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Jindal Steel And Power Ltd
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Ladies and gentlemen, good day, and welcome to the Jindal Steel & Power Q FY '23 Earnings Conference Call hosted by Antique Stock Broking. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Pallav Agarwal from Antique Stock Broking. Thank you, and over to you.
Yes. Thank you, [indiscernible], and good evening, everyone. A warm welcome to the third quarter results call of Jindal Steel & Power. We are joined today by the senior management team from JSP, Mr. Bimlendra Jha, the MD; Mr. Ramkumar Ramaswamy, the CFO; and Mr. Vishal Chandak, the Head of Investor Relations.
So I would like to now hand over the call to Vishal for his opening comments. Yes, Vishal, over to you.
Thank you, Pallav. Ladies and gentlemen, good evening, and thank you very much for joining us for the Q3 briefing of the earnings highlights of JSP. So we will start with a quick overview on the financials by our CFO, Sir, Mr. Ramaswamy, and then we'll jump into the Q&A.
So without much ado, sir, I'll hand over to you, sir.
Thank you. Good evening, and good day, everyone. Let me give a quick overview of the financial and operational performance for this quarter.
Let me start with the sales volume first. Our volumes for the quarter was 1.9 million tonnes. This is a 6% decline Q-o-Q, primarily driven by a 48% decline in exports. The domestic volume also marginally declined by 1%, primarily driven by issues around rate availability and its patches. The share of exports in the total volumes declined to 5% at against 11% of the previous quarter. The production for the quarter was 2.06 million tonnes, which is a 13% increase quarter-on-quarter.
As you would know, in the last quarter, we had some shutdowns. And this quarter, all the plants produced at optimum capacity. The Angul plant created a world record in production during the quarter by producing 54 [ heats ] in a day during October.
Let me talk about realization. Our MSR declined by 1% quarter-on-quarter as the pricing remained soft during the quarter. And to give you a quick sense of where we are, currently, we are seeing prices firming up and the current realizations are marginally inching up by 1% to 2%.
Our SMS costs declined by 9% during the quarter. This was primarily driven by a lower coking coal price of around 18%, lower thermal coal prices of around 17%. Iron ore prices remained flat during the quarter. As per our practice, we do not provide any forward guidance or numbers for the subsequent quarter, so I'm not able to provide that.
Let me move on to EBITDA. Our stand-alone adjusted EBITDA is INR 2,163 crores. This is 52% higher quarter-on-quarter primarily driven by the factors that I detailed earlier, that is lower volumes, lower realization, offset by lower costs. The EBITDA -- for the EBITDA per metric tonne for the quarter, it improved and is INR 11,183 per metric tonne. The consolidated EBITDA for the quarter is INR 2,296 crores, which is also 51% higher Q-o-Q. The main operating entities Mozambique, South Africa and Australia, they had an operating EBITDA of around $20 million, and after adjusting for FX, this translates to $4 million during the quarter.
Profit after tax. On a consolidated basis, our profit after tax was INR 518 crores, which is 137% higher quarter-on-quarter. Before exceptional items, our profit after tax is INR 897 crores for the consolidated entity.
I would also like to give an update on the overseas subsidiaries, the investments that we had highlighted last quarter. As highlighted earlier, we have concluded an independent valuation exercise, and based on that, we have provided for INR 7,253 crores in the stand-alone entity against the overseas investments. At a consolidated level, this provision gets offset. We have, however, charged our goodwill and other assets appearing in the consolidated books to the tune of INR 378 crores, which you will see in the financials as one-off exceptional items.
Based on the above provision, our net loss at a stand-alone entity level is INR 4,512 crores. Exceeding the one-offs, our profit after tax is INR 836 crores during this quarter for the stand-alone entity.
I'll give a quick overview on our debt. Our journey of deleveraging continues. Our gross debt at the end of the quarter was INR 10,983 crores, and net debt was INR 7,478 crores. At a consolidated level, our net debt was INR 7,090 crores, which is 0.66x our EBITDA.
