intermittent shutdowns whenever it is required. So of course, there is shortage of thermal coal, but we are now importing thermal coal. And hopefully, in the next one week or 10 days' time, the situation will be normalized. So our intention is not to reduce the production. We have a target of 8.2 million, 8.3 million tonne in this particular financial year. And our aim is same. We'll be producing more than 8.2 million tonne in the current financial year. No longer shutdowns. But in case there is some breakdown, which is unavoidable, like it has happened about 2 months back, so that is an issue. Sometimes, it happens. But otherwise, there is no planned shutdown until next year 31st March. Hope I answer you.
Yes, sir. That was a very elaborate answer. The second one is essentially on the coking coal price and thermal coal price movement over next quarter Q-o-Q. If you can give any dollar, that would be great.
yes. Okay. And it's very difficult to predict today's market because the world is melting down. We do not know where the world will settle. So the first and foremost issue is the Russian and Ukrainian war. At the moment, the Russian and Ukrainian, that comes to an end or it recedes, then only the world will stabilize, otherwise, not, because you must be seeing nowadays most of the European country, they already started rationing the usage of gas, and they want to store the gas for the winter season. Because Russia has total gas from 100% supplies to 40% supplies. So 60% is reduction in the overall supplies of the gas. And this is the reason there's overall chaos and shortage of energy worldwide. Let us see. Mr. Joe Biden is visiting Saudi Arabia. I think there is reasonable conclusion. I think we compound more oil or more gas. This may give a respite to the world. But today, the whole world, entire world is uncertain.
As far as the coking coal prices and the steam coal prices are, today, surprisingly, the coking coal prices are lower than the steam coal. So international market landed in Europe recently, because European power plants, the thermal power plants, they are reignited, restarted, refired. So people are using more coal than using gas. Gas-based power plants are almost shut. And wherever there is no thermal power plant, they're only [indiscernible] gas based power plant. So the demand for the thermal coal will continue as it is.
They want any respite till Russia and Ukraine did settle their scores. And if they settle their business, I mean, in terms of ending the war, then only situation will be comfortable. But we feel in the quarter which is now going on, quarter 2, the things should remain somewhere about approximately and not the -- I cannot vouch for it, but approximately, until $230 to $240 level of coking coal, and a similar about $200 to $210 on C&F basis, the steam coal into India. But yes, of course, the steam coal prices in Europe will be more than $300 and also in many other parts of the country. So hopefully, it's clear.
Yes, sir. The price level is, of course, clear. But I was looking for the movement from JSP's perspective on your cost. What kind of cost movement you expect once...
Reducing now. Because the earlier, the cost was -- the coking coal was at a level of about $500, $550. Now that's come down to $230. So definitely, the input cost has reduced. And similarly, the input cost for the iron ore has also reduced. Therefore, yesterday, the NMDC has reduced INR 100,000. International, also the iron ore prices have come down to $99, $98 per tonne yesterday. And I think there is a good sign in terms of input cost reduction.
But yes, of course, there is always some time lag in between the new material comes in the pipeline. So now at the moment, I guess the old material in the pipeline, that will last about 5 to 6 weeks. But finally, the results of the low input cost will definitely come within this quarter, maybe second half of this quarter. After say 15th of August, you can see that the new prices of the input cost and the new material that will be applicable.
The next question is from the line of Sumangal Nevatia from Kotak Securities.
My first question, sir, is on the net debt movement. So this quarter, our debt has reduced by around INR 1,100-odd crores against our cash profit of around INR 2,000-odd crores and also the JPL equity infusion of around INR 3,000-odd crores. Is it possible to walk us through the net debt movement during this quarter?
Yes. Thank you for that question. So as I said, the net debt for the quarter was INR 7,413 crores. We had a structured long-term repayment of around INR 400 crores. And the rest of it was more a reduction in our short-term debt. We continue to hold cash in our balance sheet of roughly around INR 3,000-plus crores. And we will see on an ongoing basis, evaluating options to repay, options to prepay and options to hold cash.
Sir, I'm looking for some specific details as to what was the working capital buildup during the quarter and CapEx? And also, what was the tax outgo with respect to the JPL divestment?
