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Jindal Steel And Power Ltd
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Ladies and gentlemen, good day, and welcome to Jindal Steel & Power Limited Q2 FY '22 Earnings Conference Call hosted by Prabhudas Lilladher Private Limited. [Operator Instructions]Please note that this conference is being recorded.I now hand the conference over to Mr. Kamlesh Bagmar from Prabhudas Lilladher Private Limited. Thank you, and over to you, sir.
Yes. Thank you, Kedar. Good evening, everyone, and thanks for login in for Jindal Steel & Power 2Q FY '22 Earnings Call. Firstly, I want to wish you all a very happy Diwali and prosperous New Year ahead. And without much ado, I hand over the call to Nishant Baranwal, Head Investor Relations, to introduce the management and take the call forward. Over to you, Nishant.
Thank you, Kamlesh, and Prabhudas Lilladher. I would like to wish everybody also from the company side, a very happy Diwali and a prospection New Year. Taking the call forward, I would like to also welcome you all to discuss our 2Q FY '22 financial results. Today on the call with us, we have with us our Managing Director, Mr. V. R. Sharma; and our CFO, Mr. Hemant Kumar. Like last time, I had to give enough time for question and answers, we would like to directly dive into questions and answers just like last time. So operator?
[Operator Instructions] The first question is from the line of Ashish Kejriwal from Centrum Broking.
I have 2 questions. One is, we understand that coking coal cost is on a rise. So -- and we are having our [indiscernible] coking coal mine, which started production somewhere in October. So is it possible for you to give us any sense how our coking coal cost could be in third quarter versus second quarter? That's my question.
Yes. Thank you, Ashish. So we are -- we have 3 mines outside. One is in Mozambique. The other -- the coking coal mine. The other is the Anthracite mines in South Africa. And we have 2 more mines in Australia. Out of 2 mines, we have one mine that has already commenced the production. So the first consignment from this mine is about 50,000 tonnes likely to reach in the end of November or early December. We will be producing about 2 million, 2.5 million tonnes per year to begin with, and then slowly, we will ramp it up.Now as far as the question of the coking coal prices are. You see coking coal prices today are hovering around $380 to $410 per barrel, FOB Australia, depending upon the different kind of coal availability as per the grade and size. So now the -- for the calculation purpose, we take the same price, or the index price. So no matter at what price we are getting the material or no matter at what price we'll be dispatching or exporting material from all these 3 different mines in different countries to India. But for our calculation purpose, for the cost purpose, we'll be taking the index price, international index price. Now if you ask -- if your question is regarding the cost of manufacturing there, yes, it is about $90 FOB in Australia. Hope I answered you.
Got it. So for $90 is on the coal which is directly visible in the blast furnace?
No, coal does not go to blast furnace. Coal first goes to the coke oven. And then from coke oven, we make it coke. And then coke goes to blast furnace. So the $90 cost, as I told you, that is in Australia. After that, there is a freight, then there's washing charges. We wash it and then finally, it goes to the blend of coal in coke oven. And then from coke oven, we produce coke. And then coke goes to blast furnace.
Fair enough, sir. And sir, in terms of steel prices...
Hemant, can you take this?
Your question is what is the impact. Impact is not more than $50 because we are adequately covered till January 2022 and impact is not more than $50 per tonne of steel.
You are talking about $50 per tonne quarter-on-quarter increase in terms of coking coal because of all the arrangements which we are doing?
Yes.
Okay. That's great, sir. Sir, second question is on steel prices. We have seen long product prices increasing since October. So is it possible to just let us know how much price increase we have taken in steel? And because now export prices are somewhat cheaper than domestic price, is there any change in the strategy for export volumes moving ahead?
Yes. So at the moment, the export prices are either 5% or 7% higher than the domestic prices or equaling some of the cases. So we are maintaining our export strategy as it is. So as we have been growing from 30% to 40% of the total export from the total produce, so we'll maintain that 30%, 35%. And till the time it is at par and the demand and supply is met out.Secondly, the prices, yes, you're right, prices have gone up in the last 3 months' time. Basically, the input costs have gone up. And till the time the coking coal starts softening, these prices are going to remain stable. The moment the coking coal prices start softening, then whatever the actual impact comes then the correction will take place accordingly.
So sir, is it possible to quantify how much increase we have taken for industry as taken in October?
I do not know industry, but I can tell you in our case, we have increased INR 2,000 in the flat products and INR 1,500 in the long products. And this week, we are taking a revision. Maybe we'll be increasing another INR 2,000 in flat products and around INR 1,000 in the long products.
The next question is from the line of Vishal Chandak from DAM Capital.
Congratulations for the good set of numbers, sir. Sir, my question was with respect to the Kasia mines. You've mentioned in the press release that the mines could be operational somewhere in the third quarter itself. So what kind of cost impact will this have on the overall costs for Q3 and going forward?
