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Jindal Steel And Power Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Jindal Steel & Power Limited. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Amit Dixit, thank you, and over to you, sir.
Thanks, Jakob. Good evening, everyone, and thanks for joining the call today. At the outset, I would like to thank the management for giving us an opportunity to host the call. From the management, we have today Mr. Bimlendra Jha, Managing Director; Mr. Ramkumar Ramaswamy, Chief Financial Officer; and Mr. Vishal Chandak, Head IR. Without much ado, I would invite Vishal to take this ahead. Over to you, Vishal.
Thank you, Amit. Good evening, everyone, and thank you very much for joining us on the Q1 FY '24 earnings call briefing for Jindal Steel & Power. So we will not take much of a time and request our CFO, Mr. Ramaswamy, to start the presentation with a quick overview, and then we will follow up with the Q&A. Over to you, sir.
Thank you, Vishal. So prior to getting into the operational and financial performance, I would like to start with a few recent highlights that we have just announced. We've announced the commissioning of the pellet plant in Angul. We've announced a receipt of mining leases for Gare Palma IV/6 and Utkal C, and we've also received the great places to work certification. So all of these would be part of our current quarter announcement, and we are very, very happy to share these with all of the investors.
We can share further details about this during the Q&A. Let me now give you an overview of the operational and financial performance. Our sales volume during the quarter was 1.84 million tonnes, which is 9% lower Q-o-Q, primarily driven by weaker demand owing to seasonality factors. The share of exports during the quarter was 10%, broadly in line with the last quarter. The production for the quarter was 2.04 million tonnes which is a 1% growth Q-o-Q.
Both the plants in Angul and Raigarh produced in line with the last quarter. Let me now talk about the realizations. Our domestic sales realization remained soft during the quarter. However, with an improved export realization and mix, our overall realizations increased by 2% quarter-on-quarter. We are continuing to experience softness in realizations in the range of around 5% and we have to see how it plays out during the quarter.
Our SMS costs increased by 2%, primarily driven by higher coking coal prices. However, this was offset by higher capital iron ore volumes from our mines and the overall costs were lower by around 2%. As a practice, we do not provide any forward-looking guidance on numbers for the subsequent quarters. Our adjusted consolidated EBITDA for the quarter is INR 2,704 crores. This is primarily driven by lower costs, offset by lower volumes. Our overseas EBITDA for the quarter was INR 49 crores. On a consolidated basis, our PAT has improved Q-o-Q from INR 466 crores to INR 1,692 crores, primarily driven by EBITDA improvement in our India operations. You would, of course, note that there were one-off items in the last quarter.
I would like to give an overview on the cash flows and debt. We had an opening cash balance of around INR 4,700 crores. During the quarter, we had operational cash flow of approximately around INR 2,250 crores. This is after a working capital buildup of around INR 400 crores during the quarter. During the quarter, we had a total CapEx of around INR 1,900 crores, primarily in Angul. From a financial perspective, we repaid INR 2,300 crores of our loans. And we also took fresh loans as part of our refinancing program to the extent of around INR 1,074 crores.
Our closing cash balances at a very healthy level of around INR 3,800 crores. Our consolidated gross debt is INR 11,484 crores and our consolidated net debt is INR 6,812 crores with a net debt to EBITDA of 0.75. You would also have noted that the pledge [Indiscernible] on Promoter Holding with the start of the debt covenants, they have now been introduced as part of our overall refinancing program. With this, I would like to hand over to Vishal for Q&A.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]
Operator, just a request. We have to limit the call till 6 pm today, as the management has some other engagements.
Sure. Requesting all the members to limit your question to one per participant. The first question comes from Indrajit from CLSA.
Congrats on a good set of numbers. My question is on the capacity expansion schedule that you have given in figure 14. So there is, again, a couple of quarters actually more than that delays in most of the capacities 2 to 3 quarters delay further. And moreover, we are seeing a change in configuration, I don't see the electric arc furnace anymore and the new blast -- BOF, BOF-3. So the question is twofold. One, what is driving the delay? And what is the confidence that the new timeline should be adhered to? And second, if there is any change in configuration versus what we had earlier expected?
Yes, sorry. Just one moment. So instead of EAF you are saying BOF-3 over there, that is what you're looking at, right?
That is one question and the delays. These are the 2 questions.
So the delays, there were some delays in the environmental clearances and other things. So there is a bit of a delay that took place as a result of that. We are trying to pull back as far as possible. But given the rains and all that, we are not able to make that much of progress as we would have anticipated. So these are anyway very aggressive timeline. And I think we have given a slightly more relaxed time lines over there, although we are still working to a tighter timeline internally.
Sure. That is helpful. And on the BOF-3?