Okay. On the working capital buildup, I think we did have a working capital buildup during the quarter, primarily because of the export duty being enforced. And therefore, there was this happening in terms of customer demand. So we did have a working capital buildup maybe I don't have the exact numbers, but it will be safe to say that it will be was around INR 2,500 crores to INR 3,000 crores, yes. I think that was the kind of working capital buildup that we had. Sorry. What was your second question?
The CapEx and the tax outgo on the JPL divestment.
This is Nishant here. So some of the -- as far as the tax outflow in the JPL divestment is concerned, that's mostly an yearly item because this is a divestment. We've received INR 3,050 crores of cash pursuant to the divestment. The entire tax would be on the yearly basis. So let's see how it pans out, because as you all know, yes, there will be certain capital gains to it, which can be offset by some capital losses or any other business also. So that is something that we get to know at the end -- by the end of the year.
Yes.
Hope that answered your question?
All right. I have a second question. So with respect to shy moments, we've seen a very sharp correction in prices and also exports are now getting attractive, 15% duty. Is it possible to guide how are we doing the [ QSR ] for 2Q in the coming months?
So I think, as we said, the market is quite volatile and challenging, yes. Much as we would like to provide some guidance, I think we would like to avoid providing any forward-looking guidance on this. Whatever is the market prices that are going to be there, we will try and make sure that we are able to sell our products at those prices or at slightly higher prices to reflect the premium that we have. But currently, we don't want to provide any forward-looking guidance on our realization.
The next question is from the line of Rahul Jain from Systematix.
Sir, on the raw material side. So how well are we integrated right now on our coking coal requirements? And how is it likely in the next, say, 1 or 2 years?
Yes. Thank you. So raw material side, we are very much comfortable, and we are not foreseeing any problems. We have an adequate quantity in pipeline as far as the coking coal is concerned or the PCI coal is concerned. And also the -- and other point is iron ore is not in share supply. As you know, that Government of India has banned -- not banned, I would say has imposed very heavy export duty on iron ore and pellets. So the -- there is a flexibility now and the iron ore and pellets are available in abundance. So there's no shortage of minerals in the country as of today. .
So we are thankful to the government of India for imposing such kind of duties. So that the raw materials are made available. Therefore, yesterday, Mr. Amit Shah, he also gave the interview to Economic Times and other financial magazines. But our aim is that raw materials should be preserved, conserved, reserved for the local industry. So I think that is a very good statement. And we are not finding any difficulty.
Coking coal is also in Netherlands abundance available. And our own mines that is in South Africa, Australia and Mozambique, they are working very well. At the moment, the coking coal dependence on outside, I would say, is about 40% or 42%. But with 8% we are on coal, there's no shortage of material. Okay?
Right, right. And sir, on iron ore, what is the number right now? Is the mine that you acquired, has it ramped up and things like that?
The mine what we have now -- what we won in the bid last time, that is Kasia mine, it is working. And we are producing about 500,000 tonnes per month. And we are also buying under long-term agreement, long-term lifting agreement, LTS, that is Odisha Mining Corporation OMC, and also from some of the credit and merchant miners. So it's a good time. The raw material cost has come down. It's a good situation today I would say.
Right. And then sir, on the export duty, you have any comments? How long does it last? And what is the motivation behind adding this kind of duty?
You see, we are with the government. We don't have any problem in this particular issue. Reason being because each government takes decision looking to very macro and microeconomics. So I think the government must have thought price to -- before imposing this particular duty. And we -- there is no problem. We are -- today, we are seeing that the selling price has come down. But we also found in due course of time, the input costs are also receding and that has given us a relief.
As far as the demand is concerned, yes, there is a -- and during monsoon season because construction activities, they go down and the demand comes down. And so is the demand in the world market. So I think internationally, the -- one has to stabilize first. We -- in India, we have been -- we are self-reliant in steelmaking and whatever quantity our country needs that we can supply them.
Initially, we were thinking that the prices are coming down. But finally, when we observed that the selling prices, reserves input cost, the ratio is maintained accordingly, and the input cost has also come down. So we are also thankful to NMDC for declaring INR 1,000 price reduction therefore yesterday. So it's all good sign. Things are good. And whenever government feels that the exports to be opened, we'll welcome that move also.
And your export number will remain in the high 20s or you will bring down further? How is it looking forward?
Sorry?
Your export share of total sales will remain high, in the high 20s? Or are you going to bring it down depending on market?
No. We will maintain this year. We'll maintain our share more than 20% of exports out of the total production.