Yes. So regarding Kasia mines, yes, we won this mine in the open auction as you all know. And these are very good mines, having a good quality of the material, iron ore. And this is a running mine. So there is not much of an impact, except paying some of the bank guarantees to government of Odisha and day-to-day operations. So hopefully, we will be starting in this quarter itself, that is, before December we'll be in operation.
Sir, if you could explain us how the cost structure will change because of utilizing, I don't know from Kasia mines and what could be the outlook for this year and next year from these mines?
See, Kasia mines can give 5 million tonne a year. We have another mine that is 3 million tonnes per year, that is Tensa mine. So put together, our captive supply will be 8 million tonnes or maybe 8.5 million tonnes. And in times to come, we can increase Kasia mines to even up to 10 million tonnes per year. But in the meantime, we have the long-term agreement with OMC and also with NMDC. So we'd like to utilize that long-term agreement benefit also. And this long-term agreement with OMC and NMDC, so this will continue and we'll be blending all of the 4 different iron ore and reutilizing it. So I would say that at least 40% is the self-reliance now what we have. And 60%, we still will continue buying from OMC and NMDC.
Sure. Sir, my second question was with respect to your deleveraging. We are already at INR 11,200 crores now. So from here, should we still expect any further deleveraging in the current year given that coal costs are rising and the CapEx is also now kicking in? How should we look at the deleveraging from the current release?
I think we will hold our guidance which we have given. It will continue to be that by financial year 2023, as we have given a guidance to the market that we will become a net debt free. And whatever guidance we have given to the market in the last 3 months, I think we are doing exactly the same. And we are confident that by financial year '23, we will be becoming a net debt free in the steel sector.
The next question is from the line of Sumangal Nevatia from Kotak Securities.
Just continuing on the previous question on the net debt, so previously, in FY '22, you had guided for around INR 8,000 crores of net debt by the end of the year. But we've already reached somewhere around INR 7,000 crores and I believe INR 3,000 crores would come in from the equity of JPL. So would you like to revise your net debt guidance for FY '22, given that second half is also looking strong for us?
I think, as you rightly mentioned, outlook for steel is promising. And we stick by our market guidance that by financial year 2023, we will become a net debt free.
Understood. Understood. Sir, second question is on the pledges. Any guidance as to when the promoter family is looking to reduce pledges because given our balance sheet -- improving balance sheet situation, any thoughts on that?
As we have been talking on pledges as well, and we brought from a peak of 1,150 to 450 or so and accordingly, the pledges will come down. Otherwise, the few shares being kept in the safe custody of our lenders, I hope that, that will also get released in the current financial year also as the company's performance is on a quarterly basis or a sequential basis is improving.
Mr. Nevatia, does that answer your question?
Yes. Just one small clarification. With respect -- sorry, I joined the call late. So with respect to the CTO approved -- we're receiving the CTO at Angul for extra 1 million tonne, would you -- in the second half, can we have extra volumes? And I mean, can we go up to 9 million tonnes next year?
You see, consent to operate for additional 1 million tonne is basically that gives us a flexibility that if you want to increase the production from blast furnace or from electric arc furnace, we can. So there are so many other factors. It's not just trade jumping from 8 to 9 million tonnes. But definitely, we are taking up some of the modification measures, which will definitely help us. In any case, last year, we were at 7.5 million tonnes. And this year, we'll be crossing more than 8 million tonnes. And with all these modifications and the changes what we are going to do, not a CapEx, but it is a modification in the blast furnace and electric arc furnace. We may increase the capacity and we may reach to more than 8.6 million or maybe 8.7 million tonnes as against of last year of 7.5 million tonnes.
That's for FY '23, right?
Yes, '22, '23. Yes.
The next question is from the line of Indrajit from CLSA.
A couple of questions from my side. First, can you highlight the impact of the lower thermal coal availability in the past couple of months? And what could be the cost impact of that for third quarter and fourth quarter mainly on e-auction and also on the [indiscernible]?
There was an impact on prices, yes. The thermal coal was available at a price of INR 0.55 to INR 0.60 or maximum INR 0.70 per mega/cal. It reached to as high as INR 1 per mega/cal and also, in some cases, INR 1.2 per mega/cal. But again, the demand and supply that has balanced the situation. The entire country was facing some problem of thermal coal. Government of India has taken a very good decision. They have transported a lot of coal to different power plants in the country. And this is the region that they didn't face any blackout, neither to cities nor to MSMEs or industrial sector.Fortunately, we are -- our both the plants, Raigarh and Angul are located at the iron -- the coke -- thermal coal hub. And we continued listing material coal from the mines. For a few days, yes, they stopped e-auctioning, but now they have again come with the tender because the stock is quite good. They are producing more than 2 million tonnes per day, which is a good size, I would say.So there was a temporary impact in 15 to 20 days' time. But now things are becoming normal. Also, the -- you might have seen in the high exchange or energy exchange, the power prices or the power tariff, that has also normalized. So things are better now and we are getting coal regularly. There's no interruption in terms of coal supplies from Coal India, it is very smooth.