I'll also give a quick overview of our cash flow, and then we can open up for Q&A. We had an opening balance of INR 6,383 crores of cash. Our adjusted EBITDA was INR 2,161 crores. We had a net reduction in working capital of INR 713 crores. This was again our focus on cash and inventory reduction. We had also taken short-term loans of around INR 410 crores for the power assets that were acquired. These are the main inflows.
In terms of outflows, we concluded a refinancing of a loan to the extent of INR 1,728 crores. We repaid the short-term buyer's credit and working capital loans of INR 968 crores. We invested in our subsidiary, Jindal Steel Odisha, INR 939 crores. Our advanced tax payment was INR 710 crores. Our own CapEx, both sustaining and growth CapEx in JSP, was INR 642 crores. Scheduled loan repayments was INR 448 crores, and the financing cost was INR 343 crores. With this, we ended with a net balance of INR 3,505 crores.
Again, to summarize, cash flow from operations was INR 2,164 crores. Cash flow from financing was negative INR 3,077 crores because of the various repayments that we did. And cash flow from investing was INR 1,965 crores, resulting in a closing cash of INR 355 crores.
With this, I would like to conclude the overview and hand over for any Q&A.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]
We have a first question from the line of Amit Dixit from ICICI Securities.
Congratulations for a good set of numbers. I have two questions. The first one is essentially on sales volume, which was a tad lower in this quarter due to rig unavailability and issues around dispatches. So my question is, is there some volume lying at the port or at the plant that we can expect will come in Q4? And if you can also guide for the sales volume for the full year or for Q4, as you deem fit?
Yes, this is Bimlendra Jha. Thanks for your question. There was not much of a [ FG ] inventory buildup, it was only about 35,000 tonnes that was built up. So we -- as you know, one of the reasons why we had a much higher sales number at end of quarter 2 was because there was a lot of inventory lying with us, and we wiped this slate almost clean at the end of September. So thereafter, it has mostly been whatever we have been able to produce is what has been sold, except for some break unavailability issues, focus on whole movement in India. So that focus from the government has not changed, and therefore, we continue to face some difficulties on the movement of our raw materials as well as finished goods.
So barring that, we don't see any issues. And whatever we produce, we should be able to sell. On the -- on that rate movement also, we have tried to compensate it as much as possible through the road, and we are also buying our own [ items ]. So -- but that is also, as you may be aware, is taking time in India to get your [ items ] very quickly because there is a shortage of [indiscernible] in India.
So these are some of the challenges that the Indian industry is facing. And other than that, whatever we produce, we will sell. So that is the only guidance we can give you.
Okay. Fair enough. Sir, coming to overseas mining subsidiary, I mean we have seen that so far in terms of volumes, they have been pretty [ still ]. So going ahead, what kind of volume growth we can see over there, particularly from your Australian mining subsidiary?
So in Australian mining subsidiary, we have been trying to debottleneck that and make some solid adjustments to the way they mine and process the coal. And that should be -- still after June, we are expecting that they will -- they'll be in a position to have a proper mining and coal beneficiation and also get better gains from that because it is -- at the end of the day, it is all coking coal. And because of the high ash content, it gets sold as a thermal coal. So all that will change after they have invested in that motion, et cetera, that they're doing.
And what would be the quantum of that investment, that working investment?
It's minor, I think. How much is it?
I think we are evaluating the CapEx investments in Australia. And maybe by next quarter, we will be able to provide overview. At this time, it is a bit early. But it is not substantial. It's not substantial, so it's not.
All the best.
We have a next question from the line of Sumangal Nevatia from Kotak Securities.
My first question is, if you could just share the update on all the growth and [ bossing ] projects which are lined up as far as their commissioning time line, specifically for coal blocks, the slurry pipeline, the pellet plant and the...
Okay. So these -- our -- some of the clearances, et cetera, are still in the process, and therefore, some of these will be only done as those clearances keep coming. But the pellet plant is very close to commissioning based on the real clearances that we have had. It is under trial testing phases, so we will be -- we will soon get the consent to operate and we will be able to start operating that plant.
Coal mine will be the next big one. And there are, again, clearances in the process. We have kept everything ready in terms of the equipment, contractors, et cetera. So the moment we get all the clearances, we'll start moving into the land. And so that's just a matter of time. It can happen in weeks, in months, whatever. Whenever it happens, it is all part of the government process. We start moving in, and within 4 weeks, we started taking it out from the date of clearance. So that's the next one.