The next question is from the line of Pallav Agarwal from Antique Stockbroking.
Sir, I had a question on the recent reports of price hikes being taken in rebar. So can you just confirm whether these are true. And what is the actual quantum of the price rise that were taken?
You see, we -- I think the primary steel mills have not increased the prices, primary steel mills are playing in the band of INR 1,000, INR 1,500 here and there. But yes, price hike, we have seen in the secondary steel market, reason being this is what I observed. There are 2 reasons. One is the scrap prices, all of a sudden, in 15, 20 days' time, moved from $380 to end up to $460, $470 in India. So I think that was an impact that time.
The other is -- many of the smoldering plants, they were closed or they were not functioning properly because of shortage of coal. So that was the major reason. But I think major mills, primary mills in the country, their price band has been in the range of INR 1,500 to INR 2,000 maximum here and there. But yes, you're right. Secondary steel, the induction furnace is -- people, their base if you see, that has gone up by INR 7,000 to INR 8,000 per tonne as per the media reports. We do not know the actual effect. But this also we heard in -- from the newspapers, the INR 8,000 price hike was taken by them. Maybe because the delta was too bid and now they are recovered it. Okay?
Sure, sir. Sir, just another question on your -- we do exports on higher grid, plates, et cetera. So I'm assuming some of this goes to Europe as well. So when are these quotas going to open again or in?
The quota is already open. There is no quota existing now. Europe is starving for material. They want any quantity, any numbers also supply then. So -- but the international prices are also under pressure with 15% export duty. There are certain customers for the value added grade, they still prefer to buy from India. And that those material are also not impacting the Indian economy or the Indian customer base because these are the specialty materials. And as far as the common [ MEMS ] requirement in the countries, I think rebars, wire rods for the MSMEs and also the corrugated -- galvanized, corrugated and sheets particular protections for the rotary. I think these 3 items are not being exported by anybody as far as my knowledge is concerned. But the specialty products, people are exporting. And some of the customers are paying for that. So that is an impact.
The next question is from the line of Rajesh Majumdar from B&K Securities.
So I had a question on the rebar prices as well. Sir, Chinese rebar prices have come to a new low, a 1.5-year low last -- this week. And our domestic rebar prices are still at a significant premium over the Chinese prices. So given the fact that coking coal prices at volume now and the demand is going to be seasonally weak, do we expect the rebar prices to come up from these levels in which case also our spreads will still be reasonably good?
You see, India was never importing rebars in the country. But yes, we are not insulated from the international scenario. Whenever the rebar prices go down, that means immediately, the iron ore and coking coal prices also go down. I mean that is a sort of indirect index. The other is whenever the rebar prices or the commodity prices, they go down, that means the scrap prices will also go down. So there is a commodity factor of scrap, iron ore, coal, coking coal. All these commodities put together, they decide the prices. But the rebar prices in China -- the reduction in the rebar price in China is not because of anything else, but because with poor demand there.
So you might have seen financially, they are also struggling today and many of the rural areas, banks, they are in trouble. So the overall construction activities in China are a little down or I would say the sentiments are down is what -- as of my knowledge. But in India, the things have changed because here, the people and the customers are quite bullish.
And we are seeing in last 10, 15 days' time, there is a good demand coming from the market because we are -- the people, they were not buying and they exhausted their stocks. Now the traders that come back in the market, they want to buy more material. So -- but one thing is for sure, if the input costs, they do -- they go down, then definitely, the prices will be corrected accordingly. Okay?
Right. So basically, the spread will be [indiscernible]?
Yes. First of all, the entire world is one. Our first aim is if somebody used an authority today or somebody says that what is the one thing you want to do so the first one thing what I will do, it is in my hands, I will ask Russia and Ukraine to stop this war. Anybody [indiscernible], if we can do something in concluding the deals in between these 2 countries, I think, whether the stock market, bond market, rate of inflation, in next 2 to 3 months' time, everything will be settled. It is more a geopolitical issues today in the world, the entire Europe or the western world, including America, they are supporting Ukraine. They are giving them all sorts of help in terms of arms and ammunition.