So the higher cost will impact our profitability in third quarter and maybe part of fourth quarter. Is that understanding?
No, no. It will not. Reason being because we have stock about 30 days. This is one. So the offtake was also less during that time. But when you take the average in the next 3 months' time or in H2, so the impact will not be very significant, maybe a very minor impact.
Sure. That is helpful. My second question is on the current demand scenario. Are you seeing already pick up in the demand scenario in India? Or is it too soon to comment as we have just come out of monsoon?
Demand of steel in India is at a good level today. I would say, we have satisfied the kind of demand is coming from the infrastructure sector. MSMEs are also doing extremely well. The shipbuilding industry, boiler industry, oxygen plants are coming in a bigger way. Water pipelines are another big area where the government is concentrating and has given a full focus.The other good thing is you might have seen 3 days back, Mr. Biden, the President of United States, he has lifted the embargo in terms of the safeguard duties imposed by Trump administration 2 years back on European Union on steel and aluminum. So this will make a good flow of European steel to America. American steel prices will be coming down from $2,000 to maybe $1,200 or $1,400 in the next 6 to 8 weeks' time.And the European Union, they will be selling a lot of steel to America and the specialty products like specialty plates, specialty wire rods, India will have an opportunity to supply to European Union. So in a way, the demand from European Union will also come. And the European Union, they were also exporting some of the goods to Middle East. And since America is a better economy and they -- across the Atlantic, the freight is also low, so they will be happier to supply to America. And they will not be very glad to supply to eastern part of the Europe, including Middle East and Africa.So that market is definitely available now for the Indian steel. So we feel that the demand from Middle East, demand from African countries, MENA countries, that is, Middle East and Africa, North African countries will continue to rise, and it will be good for Indian suppliers. And secondly, the demand of specialty plates and specialty hot roll coils in Europe will also be captured by Indian wells.
That's really very clear. One last question, if I may. In terms of our export proportion rising on a higher volume overall in third quarter, can you shed some light on what kind of products are we exporting? Is it more finished steel or semis? What is the mix there?
We have maximized the sale of finished steel, especially the plates or roll coils. These are the first commodity, I would say. Then the structural is another good size, like heavy section beams and parallel flange beams, [indiscernible] beams, heavy angle irons for the power grid corporations in different countries for power transmission, the structure for the high-rise buildings. So that is on the move. So this is a demand puller, and we are maintaining that. We are not very much keen to supply the semi-finished products or billets or blooms nowadays. So these material are predominantly Ukraine, Russian and Iranian and they are the major player in exporting such kind of material. But our focus is on the average, finished goods.
The next question is from the line of Amit Dixit from Edelweiss.
Congratulations for a good set of numbers. I had a couple of questions. The first one is on the raw material costs. If I see raw material costs Q-o-Q, it has grown by almost INR 7,000 per tonne on steel sales. So if you can just separate it between your -- the cost increase in coking coal cost and iron ore cost and others, that would be helpful.
Yes, Amit, Hemant this side. As you are aware, in the last June quarter, there was a zero cost inventory of iron ore line, which we have utilized in that quarter. Due to that, there is impact of INR 5,500 per tonne. Then there is also a small impact of INR 800 into a coking coal as well. Rest is to other materials, arrows and other things put together.
No, that's very helpful, sir. The second question is on realization. If I look at Q-o-Q increase in realization again, despite the underlying long prices dropping by almost INR 3,000, our realization is slightly up. So if you could -- last quarter, I understand there was some exports and product mix. So what drove realization in this quarter?
MD sir, do you want me to take?
Go ahead, okay. No problem. I will take. So first of all, realization today, if you see the NSR that is hovering around INR 56,000 to INR 58,000 on an average. We expect that in this particular quarter, it should be around INR 60,000 across all the products, average. So the prices are somewhere about INR 56,000 to INR 70,000 now for different products. So we feel that these prices will continue for this particular quarter. By the time the coking coal prices starts softening, which we are expecting, we're always expecting though it is very unpredictable. But maybe from January onwards, the coking coal prices will start looking down. And until that time, these prices will remain on the NSR, the net sales realization, will remain in between INR 56,000 to INR 65,000, average say about INR 60,000 per tonne.
No, sir, I was asking about Q-o-Q movement Q1 to Q2 because I see that your realization has gone up despite underlying prices, these are prices long sales has -- that they under pressure. So just wanted to understand why there was a price increase for you? And what was the key driver?