As far as our slurry pipeline is concerned, that's a slightly longer project. We have completed nearly half of it, and half of it is the more tougher areas where things are moving a bit slower compared to our expectation. But that is where all the conversations are happening to facilitate that.
So as far as [ hot strip ] mill and the rest of the investment around that is concerned, that is proceeding on a sound basis. And quarter 2 of next year, we should be able to see these investments coming up.
Okay. Got it. Sir, with respect to the coal mines, all the 4 coal blocks, I mean, they are seeing delays because of regulatory issues or we are seeing some progress in one or two of them? Any details, mine-life...
No, we are seeing progress. It is just that the progress is not to our taste. But it is -- Maybe we would want things to happen in a week, which may be taking four weeks. So that's the difference of expectation.
Okay, okay. And sir, with respect to the blast furnace and the [ hot strip ] mill, that is expected to, I mean, commission in the second half of next year and start contributing volumes?
Blast furnace. We need clearances, et cetera. It is the [ hot strip ] mill which is -- got off everything. So that will definitely be commissioned in the second quarter of next financial year.
And apart from that, we have got our -- once again, I'll give you the time lines from -- so second quarter of FY '24, our [ hot strip ] mill, pellet plant was the first one. I already told you in the current quarter, it should happen. Then slurry pipeline will be definitely by the second to third quarter of next financial year. And then blast furnaces, our blast furnace should also come up by the end of third quarter, BOF around a similar time. So this is the kind of time line that we are working with.
Understood. Sir, my second question is with respect to the coal cost. I mean, domestic coal levels seems to have improved, and even thermal coal international price is down. So I mean, what is the sense on coal cost reduction going forward, both on thermal coal and coking coal versus the 3Q level?
Coking coal, the international prices are not down. They are up compared to last quarter, although they are down compared to last year. So if you're making comparison with respect to last year, of course, there are down, but then those were exceptional numbers. If you compare it to the previous quarter, then they are. And that kind of a movement in coking coal prices is anybody's guess, and it is dependent a lot on what happens in China. And the China, when it returns after the Chinese New Year break, that is when we will know in which direction the coking coal prices are moving.
So that's very clearly also an indicater of demand, but the world level, the expectation is that the next -- the current calendar year is likely to be stable in China. Overall, the world is expected to increase it by about 17 million tonnes. Out of this, 7 million tonnes growth is coming from India alone is what is our expectation for the current calendar year. So that is the current quarter and the 3 quarters of this financial year.
So in this one, India, we see walking to a different drumbeat compared to rest of the world, which might open up a similar kind of a possibility that happened in the past. Where the raw material prices, if they don't pick up as much as what happens on the steel demand side, then you can look at robust performance by steel players in India.
Okay. And any outlook on the thermal coal?
On thermal coal, see, we will beat the moment our mines open up. We are completely independent of what happens in the market. And that is why we are very keen that all our clearances happen quickly, and we start mining.
We have a next question from the line of Siddharth Gadekar from Equirus. [Operator Instructions]. Mr. Gadekar?
So first question is on the pellet plant. So given that one pellet plant is coming online by this year end, so next year, what kind of pellet volumes can come from that plant?
So this is a 6 million tonne per annum pellet plant. And therefore, it's not a very steep learning curve or anything for us. It is just a question of commissioning, and thereafter, a quick ramp-up. So that's the kind of a capacity it has.
The only trial and testing that we will have to do is whether the quality of the pallets we are able to produce, whether we are able to use flux pellets and all. So to that extent, we will be moderating the volumes, but otherwise, capacity is 6 million tonnes per annum.
So, sir, we can expect 4 million tonnes on that plant in FY '24? And that will be entirely external sales, right?
FY -- Not -- yes, FY '24, yes. No, it will not be external sales. We will be -- because it is coming up at Angul, it will be entirely consumed in-house.
So the given -- you already have 9 million tonne of pellet capacity. So from there, we will do an external thing, sir?