And Russia is bent upon in asking them to surrender. So this is a big question. Who is going to win? But I believe in Mr. Modi, he says that in war, nobody wins. So I think in this war, in between the 2 countries, neither they will win and nor the entire world will win. The whole world has lost trillions of dollars, trillions of dollars. So let's pray to God that good sense prevails into these 2 people, Mr. Putin and Zelensky, and to stop this war. The moment the war stopped, the entire world will come up like a flower once again in next 3 to 4 months' time.
And sir, my last question is that, how long will it take to the current inventory situation in the system to normalize [indiscernible].
Sorry to interrupt. But Mr. Majumdar, there is a lot of disturbance from your background.
Yes. Am I audible now?
Yes.
Yes, Mr. Majumdar. What was your question? Sorry.
My last question, sir, how long do think it will take for the inventory in the system to get cleared, assuming that the export tax will remain and the current demand rate? Because you see a halving of the exports in June. So if we assume that the export taxes are there for some more time, how much -- how many bulks can it take for the inventory in the system to normalize?
You see the inventory -- we do not manufacture anything to keep the inventory. Stock and sale is not our business. And we don't produce anything other than the rebars in anticipation. So all of our products are tailor made. And whenever we get the order, we produce, otherwise we don't get, we don't produce. We are not in the commodity business. We are not in that business. Our business is if we get orders, we produce. We don't get orders, then we'll not produce. But fortunately, our order book is booked for next 45 days without any problem. And every day, we are booking orders and we are getting good orders. So thanks to domestic grade consuming industry, and there is, in fact, there's a shortage of grades within the country. So we don't need to score places today in a shortage. .
Some of the major steel mills, they have gone to shut down or breakdown. So the -- I would say, JSPL stands a good chance to cater that market. There are no issues. We will maintain our volume around 2 million tonne per quarter, 2.1 million tonne per quarter, and reaching to a level about 8, 8.2 million, maybe 8.4 million combined by the end of the year. We will maintain it, and we will sell also. There's no problem.
INR 14,500 crores of sales turn out in the first quarter, we'll maintain the numbers so that last year, we did about INR 56,000 crores of sales turnover. And this year also, we'll be touching more than INR 55,000 crores. So there are no issues. So we made our plan accordingly. We have entered and moved into more and more value-added grade steel where we get higher margins and where the competition is very low. So our team, research and development team, our production team, they are already on that job. So I'm not foreseeing any problem.
The next question is from the line of Indrajit Agarwal from CLSA.
2 questions. First, given that we are in volatile times, so is there any change in our CapEx intensity or project time lines or we stick to our CapEx plan? And with that win, what has been the CapEx in first quarter? And what could we end with such for the year as a whole?
Yes. Very good question. First of all, I'll tell you, there is no volatile time. Volatile time means when you produce something which cannot be sold. The volatility in terms of going prices going down, one sidedly, which is not volatile because prices are not going up. Like for example, the coking coal prices, which you see, it has gone up to $670, came down to $450, sorry, $550, came down to $380 and then again went up to $520. That was volatility. But today, what we are seeing, you see the graph and the index also for the last 3 weeks, continuously, the coking coal prices are falling. And continuously, the iron ore prices are falling.
So I would say it's not a volatile situation. It is a down sliding. And that is good for a reduction in the input costs, and that is good for the industry as a whole and good for the customers also. So -- but industry is maintaining the margins, so we are. So we are also maintaining our margins. I think there should not be any pressure on the margins and there should not be any price -- and not, sorry, price, the quantity reductions. So this is one.
We'll be maintaining a good cash flow in times to come also. And as you have seen the results, we have done a wonderful job during this -- these days also. And with a kind of PAT of INR 1,626 crores that we have generated, it itself speaks that the company is doing exceedingly well. And the gross margins are somewhere about 19%. So that is also -- that is EBITDA margin. So that is also a good number as far as the company is concerned. I think I'm very much hopeful that we'll be in position to maintain these numbers throughout the year.
The next question was CapEx. No. There is no shortage of funds first of all and there's no u-turn taking in -- and completing the projects. So we will complete the projects, CapEx will be as it is, as we decided in the beginning of the year that will continue. So all the permissions, statutory requirements, approvals, consent to operate, consent to construction, everything is in place. And our people, our team is working, day in -- day, night.