Sorry. What?
No, what was the reason for this price increase for you? What were the key drivers?
Demand, one driver demand. International demand as well as domestic demand. Especially, we do not lead the price movement. Prices are driven by the demand and the international scenario. So when the prices were going to INR 1,200 per tonne in Europe, definitely, we are also getting same price. But these factors are uncontrollable. So demand was very high. So the demand in India was also very high.
Amit plus, as you wanted to know about exports, definitely export markets were with liquidity and healthy in the quarter and in September. And also affect that we have exported 40% to the export market and -- as against 34% last quarter -- 44%. I would like to correct, 44% this quarter as against last quarter of 34%.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
I just wanted to understand a bit more about the price realization, the way you're guiding about the INR 1,500 per tonne you have taken in October, another INR 1,000 is possible in the long products during November as well. But currently, if at all we look at sort of the discounted import parity price, the discount is probably wide, is around 20% or so. So do you see this discount narrowing over next 3 to 4 months? Or do you think that this could continue from here?
What is the discount 20%?
If at all, we sort of compare the domestic prices to the lended international parity prices and consider the discount, that discount is of -- order of around 20% or so.
No, you mean the price difference in between the export versus domestic?
Price differential of the China export prices lended in India, theoretically, versus the domestic prices?
So the China's lending price, yes, you're right. If the China starts exporting to India, it will be at least INR 5,000 to INR 7,000 higher than the domestic prices. So this will continue as it is, because China does not have material.
And in terms of the progress on the CapEx plan that you are highlighting, could you sort of take us through the key milestones that had been achieved during this quarter?
This quarter, we had a very small exposure in terms of CapEx, but we want to spend about INR 18,000 crores in the next 3 years' time to elevate our production from 5.4 million tonne in Angul to 9 million tonne. So our CFO can tell you that what is the total CapEx spending we have done in the last quarter and what he's likely to do in this quarter. Mr. Hemant, please.
If we talk about for the half year, it's around INR 500 crores. If we talk about only for the current quarter, it's INR 350 crores. But as far as our projects' implementation is concerned as our MD sir rightly mentioned, we are progressing well as per our plan.
Right. And what would be the CapEx target for the FY '22? What would you be able to actually deliver?
Because most of the time has passed, we are not looking beyond INR 2,400 crores to INR 2,500 crores, all put together in the current financial year. For our new projects, recommendation was 100% subsidiary.
Sure, sir. Just if I can squeeze in one more question. On the Kasia mine, you said that you'll be able to sort of ramp up to 5 million tonne immediately. And in the longer run, it could sort of go up to 10 million tonne. So what are the steps needed or what is the work needed at the Kasia mine to raise the production level from 5 million tonne to 10 million tonne?
I just wanted to put, which is, EC is available up to 7.5 million tonnes. MD sir wanted to say in the next year, we can go up to 4 million or 5 million tonnes because now 5 months are only left. The EC is 7.5 million tonnes.
So is it possible to sort of achieve this 7.5 million tonne production in FY '23 itself?
'23? Yes, yes. Definitely.
The next question is from the line of Bhavin Chheda from Enam Holdings.
Congrats to entire team for good performance and record delivery being done by the company. Good to see very high deleveraging done in this quarter also. So a few questions. First, on the Australia coal mines, if I heard correctly, you said your FOB cost would be $90 as against the current realizations of $380, $400?
Yes, you're right.
So $380, $400 is hard coking coal. So your Australia grade would be hard coking coal, semisoft, soft? If you can guide something?
It is hard coking coal.
So from December shipments, you are saying you will be making $300 on Australian coking coal?
It's not a point of making as point of what the actual story is because, yes, those assets also we have spent a lot of money. So this is the net price what I told you, the net cost. But we have to service those debts also. So the point here is, today, we are servicing those debts for the last so many years from India. So now these will be self-reliant mines.
No, I understand that. But it's a very big number you're guiding. So because you plan to guide so -- so if you can give some -- because the run rate would start slow and then it would be 2 million to 2.5 million per annum. So is this cost upfront or it would be after exit run rate, if you can guide something on this? Because if I extrapolate the number, you're guiding 500 million, 600 million tonnes of EBITDA at Australia coal mines, which are difficult to digest. So if you can throw some light here?
Bhavin, Hemant here.
Yes, please carry on.
If you recall, our MD sir said that we would have 2 million to 2.5 million tonnes of coking coal security available because we are expecting a similar 50% out of this from -- Australian 50% from Mozambique as per our current run rate going forward. And that will meet out around 50% of our coking coal requirement in India.
Sure. I'll get more update on it. Second, you also said, if I based on the number, your quarter 3 impact on coal would be $50 per tonne of steel?