So net-net, you will see sales from Barbil where we are getting our current pellets from. So we -- whatever is the quantity of pellets that we produce and consume in Angul will be in the quantity of pellets that will be released from Barbil for sales.
Okay, got it. And secondly, in terms of volume outlook, how should we look at it in for fourth quarter and FY '24 perspective?
See, volume is stable. And it will -- it is something that we are expecting that the demand in this quarter should be good. Export inquiries have also increased. So as long as we can manage the logistics, I said earlier, we can -- we will be able to sell everything that we can produce.
Okay. And sir, for FY '24, any volume guidance?
We don't give forward-looking statements as you are aware, so the guidance is what you can see.
So is it fair to assume that if the industry is at 6%, 7%, we will be doing a 7%, 8%?
As soon as I say yes or no to that question, then I'm giving you a forward-looking guidance.
I requested -- as we mentioned, we do not give forward-looking guidance either in terms of cost or volumes. So please, if you could take note of that.
We have next question from the line of Indrajit Agarwal from CLSA.
My first question is on the INR 7,000 crores write-off that we have taken in the stand-alone. So we understand it's to JSPML, but which are the end-use entities where we have actually lent these monies to, and do we plan to invest further in these subsidiaries?
So the [ NDA ] subsidiaries are quite new. I mean the main ones are, of course, we have [ Austin ] and Mozambique, South Africa. But then we also had Mauritius also invested in various other subsidiaries, like Bolivia and Botswana and others. So we considered all of these investments when we did a valuation of how much we have invested, and the outcome of that is the impairment provision that we have made.
I think you also asked a question on investments, so there is no current plan to invest anything further in any of the subsidiaries, yes. As and when there are any plans around it, we will definitely disclose that to all. At this point, there is no further investment in any of these subsidiaries.
Sure. This is helpful. My second question is on the [ captive ] coal blocks. So once these blocks are commissioned, as you mentioned, you'll be fully [ independent ] on thermal coal. And how does the cost look versus your current landed cost is the mining cost and the landed cost of those, materially lower or largely in line, including the royalty?
No, it will be materially lower. Our own coal mines will be materially lower.
We have our next question from the line of Ritesh Shah from Investec.
A couple of questions. First is, sir, how should one read into the tax implication of the write-off, INR 7,700 crores? If memory serves me right, we had some prior gain corresponding to GPL. How does it -- how should we connect the dots, sir? That's the first question.
So we have created deferred tax assets to the extent of INR 1,900 crores in this quarter. As and when we decide to write-off, the appropriate tax adjustments would be made. So I think that is how you would like -- you should be viewing the tax benefits because of this.
Sir, if in this [ strategy ], should we assume that whatever gain we had, we have a complete [indiscernible] in place so there won't be incidents?
No, I wouldn't -- I won't suggest you should make that assumption for two reasons. The gain that was there, and I'm assuming you're referring to the JPL divestment, that was a capital gain and the tax impact on account of this write-off would be a revenue-related item.
And also, there is also a question of when we will actually do the write off this, currently only a provision that we have made. We will have maybe one or two more quarters where we'll again elevate and firm up our positions, and then we will keep you suitably advised.
Perfect. That's helpful. My second question is more on capital allocation. So one is, I just wanted some color on money power status, the financial impact and time lines. The second is basically, are we looking at any inorganic moves? What we understand is [indiscernible] is also -- that it could be of interest. That's the second bucket over there. And the third bucket, there was news pertaining to JPL or I think the [indiscernible] setting up a power plant in Mozambique. The third point, is it -- any which is related to the company? So I asked within the three buckets on capital [ amounted ]. One is [ met ], second is [indiscernible] and for this [indiscernible]. These are all related to capital.
[indiscernible] one question, so I'll lose track of all three questions. But nevertheless, it is -- the first one is easy because it is in our interest to quickly decarbonize. So our investment in [indiscernible] is about reducing the carbon footprint and getting a lower cost of power. In fact, it will be lowest cost of power probably that we'll get being a bigger plant. So this is something where we want to expedite it, and we are giving ourselves a couple of years for the entire investment to be made. Around INR 1,500 crores or so is our current estimate of making it good, and it will be done in phases. So this is what is on your first question.