And we are going to spend about INR 18,000-plus crore in the next 2 years, 2.5 years' time. And the aim is that we will not be spending more than INR 6,000 crore or INR 7,000 crores per year. Whatever we earn, we will invest. So our -- Mr. Naveen Jindal, our Chairman and our entire Board has taken the decision. But of course, we need the banking support always for the opening of [indiscernible] and getting the limits. But we will be spending only that amount, which we can afford to accrue from our existing business, and that is -- the accruals are going to be somewhere about net PAT will be about INR 7,000 crore plus. And last year also, it was across close to INR 8,000 crore, and last to last year, INR 7,000 crore.
So if you see the continuous the last 3 years, we are giving the projection, INR 7,000 crores to INR 8,000 crores, which itself shows a very, very solid performance of the company. And we won't be under debt burden once again, and we don't want to be. So there's no u-turn in the CapEx. We will continue the CapEx as it is, there's no problem. And the situation, today's situation, what we are seeing, that will, I would say, that will be utilized in the best of the best manner in the interest of our company. Thank you.
My second question actually is a follow-up to the same question. So there has been news flows that you are looking to raise about INR 15,000 crore in by way of debt from several banks. So given the cash flows we are generating, what could be the use of these funds? Are we looking at any large inorganic opportunities that may arise?
I'm not sure. So the point here is this INR 15,000 crores that is the approval given by the lenders. So -- but as I told you, that we will be working only on our invest policy, but of course, we need the banking system, banking channel, banking score, because you have to open the letter of credit for the imported goods and equipments and also for the domestic one. That is very much there. So we are not facing any difficulty there in terms of getting the money whenever it is needed. But today, we don't need it. Whenever we will need it, this will be taken.
Maybe just to add. I think the INR 15,000 crores that we are referring to, which may be the term sheet that we would have signed for our expansion project. I think that's what you are referring to. But as -- and the sir mentioned, our objective would be to maintain a very prudent leverage of between 1 to 1.5 in the cycle. This is, of course, an approval that we've got for our expansion.
The next question is from the line of Ashish Kejriwal from Centrum.
My simple question is on CapEx. We have won already 3 coal blocks. So is it possible to share when can we expect some production from there?
Could you repeat the question? Actually, your voice was too loud. May I request you to please speak a little slowly and a little away from the mic.
My question was, in terms of CapEx, which we are doing for operational of our coal blocks, so when can we expect production from coal blocks coming in? And if possible, if you can guide that in FY '23, how much captive thermal coal we can generate from our coal blocks which we want to be?
Yes. I'll tell you, we are planning that before 31st of March 2023, we'll be in a position to open at least one mine. So we have 4 mines over and 4 mines in the open.
So any volume number which you can give, sir?
The clearances are in place. Most of the rehabilitation work is already done. And I think maybe some INR 50 crores to INR 100 crores is the spend for first opening of the mine and some of the equipment, machinery and all these things. So I think by March, we should open one mine. And not a big amount, maybe INR 100 crore, not more than that.
So which mine we can open by March?
This will be [ Lorisha ] Utkal.
Okay, okay. And secondly, sir, this -- the Forex gain, which we have reported in this quarter, INR 446 crore, this is on account of what? And in which line item it is mentioned?
Yes. Mr. Ramkumar will answer.
This would be on account of the overseas loan that we have provided to our subsidiary. I think the loan value is close to $1.6 billion. And this FX gain, this is, of course, unrealized. You have to understand that is on account of that.
And this is reported in our top line or raw materials?
Sorry?
In P&L, in which line items these are included here?
This would be under the other expenses line. But we would have called out for this separately so that we have recognized this unrealized gain separately. So we've called it out separately. But you will find it under the other expenses side.
The next question is from the line of Vikash Singh from PhillipCapital.
Yes. Sir, I just wanted to understand, have we taken any inventory write-downs in this quarter, because after May, the export duty implementation would have bring down the overall value of the inventories significantly?
No. We have not kept ending at hold. We have paid about INR 113 crores of duty -- export duty. And we clear all the inventory of claims and whatever the other products were. And after that, we are working on a very, very structured business that is making goods, only those goods where we get the value addition, where we can recover a major part of the export duty. This is one.
Secondly, our first purpose is to meet out the domestic demand. And whatever is not sellable in India that much of quantity for export. But there are no inventories now.
No. Basically, this question that I said from the stock adjustment, which was roughly about INR 1,700 crore. And if I just look at the difference between production and sales, it was just 2 million tonne, [ 2.525 ] million tonne. So effectively, that is coming somewhere around 69,000. So I was wondering that why this figure is so high on per tonne basis?