Yes, I said earlier also.
$50, which looks largely covered by the steel price hikes, which have been taken in October and you're looking to take further hike. So quarter 2 EBITDA looks largely to be maintained because of the aggressive price hikes taken by all the players in India. Is my understanding correct?
Bhavin, as you know, we don't give any future outlook on EBITDA. Plus, no one can say with 100% surety that so much will -- price will move or so much price will come down.
Sure. No, I'm just trying to indicate the milestone. Your cost hike is largely covered by NSR hike. If that statement is correct?
That you can estimate very well, but we don't give any outlook on EBITDA.
Okay. And the JPL, this equity number of INR 3,015 crores, what are the pending things and when we should expect JSPL to realize this equity number?
But I'm happy to advise that we got the shareholders' approval. And expecting the lender's approval plus there are 2 and 3 other approvals required. We are sure that we will be able to consummate this deal by the end of this financial year.
Before the financial year. And my last question. You're looking for a bond ratio. So this is largely to refinance the Mauritius debt? And if I understand correctly, the FY '22 repayment schedule is $220 million there, right, so it's largely refinance Mauritius debt?
I don't want to comment on that. As I mentioned, we want to be net debt free by financial year 2023. And seeing my cash position as of today, I can meet all repayments of overseas from my cash in the bank. So I can't comment on the futuristic thing. Once we do, we'll come back to you.
The next question is from the line of Raashi Chopra from Citigroup.
On the raw material costs, you indicated that the breakup of the increase this quarter was about INR 5,500 on iron ore, INR 800 on coal and the other materials is the balance. How should we think about this for the third quarter, one? And secondly, in this quarter, what was the pure steel realization delta sequentially, excluding the pellet revenues?
Raashi, as you are aware, quarter-on-quarter, we always give a blended NSR, first. Second, as I reiterated, as you also mentioned and rightly INR 5,500 because of our own raw material inventory of iron ore is INR 5,500 per tonne and INR 800 of coking coal. I've given guidance only on -- because we have covered until January and that data is looking around $50 per tonne on coking coal. Plus, iron ore comes, as our MD rightly mentioned, is on a downward or more or less stable. Beyond that, I don't want to comment.
Okay. And just for CapEx, so effectively in the second half, we should assume that the CapEx will be close to about INR 2,000 crores?
I think there are 6 months, and we are committed because, let us say, I've kept aside INR 2,500 crores to meet any eventuality for my CapEx. It's a factor of depending upon how much cash outflow will occur, but we kept INR 2,500 crores separate to meet any kind of cash requirements coming out of that project in the current financial year.
The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher.
So maybe I had one question on the tax part. What would be the cash outflow, like say, are we now on the normal tax rate? Or how the things will be on the tax outflow side?
Kamlesh, first of all, good evening. And if we talk about tax and other matters, it's a factor of how much availability of tax, shares and other things are there. And accordingly, we busted and paid the advance tax for the 2 quarters. Beyond that, I don't want to give any ideas.
NO, but I just wanted to know that are we in a normal tax rate regime? Or do we have prior year losses or all that has been exhausted now?
If we talk about, we are in the tax bracket of 25%. But keeping in view, depreciation, unabsorbed and business losses carry forward, I think working being done. And accordingly, last tax duly paid for the 2 quarters.
But assuming we maintain the current run rate of earnings, so would we be in the normal tax regime or not?
Yes. Going forward, it's the factor of not many things, tax is not a simple jacket. It's not a simple jacket. I can't say it's 25% in all, but we have opted for because a lot of now whatever concessions and other things were available are not going to be available as per new tax regime of 25%. And I don't see that we will be crossing beyond 25%.
Okay. So have you opted for 25% new regime or...?
Yes, definitely. Yes.
Okay. And lastly, sir, on the overseas coal mine, like in the Mozambique, we would be having just like, say, 15-odd percent yield on the ROM production in form of coking coal, like, say, we produce 4-odd million tonne. So maximum, I believe, 0.6 million tonne would be the coking coal. While rest, thermal coal and all those are very separate, so it's very difficult to transport that as well. So -- and even in the Australia, like, say, ROM like -- I had one doubt on that part because if I see the announcement, which you have made on the Wollongong coal that subsidiary, we are allowed to produce 3.6 million tonne over the next 5 years in total. So how we comment on that, we would be able to produce 2.5 million tonne? And even at that part, we wouldn't be having maximum like, say, if I see the history of Wollongong, there has not been more than 45% production in terms of overall produce.