The second question and third question, if you want to -- the second one was inorganic model, yes. So we have already been very clear that these are good assets at MDC or RNL, et cetera. But there are -- all the time anyway, our company is on lookout for such good assets. And we will continue to explore this, and we'll continue to remain interested in these.
And the third one was around Botswana and JPL, et cetera. So yes, JPL is doing something over there where we do not have much to say.
We have a next question from the line of Amit Murarka from Axis Capital.
My first question was around the thermal coal cost, coal cost. So like could you share some light on how has the DRI cost changed in the quarter, and are you seeing some benefit of thermal coal [ action ]?
It has not changed yet because these coal mines have not opened yet. So thermal coal, whatever has been on market prices, et cetera, that is -- everything has been sort of in line. But if you see overall, our cost has reduced by about [ 90% ] in steel production. And that was thanks to the availability of raw material mix, which included, of course, the thermal coal and coking coal and iron ore.
So given that trend, we were able to almost keep our MSR, the prices stable. Whereas the costs give us a good advantage, and that is where you're seeing a result of quarter-on-quarter 50% -- more than 50%, I think 51% on a consolidated basis, 52% on stand-alone basis, the EBITDA improvement. So that is a direct result of cost reduction primarily on account of raw materials.
Sure, sure. Also given that the regional demand outlook is now better, like, could you kind of help us understand how is the export's outlook are you changing in this situation?
So the -- see market outlook, we have -- we are seeing a good, robust improvement in the order book, which as you know, that this export duty was drawn only in the month of November 2022. And it was -- that quarter, was already booked out. So inquiry started coming in after that, but that is mostly for the current quarter. And they put [ some ] miniscule level to a decent order book, and that is always a question of where we get better realization. So we keep evaluating that, and we keep taking the orders and not taking the orders on that basis. So we are seeing a very good, healthy pipeline of order book.
Right. So then basically, last quarter, exports have been weak. So like, how do we expect it to go back to like the usual 5% of the total volumes that we have seen in the past?
As I said, the decision on every order is based on the alternatives. And we are not fixated on any export as a percentage. What we are fixated on is highest value for the products that we make, and that is a decision which is based on every inquiry. And in the same time frame, the alternative that we have domestically. So we would not want to hazard any forward-looking statement on how much would be the percentage of export.
We have our next question from the line of Kirtan Mehta from BOB Capital Markets.
One question on the coal mining project. You mentioned that some of the clearances are coming in a bit late. Could you explain us what are the clearances involved, and what are the steps involved in achieving these clearances?
I'll have to write a book and give it to you on the number of steps involved, unfortunately. It's -- it's just too many. It's just too many. But every step has to be efficiently answered, [ replying ] for, and we keep going on and on with every step. And then I can't give you the whole list of 20 to 30 steps which we are monitoring on a daily basis.
Broadly, if we have revised our plan accounting for the actual [ system ] that is involved into it, how do you see the ramp-up sequence changing and the timing changing from your earlier guidances?
See, we have only given the guidance. I was there on the call last quarter, and I said that we would like it to happen as soon as possible, but it is not in our hands. So technically speaking, anything in importance [indiscernible], but it doesn't. So what I'll do, I'll give you on something that we don't control.
So [indiscernible], can we assume that the mine would be fully ramped up over the next 2 years or so, or could it take even longer than that in terms of achieving the [indiscernible] mentioned?
2 years is a good guidance for full ramp-up. That I should be confident.
Fine, sir. And in terms of the second question was about sort of the 9.6 million tonne capacity that we had last time, I think when we discussed there were some gaps. So are we planning to close any gap during FY '24 to improve the production level?
Surely, when we say 9.6 million tonnes, it starts with the metallics, okay. So it is not all finished goods or semis or anything, it is all metallics including [indiscernible], et cetera. Many of them assume within the system, some of them when we have surplus in, we are able to sell outside.