Maybe because of the known dispatch or known availability of rates, but not because of any commercial business.
Maybe some of the details, you can take it offline with our Investor Relations team. And we are not sure on the question, maybe you can just take it offline, please.
Understood, sir. And sir, sir, just secondly, in terms of our now export strategy, so can you just tell us that now how we see the mix of export going forward? And at present, our export versus domestic realization gap is how much?
I will answer you very frankly. We are now aiming only for the much more value-added products exports. And these products are especially tailor-made products where the customer doesn't mind paying $100, $150 extra and we recover most of our duty part. And that is what's going on now. And as I told earlier, we'll be maintaining our exports 20% plus because whatever we can sell in India at a price available in India, that is okay. And whatever we cannot sell in India, where we feel that there are no customers for those products. We will export it. We will not reduce our production.
And the price difference, sir, right now?
You see there are no difference because the price is because it is not apple-to-apple. Like we are now entering into a very specialized field in Europe, especially for the specialty blooms, specialty plates, specialty beams, those markets or those products are not sold any. So these are Europe-specific products like we are in [indiscernible] for Hong Kong and Southeast Asia. And also for Mexico, these products are not using it. So what we have done is very difficult to explain technically each and everything. But yes, offline, we can. So we are now entering into niche markets where the products are sold in terms of thousands of tonnes, not in less of tonnes.
And right from Australia to Southeast Asia, Hong Kong, Vietnam, Taiwan, Philippines and on the west side, it'd be Mexico, Costa Rica, Guatemala, Suriname, Colombia, these are the markets where we have niche markets and also through United States and Canada. So Canada, for example, we are one of the largest supplier, the specialty beams for the high-rise buildings. So those items are not sellable in India. So we are develop on those side areas where the country-specific requirements are met out. And we have found a great market as a vacuum because all of these products are being spiked by either Ukraine or by Russia.
So since they are under war. So we have the opportunity and we are exporting and we are not compromising on the domestic demand. So whatever our customers they want to buy. So there's our first choice. And wherever we feel that we have capacities available, which we assume contemplates about 20% total production will go to exports. And that will be practically evaluated for us. We cannot compare those projects with the Indian products, because in India, these products are not sellable, okay?
The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher Limited.
Sir, one on the part of, like, say, the gap between consolidated EBITDA and standalone EBITDA. Actually, it's around INR 300-odd crore. And this question is specifically for the CFO. And why such a big gap like INR 300-odd crore? Because it has not been there for the last 8, 12 quarters. So why such a big gap? Why consolidated EBITDA is lesser by INR 300-odd crore compared to the standalone EBITDA?
No. This is clearly your intercompany transaction eliminations in compliance with the accounting standards.
Okay. And just harping on the -- that number. So like we would have done roughly around INR 2,000-odd crore of cash profit in this quarter. And on top of that, we had roughly around INR 3,000-odd crore from the sale of JPL. So cumulative, both around INR 5,000-odd crore. And even if you do a CapEx of INR 1,000 crore which you have not yet quantified. So like the debt is down hardly around 1,000 -- around INR 1,100-odd crore. So where is the gap on that part? And like on the side of -- like working capital, anyways even in the last quarter, we had a working capital.
I think this question came up earlier as well. And as I said, our working capital during the quarter has gone up by around INR 2,500 crores, INR 3,000 crores. And our current objective is to make sure that we are able to realize that working capital during this quarter.
And how much was the CapEx in this quarter, sir?
That of course was nothing significant, around INR 700-odd crores.
The next question is from the line of Kirtan Mehta from BOB Capital.
I have a couple of follow-up question. First follow-up question is on the project finance term sheet for INR 15,000 crore that you have signed on the balance sheet of I think the Orissa subsidiary. I wanted to -- I do understand that you don't have a plan to leverage it. But I wanted to understand the covenants of it. What kind of capital expenditure is allowed to be financed under that loan?
And also, what kind of capital expenditures cannot be financed under that loan because it's a project finance loan? And related to that, the another question was, why it has been taken on the books of the subsidiary where the cost of loan would be higher and you would have taken it on the parent? If you can clarify on these 2 aspects, it would help.