I would like to apprise all my stakeholders here. If we move back the earlier story of 365-meter longwall provisioning given to us, and we mined all those in a month's time. And as far as we are giving a guidance that on annually, we are going to do 1 million to 1.2 million tonnes of production or mining there, I don't find any difficulty. Yes, definitely, it is for 3 years. And after that, we already even for second mine, we are moving ahead. And for this mine, also additional permission will come.Reason being, we have now changed the method of mining for which their environmental and other authorities are very much comfortable. Let us see how this stands out. And the first shipment is coming out in the first week of November, that is on a very auspicious day of Diwali. And as you mentioned about Mozambique, I would like to give you that 5 million tonnes of ROM. And it's not 15%, it's 23% to 24% of ROM comes in the shape of coking coal. Rest is a high caloric value of coal, that comes to 1.2 million tonnes of coking coal.
The next question is from the line of [ Saumil Mehta ] from Kotak Life.
Most have been answered. Just 2 more questions from my side. First, in terms of what is the status now given there the coking coal prices are globally and even the thermal coal prices, do you believe is it fair to this point in time to maybe find a suitable buyer for these assets because hypothetically, if price is correct by another 50%, the probability of that comes down? So is selling of the assets right now on the drawing board? Or what is the thought process over there?
Mr. Hemant?
I request MD sir to take this question because it's a very, very ridiculous question. I tell you one thing. First of all, the investments were made to make things better for Indian operations. We were not interested in selling this coal to rest of the world and keeping our plant right. So we will be happy if we -- the things are in good shape, and we keep on importing coal for our captive use.As far as the selling the FX, it all depends upon the situation. As of now, we are not a distressed seller. And neither we have thought to sell it immediately. But you never know that because in future, what will happen because many of the new coal mines will not come in the world. As you know, the G20 Summit, it is a strong message given to the coal industry and also the thermal power plants that new funding for the thermal power plants will not be available.Now the people, those who are in the business of coking coal, they're discounting for mines, so that they can find some running mines where they don't have to borrow funds or they come with an equity partnership or they come with joint venture. So these things will change because of the change in the geopolitical situation we work with. So we are working since last 3, 4 days after this news. We are also pondering upon that maybe existing players, those who are in coking coal business, they are willing to invest into it and either in full or in part or paying us a good premium, then we will decide what is to be done. So as of now, there is no number one. Number two, we have also not approached to anybody. But they're already changing very fast in terms of the coal assets. And people, those who have the coal mines, they will definitely get a premium.
Sure. But sir, even our extremely high reliance on improving our ESG score at least back towards the rational for JPL and that was the right one. Don't you believe selling the coking coal assets or coal assets will further improve our ESG scores?
Yes, you are right, it will, it will improve definitely. But coking coal is required. If you don't have your own mines and if you buy cooking coal from somewhere, then the impact is same because you are using them. Because the cokes -- blast furnaces are there. So we are working on a different technology, how to convert Indian steam coal or Indian highest coal into gas. They are already doing it in Angul. We have the first plant in the world producing coal to gas and gas to DRI. We are working how to produce coal to hydrogen so that we can reduce the overall coal convention in part and making of steel. And also how to inject this gas -- hydrogen gas into blast furnaces, so that we can reduce at least 15% to 20% of the total coking coal consumption in our plant so that we are working very seriously with technologist players.
Sure. And my second and last question is, while the first half of the year will also have a significant pellet profitability. What we hear is with the decline in iron ore prices globally, especially in the Chinese market, are we seeing some sort of lower pricing tenders for pellets? I mean I'm not looking for a specific number, but in terms qualitatively, do you believe second half of FY '22 can be lower in terms of pellet profitability for us versus first half?
No, because today, we are consuming pellets at least 60% to 65% in-house. So that is not impacting us. Secondly, we have now 2 pellet plants, and both the plants are running full. As far as the prices are concerned, currently price is about INR 13,000 a tonne for pellets in the domestic market. And also for the export market, the similar prices are available. So today, we have shortage of pellets, we don't have pellets too much. The demand is pretty good because there was a problem of iron ore in the country, and the people are not getting the right size of iron ore. So pellet is in very, very good demand, and we are maintaining a good profitability in that.
The next question is from the line of Prashanth KP Kota from Dolat Capital.
Really appreciate the renewal power deal that you announced last quarter. Sir, this quarter -- according to this quarter, I had a question on what -- could you please help us reconcile H1 EBITDA to H1 net debt changes, on an H1 basis?
Mr. Hemant?
If you see, we talk about in the half year, we made as we talk INR 9,000 crores and we prepaid around INR 4,500 crores of loan in Indian books. And if you talk about overseas as well, we have paid more than INR 4,300 crores. And if we talk about CapEx, we -- as I mentioned, we have already done a CapEx over around INR 500 crores put together and also [indiscernible] of INR 730-odd crores. And this is a very important item, which we discussed last time, changes within net working capital because -- given because of COVID, all ports and other things choked out and our most appreciative tax blocked up in our working capital. And I'm happy to advise that most of the working capital has been unlocked. If I give a guidance as of today, in terms of today, 2nd of November is a very small amount left out. We are very hopeful that we will be able to unlock that working capital in the current quarter itself.