Yes. So there is a -- this BOF, we are anyway planning along with the blast furnace 2, that expansion. And we will -- we are still looking at this DRI-2 that is there. So it is -- one of the BOFs will come faster. And the other one is on a slower time frame. So if there is any change on that one, we will let you know.
And EAF also, we are pursuing?
It is an option. It's an option between BOF-3 and EAF because of DRI-2 that option exist.
All right. But that doesn't change any of our CapEx guidance, right?
No. The CapEx guidance doesn't change. It is just a question of some thought process that is still there on BOF versus EAF.
The next question is from the line of Amit Murarka from Axis Capital.
Just wanted to understand the realization performance better. So clearly, the realization has been a bit out of line with how market prices have behaved. So could you just quantify how much of a benefit was there from this higher-priced exports, as you mentioned in your opening comments?
Yes, I can talk about it. So as I said, overall, India realization continues to remain soft, yes? So I think that -- that is something that we are also seeing. But given the overall mix and the improved exports. So in exports, we are roughly seeing around 8% to 10% delta overall domestic prices. And having taken in totality, we saw a slightly improved realization. But the domestic India realization was weak.
So let me give you the numbers to put it in context. If we consider quarter 1 of last year to quarter 4 of last year. So it had just the India realization has declined by 11% from 68,390 to 60,600. From that level, it has been relatively stable, but marginally down by about 1%, and it is now at 59,961. So that was the kind of number there.
And even in this current quarter, we have seen further decline in rebar prices. So like is it fair to assume that a drop in realization would be sharper than the realization? I mean, the drop in your realization will be sharper than the fall in rebar because that higher priced export contract benefit will not be available in the second quarter?
As I have indicated, we are seeing softness in our realizations, approximately around 5% on a quarter-on-quarter basis. But again, this is too early to kind of comment on how it will play out. We are constantly looking at how the mix can be improved. And let's see how it plays out during the quarter.
And just also the coal blocks. Could you help us understand how will the ramp-up be on the 7.4 MT volume?
So there are still many [Indiscernible] between the [indiscernible] because we have got the mining registered. But there is -- that is not the only legal hurdle. There are several other permissions and every day is a struggle to get to those permissions. But we do hope that within this quarter, we will be able to start our mining.
And any planned ramp-up schedule?
As soon as we hit the coal, we'll be ramping it up based on our ability to get into the mine first.
The next question is from the line of Bhavin Chheda from Enam Holdings.
Yes. Congratulations on a great set of numbers. The [Indiscernible] cost has declined on a quarter-on-quarter basis. So can you give some highlights of how much iron ore and cooking coal and thermal coal was down? In consumption cost?
See, I don't think we will be able to share the exact details at this point of time. But as I said, our SMS costs increased by approximately 2%, primarily driven by higher cooking coal prices. However, during this quarter, we had a higher active iron ore from our Tensa mine. And therefore, the overall costs were lower by around 2%. Last quarter, we did not -- we had kind of stop them because we had accelerated the mining from our capital [Indiscernible] in the last financial year. And the last quarter, it was a much lower volume. So this time, we had a much higher volume. At an overall level, our costs were lower by around 2%.
And sir thermal coal would have also declined, right? It is a declining trend?
That is right. But yes, the thermal coal prices, of course, the auction prices are all reflecting a decline. We will start seeing the manufacturing in the Q2.
And sir, as you gave guidance of NSR, which could be down 4%, 5% for next quarter. How will the costs are trending in this quarter?
Let me clarify. That was not the guidance. I've given you an approximate view of how things stand as of now, we do not give a forward looking guidance on either NSR or costs.
Sir, if you can guide on how the cost are also trending?
So as I said, we do not provide forward-looking guidance.
A reminder to all participants, please limit your questions to one per participant. The next question is from the line of Kirtan Mehta from BOB Capital Markets.
The question is basically, we were planning to undertake the CapEx review and inform the market about the sort of the revision in the CapEx plan. Has that been completed? Any changes a part of the same? Or we are still expecting the CapEx plan to also evolve at a later date and also in the changes, apart from the changes that you have mentioned, we are also not seeing the [TSCR] component presence? So is that also exist as an option further?
I think that is a typo. So let's say that the rest of the -- our configuration remains the same.
Fine and on the review of the CapEx? Has it been over or it's still ongoing?
See, there is no revision in CapEx as much to announce. There are obviously constant evaluation of the opportunities around us that keeps happening. So till the time that we have got any bankable visibility report or anything else, we can't make any announcements.
Last time, what I understand was we had made an announcement about the review being undertaken and plan was basically either to come to the market before the -- as soon as it completes. So the exercise is still on? That is what you are confirming at this point of time?