Sure. Let me try and answer it. So first is on -- first, to I think this INR 15,000 crores is the term sheet is for the project that we have in the expansion project that we are doing in Jindal Steel Orissa. Even that this expansion project is happening in Jindal Steel Orissa, the term loan and the term sheets have been taken for that entity, yes. I think that would be a simple straightforward answer to your question.
So basic, is that apart from the current CapEx which has been around for around INR 18,000 crores, only that can be financed? And if you are planning to add any of the secondary expansions to that project, can that also be financed under the same loan? Because we don't really plan to draw it down either this year or the next. The way I understand it, you plan to actually do it from your own pocket, or whatever the cash flow is afforded by the company.
So in that scenario, are you aiming to sort of use this project loan for the further capital expenditure that you would be doing after completion of this project, sir?
No, no, no. This is for a specific project with the details have been submitted to the bankers, and it has been given for this specific project. We cannot use it for any other purpose. As mentioned, our objective is to fund as much of the project through internal accruals and maintain a very healthy gearing. Yes. So we cannot use it for any other purposes.
Right. Can you also clarify on the reasons for taking it on a subsidiary balance sheet rather than a parent balance sheet because the cost of loan would be higher on the subsidiary balance sheet?
The project is happening in the subsidiary, isn't it? The loan has been taken in the subsidiary for that purpose.
Second question was about, again, a bit going back to the export mix that our MD be clarified. I wanted to understand what was the export mix in the FY '22? We believe we had exported around 2 million tonne of product. Could you give us a breakdown of the category of products that was exported in FY '22? And how would this category change in FY '23 as per your current plan?
I think I already answered this. We will be doing about more than 20% of the total produce, total exports. But I cannot give a breakup that what will be -- how much quantity will be beams, channels, angles, or especially the rounds of the allied steel rounds or the plates. So that is very difficult to tell today, but...
Historical breakup at least for FY '22, where you've already completed that deal.
I can share with you because of -- and I will not remember, but I can share with you. I mean, Nishant will share.
Sure, sir.
One more question, if I can slip in, about the coal project that you are developing. Could you also clarify on the model of development? Are you involving the MDO? Or are you doing it on your own balance sheet? And does it also involve the complete CapEx on setting up the mines and all the related equipment? Or it's only sort of the payment would go primarily to the MDO operator?
Doing coal mining by ourselves. We have the entire team available. As you know, we have been maintaining our coal mines for so many years in Raigarh. And now also the core mining by our sister company JPL is done by themselves. So we have the expertise available, and we'll do it ourselves.
Then in that case, your CapEx of INR 18,000 crore would go up by another INR 1,800 crore to INR 2,000 crore for additional CapEx on the coal mine because initial INR 18,000 crore plan did not include the CapEx on coal mine.
That I think you have to take it differently. First of all, INR 18,000 crores is for the extension, the next extension that we are taking that includes glass furnace, includes rolling mill or strip mill, cold rolling mill and many more in areas. So the coal requirement, today, we are buying coal. So if you see buying coal versus your own coal, so we'll be saving at least 60% to 70% of the input costs or the expenses. So when we say those expenses, 60% to 70%, that is the money which is going to be plowed back to the mining. So that is from the existing operations.
So the next expansion what we are seeing, there will be hardly any use of coal in the next expansions. So -- but the company, which is now running, whether it is Raigarh or it is Angul, there we are buying coal from the market. And we are buying coal in -- for what crores of these. And the difference will be when your own mines, the difference would be about 60% to 70% of the cost save.
So there will be no CapEx impact or no financial impact because whatever we are saving and because today, we are passing it on to add coal to India, to the importers or the foreign companies. So that money will go to development of mines in stages. So I hope I answered it.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Vishal Chandak for closing comments.
Thanks, Rupisha. Thank you, everyone, for joining for this conference call. And I would once again thank the management for this opportunity. So I would hand over the floor to Nishant for closing remarks.
We'd like to thank both Motilal Oswal, Vishal as well as the operator, it was -- and all of you for joining the call. Thanks a lot for your support, as always. Have a great day.
Thank you very much. I'll soon be back. And let us pray to god that all these international geopolitical issues should be resolved as fast as possible to avoid the meltdown of the economy worldwide. So let us hope for a good future tomorrow. Thank you.
Thank you, everyone. Thank you.
Thank you. On behalf of Motilal Oswal Financial Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.