Okay. Understood. Understood. Sir, and I really appreciate your efforts on reducing the -- efforts to identify technologies to reduce the carbon footprint. That is our feedback to you. And sir, just one quick question. There is an earlier participant asked you this question, but more of a broad guidance, what would be the cash tax rate? I think, let's say, we made the similar kind of PBT run rate for the next several, let's say, 2, 3 years. So on an FY '23 basis or '24, assuming the PBT is what it is right now, the cash tax broad range is enough, sir. We do not want specific because you have better idea of the depreciation and the indiscernible] losses, et cetera?
I think I would like to say we will remain compliant with all tax matters, whether all those payments of tax with that [indiscernible] in law at that point of time. Beyond that, I also mentioned, I don't want to comment. And we already paid the advance tax as per the calculation for the current financial year. And also, we have moved to a new tax regime of 25%, including surcharge and all.
Sure, sir. I was only asking from the point of view of making our projections on free cash flow, et cetera, nothing beyond that, nothing on the regulatory or compliance, sir.
Prashanth, we are very sorry. We'll not be able to give you a projection or an estimate on the future profit or operating profit for that matter.
No, only the probable cash tax, sir? That's it...
Prashanth, that will actually be -- you can understand, right? If you will back -- calculating through the operating profit or the PAT, that we'll make, right? PBT.
The next question is from the line of Vikash Singh from PhillipCapital.
Sir, my first question pertains to our steel selling. So basically, we have a finished steel capacity versus the production or the sales capacity mismatch. So shall we understand that the incremental 0.5 million to 1 million tonne, which we would be selling in the next 1 year, that would all be sales? Or we have still -- we've got some falling in demand to convert it into kind of...
No, there is no mismatch as of now. But even the mismatch comes when you feel that some of the products are not gaining any good EBITDA or good margin. Many a times, we sell semis, which we are getting better margins than the finished products in India. Like for example, the last 3, 4 months were very bad for the rebars. And whereas selling billets were at a higher price than the domestic realization. Sometimes we sell bigger which is at a higher price or higher margins or EBITDA than the billets or even the rebars. So we don't have any surplus raw material or semis.Put together, we are a very balanced company, and we have the options available to convert at least 2.5 million to 3 million tonnes of rebars and we are already doing around 2.5 million tonne -- I think more, maybe 2.8 million tonne plates. So put together, these 2 items give us more than 6 million tonnes, or more than 5.5 million tonnes. When we have rails, we can put 1 million tonne, we have large, medium and section light mill that can give another 0.8 million tonne. So we have the capacity to roll at least 9 million tonne total. But decisions are taken. These are the economical decisions or based on the economics. So whenever we feel that we can earn more profit in selling semis, we sell. Otherwise, we don't sell them.
Understood sir. Sir, my second question pertains to your net debt becoming zero guidance. So what I understand that our foreign basically entity that's still not been able to pay off their debt. So are we talking about the net debt means that the India would have more cash than the debt in these foreign subsidiaries or from India, we'll continue to say that debt of the foreign subsidiaries and -- will become net debt -- zero debt there also?
Mr. Hemant?
As I when mentioned earlier also, we are sitting on a cash. If we would like to pay all overseas loan, I can pay. The due date is 31st March of $357 million. And if we talk about the next new date is $106 million on 30th September 2022. And we are expecting to make those payments from India's check, though all cylinders are firing, generating cash, whether it's Mozambique, whether it's Australia. But conservatively, we built into our JSPL operation that we are going to make the payment from India as on today.
The next question is from the line of Rajesh Majumdar from B&K Securities.
Congratulations once again, sir. So I had a question on the export realization for the quarter. I know you -- exactly when I am not asking for that, but was it significantly higher than the domestic realization for the quarter?
You see we export realization because we are not [indiscernible] the way and maybe you might be asking.
Okay. And which are the regions which contributed to the bulk of the export, I mean, specifically if EU and Middle East was a large contributor?
Sorry, Rajesh, could you repeat your question? There was some muffled sound in between.
Sorry. Sir, my first question was on the export realization. I couldn't get the answer. What is the answer to that?
This the operator, Mr. Majumdar. The line for Mr. Sharma has got disconnected. I request you all to please stay online.
Okay.
Operator? Yes, we will continue. While Mr. Sharma rejoins, I think our CFO, Mr. Hemant Kumar, can take that question.
Rajesh, I can't say whether it's the reason why they're not. Is it European countries, even we have exported to Canada, in U.S. and even the Middle East and all Asian countries as well.
The reason I'm asking this question is that EU has a certain quota for exports. And are we close to fulfilling that export quota?