Yes. We have said that we will share the capital allocation framework, but given several ideas that are being considered we have still not concluded that, and we'll share that the moment it is available for share.
Fine, sir. Anything that you can share on the ideas under consideration at this time?
I'll tell you the reason for rethink and everything else is that the world is moving towards more and more green steel, and we are looking at options.
[Operator Instructions] The next question is from the line of Sumangal Nevatia from Kotak Securities.
My first question is just continuing on the previous question on this capital allocation framework. Our annual report also mentioned about our plans for coal rolling mill, et cetera, along with hot strip mill. So if you could just detail, I mean, what sort of downstream opportunities are we evaluating? And what could be the mix of finished steel and potential capacity over the next 2, 3 years?
So we are evaluating these downstream options, which include cold rolling, galvanizing, color coating et cetera. So these are natural -- once you put up a 5.5 million tonnes hot strip mill, which is currently our focus to get it off ground. Then the next obvious thing are downstream facility. That's what we are working on.
The next question is from the line of Vikash Singh. Please go ahead from Philip Capital.
Sir, I just wanted to understand while we have pushed our CapEx by a quarter or 2, our total spending on a yearly basis remain constant. So have you added something additional or this is just some typo?
No, we are actually -- should be marginally less if at all. But our numbers are more or less similar.
Despite the CapEx being -- some of the larger CapEx has been pushed back by half a year?
See, the only thing is that it is a commissioning time -- so we have taken a bit of a cushion over there to give an indication. As I said, that there have been delays that were there in obtaining environmental clearance and all the statutory clearances. So to that extent, there has been a quarter push in most cases.
The next question is from the line of Pallav Agarwal from Antique Stockbroking.
Sir, with the commission of the pellet plant, what sort of -- will we see more external sales or stop procuring from outside? And what could be the potential cost benefit of it?
We are not -- we have not been procuring any pellets from outside anyway. But yes, we are wanting to ramp up this capacity. And thereafter as the new blast furnace comes in, then we will start consuming all the pellets ourselves.
Okay. So right now, I mean until that last one comes, I mean these are available for external sales?
Yes, there will be some amount that may be available depending upon the economics because -- as you are aware that even though we had the capacity between iron ore prices and pellet prices, if there is a positive margin only then you sell.
Sure, sir. And also on the slurry pipeline, would it -- I mean, would it not have made sense to commission that along with the pellet plant?
Yes. Nobody wants it more desperately than us. But you have to deal with the ground reality of the country.
The next question is from the line of Rajesh Majumdar from B&K Securities.
Yes, -- sorry to harp on the raw material thing again, but the numbers are not adding up to what you're saying. If you add the raw material position on a Q-o-Q basis, it is down nearly 10% and not 2%. And this is excluding the change in [Indiscernible], raw materials plus the purchase of stock in trade on a Q-o-Q basis. So that is a very, very sharp reduction, which is -- does not match exactly with the numbers that you are seeing. Now is this a sustainable number? Or how should we look at this number? If you look at the Q-o-Q position, it is down more than 10%, actually.
Maybe if very specific details on numbers, I would request Vishal to clarify to you separately. But as I indicated to you, I think these are the costs that we are seeing. Our SMS costs have increased by 2%. And because of higher capital iron ore prices, the overall costs are lower by 2%. But any more specific details, Vishal will be able to share that with you subsequently.
Right. And for this quarter, the cost is going to go up a little bit. Is it?
No. As I said, we don't provide forward-looking guidance. But given that the same question is being asked several times, I can only say that cooking coal prices have come down. So we expect to see some of the benefit during the current quarter. Cooking coal and iron ore prices have also gone down.
The next question is from the line of Pavas Pethia from Aditya Birla Mutual Fund.
Comparing with your last quarter presentation, have we changed the plans for finished steel capacity. There's no [indiscernible] in this presentation? .
I already mentioned about typo. There is no change in the plan.
Okay. Time line wise, it will be still in FY '25.
We will get back to this. As we said, there are several of these currently on the drawing board. We are looking at what would be the best configuration for us? If there are any changes to this, we will keep you updated on that.
The next question is from the line of Sumangal Nevatia with from Kotak Securities.
I think my line got dropped. So one is we've discontinued given the international business, EBITDA of various mining businesses, is it possible to get that?
Sorry, could you repeat that question, Sumangal?
Sir, the EBITDA of different international business -- mining businesses, which is in South Africa, Australia, Mozambique. The press release does not mention it. In the past, we've always shared those details in the press release.
Yes. I mean, given the low materiality to the overall numbers, we thought it did not make sense. But if it is helpful, Vishal will be able to share that with you separately Sumangal.
Got it. And just one last thing on this cost. Is it possible to share what would be our, say, cooking coal and thermal coal cost? And how is it as on, say, today, not asking forward guidance, but how is 1Q versus what's the current trend in the market?