I think the quota is in the countries and all, total into that specific country in European countries. And...
So Rajesh, this is Nishant here. So as you know, if you were talking about last quarter, it all depends on quarter-to-quarter. So last quarter, the export realization were better than the domestic realization. And region-wise, you have rightly said, there might be some quotas. But frankly, all across the world, you will talk U.S., Europe or even Southeast Asia, the prices were healthier at that point in time than India as of last quarter. And therefore, we were able to maintain healthy margins or healthy realizations throughout.
Sir, absolutely. So my second question is a follow-up to that call. We've seen some happening in the regional markets now in terms of Chinese internal prices falling down by a lot. Now I know that there are some internal guidelines there to how much they can export and so on and so forth. But will this result in an overall weakness in our export realization going forward compared to what we have seen in the first 2 quarters? And in that case, it will post volumes come up a little?
Let me just check if our MD Mr. Sharma is back. MD sir, are you there?
This is the operator.
Hi Kedar, is Mr. Sharma has joined back?
Not yet, sir.
Okay. So Rajesh, regarding your question, we are supplying, I can tell you, so across EU, Southeast Asia. And the markets are still going there. But I can tell you, this quarter, with the Indian markets looking up, like we've always said, our quota of call for our products is the Indian market. And that is where we're looking to supply a bulk of it, while exports remain a key channel for us in case of subdued demand or in case of minimum volume that we'll always supply there.
Right. So is it feasible to assume that the exports' contribution will be lower in 2H as compared to 1H in terms of the percentage of volumes?
It's a very relative term, we talk about it. It depends upon the demand and supply, as Nishant rightly mentioned. We are expecting the demand to pick up now with the festive season and rainy season is over. And domestic demand is really shaping up. And it depends upon if the domestic demand absorbs. And we'll see, as we have given also the guidance that we will keep our exports in the region of 25% to 40% maximum, and we'd like to keep that range 25% to 40%, depending upon the demand and supply situation in India and international markets.
Okay. My second question is also relating to the domestic pricing of long. Can...
This is your third question. Given the paucity of time, we still have certain -- another facility waiting. If you can take the last question. We can always connect offline, if that's one of the option. Thank you.Operator, let's take the last question.
Sure. The last question is from the line of Ritesh Shah from Investec.
Congratulations for a good set of numbers and walking on the top on balance sheet. Really noteworthy. Sir, a couple of questions. First is, sir, you indicated INR 18,000 crores of CapEx over 3 years, including INR 2,500 crores in FY '22. How should one build for '23, '24 and '25? Should I just cut off FY '22 and split it over 3 years or it will be back ended? Some color over here will be useful.
Ritesh, we have already given a guidance on that. As we mentioned, INR 2,000 crores to INR 2,500 crores, we're not for the current financial year. Going forward, is around INR 4,700 crores, then INR 4,500 crores, then INR 4,000 crores, then the balance because we are expecting to spend this money in the next 4 to 5 years' time.
That's useful. Sir, secondly, can you quantify what is the number on the overseas debt and the debt maturity profile? I think you gave 2 numbers of $357 million and $106 million. I missed out on the time line over there, sir.
Yes. $357 million is due on 31st March 2022 and $106 million is due on 30th September 2022, and the balance $6 million in the next 3 to 4 years.
That's helpful sir. And sir, I just wanted to have a comfort on one thing. The slurry pipeline and all the incremental expansions which are there, be it beneficiation or everything, everything is within the listed entity. Would that assumption be fair?
Yes. If we talk about our 6 million tonne of expansion, that is into our 100% subsidiary. And as far as slurry is concerned, we are implementing into our own company.
Okay. Perfect, sir. And so look forward to more details on the 2 in terms of carbon intensity that you have given by 2030. It's such a -- very encouraging number, I would look forward to more details over there.
Thank you, Ritesh. You can talk offline with Nishant on this. He can give you more color with the specialities.
Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.
I just wanted to say with improved sentiment in steel over the near term and company's focus on continued debt reduction, on deleveraging. JSPL is all set to generate adequate cash flows going forward for meeting our debt repayments, funding the Angul expansion project and funding requirements of our overseas business. Now with the enhanced management focus on medium steel business, we are confident we will soon be a net debt-free company in the coming months, as we mentioned, by financial year 2023. And I would like to wish everyone a very happy and prosperous New Year to everyone. Now I will hand over to Nishant. And Happy Diwali to you.
Thank you, everybody, for joining us today. Happy Diwali, again, on behalf of the company. I would pass on the call to Kamlesh Bagmar from Prabhudas Lilladher. Kamlesh?
Yes. Thanks, Nishant. And thanks to all for participating in the call. Thanks a lot.
Ladies and gentlemen, on behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.