So you already must be watching Platts. It is around 350 level at least, 340 -- sorry 247 to 250 level, I'm sorry. So that is the current level right now.
But sir, what would be our cost in 1Q, I mean, in our numbers?
See, we don't disclose the specific numbers Sumangal. So you will have to bear with us on this. We don't disclose those specific numbers, and we don't give forward guidance. So my request to the analyst is please not to ask for that because we just want to make sure that this is consistently being followed.
Got that. I understand. But okay. Just one last thing on thermal coal. Is it possible to share what is our mix in terms of how much are we using linkage versus E-auction or even imports?
We hardly use any imports, but we are typically more domestic.
And the linkage in E-auction breakup, sir?
I don't think those details are available at this point of time right now, and I don't think we have also shared this in the past. So we would be unable to share that.
The next question is from the line of Satyadeep Jain from AMBIT Capital.
Just a clarification question before I asked the call [indiscernible] If there's a typo, the finished steel capacity after the expansion still stays at [50 tonnes per se]?
Yes, the finished steel capacity, we are still expecting around the similar level.
Okay. Just one question on the coal mine. What is the [Indiscernible] CapEx figure for that in addition to the [INR 44,000] crores CapEx, would there be additional outlays for mine development CapEx and given the [negative price] in Russell Vale mining, ash, and quality did not meet the earlier expectation. Given what we've seen with the [indiscernible] the Utkal mines, are you confident that the grade whatever it is, [G10, P12] or ash is meeting the expectations so far you have from the mining, based on whatever you've seen so far?
So I have not understood the question or the purpose of it.
The Russell Vale mining initially [Indiscernible] there was expectation on certain costs. And over time, there were some negative supply on the ash content and the quality, which is one of the reasons I'm guessing there is a write down also. When you're looking at the new mining blocks, they're going to commission soon, the quality so far based on what you're seeing, are you confident that the quality G10-G12 and the ash content would remain -- meet your expectations?
You are talking about our Australian resources or Indian resources.
Linking the Australia, one had [negative price] in terms of quality, the Indian coal block that you're seeing, obviously, management has a time to evaluate these blocks in past volumes. Is there confidence that there would be no [negative price] on these blocks?
I think maybe let me first answer and then [Indiscernible]. Firstly, it is not correct to compare the Australian experience with the India experience. In Australia we had several other issues including our ability to invest and get the right returns. So they are not comparable. Of course, we are confident about the quality of these mines. That is the reason why we have bid and we've got these mines on auction. So I think we are comparable. We are quite confident that these mines will serve the purpose for which they have been acquired. It is not correct to compare the Australia experience with the local experience.
I'll also tell you -- that is why I was not able to understand what is your question and what are you getting at? As far as Australia is concerned, Australia has had a lot of different kind of legal environment and issues around the restrictions on mining, et cetera. A completely different volume compared to India. India is our home territory, familiar territory. The mine is next door, it is a fully explored mine. There are no surprises. We know exactly what is -- where the coal is lying. We know exactly where we will enter, our shovels are ready, just we need the permission where there is nothing that we have to worry about in India.
Just one on the CapEx, how much would you be the mining CapEx?
We will share that with you separately. We don't have-- we have not kept that separately.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Amit Dixit for closing comments.
Yes, thanks, everyone, for attending the call, and thanks to the management for giving us opportunity to host the call. I will pass it over to Vishal, if you would like to have any closing comments?
I would request our MD Sir to have closing remarks for quarter.
Yes. So first of all, I am once again happy to say that we have not only being able to commission the pellet plant and also have obtained almost the heavy lifting has been done in the -- in case of coal mines. Rest of the plans are on track. We have taken a bit of a cushion there on the -- that's why we have given a bit of guidance where the commissioning date given our past experience. We have taken a bit of a liberty over there to say that there is maybe a quarter delay in most cases.
But by and large, we are on track, as we had planned. There are -- there is, of course, some amount of rethinking and our ability to do something new within the constraints of what we have put as our plans so that our carbon footprint goes down, we are able to give a better product mix to the external markets apart from internal markets. You are aware that [Indiscernible] et cetera, are coming. And therefore, we are being more cautious about some of the things that we are doing, some of the reevaluation is taking place only from that point of view.
So on [Indiscernible] we will come back to you because we have sent you all these numbers, and there may be some errors somewhere, which we will rectify and send it to you.
So that's all that we have from our side. We have also been certified as great place to work. And we are actually quite confident on our team to deliver on all the results as the opportunities are there all around us.
Thank you. On behalf of Jindal Steel & Power Limited that concludes this conference. Thank you for joining us, and you may now disconnect your lines.