Our guidance is that our company is focused on value creation, and therefore, the more we are able to value add, the better our investments pay off. So this is something that you can constantly see that when we are saying that we make 54 [ heats ] out of a single [indiscernible], that is only shifting it from intermediate product to a semis level, but we don't have the finishing capacity for that semi. So today, I may be selling that semi. Tomorrow, when I have our [ hot strip ] mill, then it immediately starts coming into production over there. And I may not have enough of savings.
So these are -- this is where the sequence of investments counts a lot. And the guidance I gave last time as well was that we start from where the highest value is created. And I did give that guidance that pellet plant is our first priority, coal mines is our second priority. And then actually the end of the chain becomes the next highest priority, which happens to be a [ hot strip ] mill because you don't create that [indiscernible] value in the semi-state.
So these are the kind of ways in which we are making sure that our investments are paying for themselves. I hope that is [indiscernible].
We have our next question from the line of Bhavin Chheda from Enam Holdings.
Overall, good set of numbers. Sir, couple of questions. One on the Australian coal subsidy, despite over 100% growth in dispatches, we have reported an operational EBITA loss of $6 million. So were there any exceptionals, or -- because I believe in the past, we have said that the overall cost is roughly around $80 to $100 to produce coking coal, the prices are much higher. So why are we not able to report profitability at the Australian mine?
There are a couple of ways to support the production. So production itself, the volume, the volume is still much below the capacity that is intended for.
But more importantly, specifically for this quarter, one is there is a realization, which has come down significantly. The MSR, or the coal produced from outside India, was $197 last quarter. And in this current quarter, it is only $69, yes? That is number one. Number two, there were quality issues because of high ash content which again resulted in the lower end in [ half ]. And that is the reason why you see a lower EBITDA as far as the Australian subsidiaries are concerned.
This is what the team over there is focusing on in terms of improving both the production, the quality, and therefore, realizing the rising higher value.
Sure. And...
This coal -- essentially, this coal got sold as thermal coal rather than coking coal. That's the crux of it.
Okay. And any plans to ramp up volume and cost reduction efforts here? Because it's quite long when we are yet to see any cash flow or kind of the Australian mine.
So if you see the quarter-on-quarter, there is a reduction in losses that has happened. And that is because if we were mining in three phases, we started mining two phases more efficiently and got a bit of an improvement as a result of that, both in terms of cost by reducing the manpower. But more importantly, also focusing on the right quality, so with lower ash content, et cetera.
So that is the kind of an effort which is an ongoing effort right now. But yes, Australia, there have been challenges, and we are overcoming those as we speak.
Sure. The second one on the capital expenditures spent in the quarter and first 9 months?
In the first 9 months, the total capital expenditures...
For the quarter, we just shared the numbers during my overview. So during the quarter, the investments that we made into our wholly-owned subsidiary, [indiscernible] and Odisha was INR 939 crores. And the cap that we had in Jindal Steel and [indiscernible] itself, the growth in sustenance projects was INR 642 crores, total INR 1,500 crores.
[indiscernible].
Yes, yes. INR 410 crores in [indiscernible]. Therefore, total of INR 1,965 crores during the quarter.
Sir, this is during the quarter?
Yes. During the quarter, yes.
And 9 months figure if you have?
I'll give you the broad picture that whatever was the cash flow from operations, nearly all of it was spent on these three major buckets, which is for the power, that INR 410 crores CapEx in JSP and investment in JSO.
On the 9 months, maybe I can share. The total investments into Jindal Steel Odisha was INR 2,708 crores. In Jindal Steel and Power JSP, it is INR 1,566 crores, plus INR 410 crores for [ Monet ].
We have the next question from the line of Prashanth Kumar Kota from Emkay Global.
Only one question, it's regarding our debt. Sir, now we have a budget of INR 10,000 crores and net debt of about [ INR 6,200 crores ], something. Our EBITDA stream is now -- even at this current level of not so great EBITDA quarter, we are probably going to talk INR 10,000 crores -- per [indiscernible], INR 10,000 crores. And the new power capacity coming from coal mines coming up on stream over the next 1.5, 2, 2.5 years. Sir, you were substantially present meeting asset-based Analytics . Sir, but we are worried that sir our debt is too low compared to what our Financial support. The orders, at one point we have INR 40,000 crores, INR 50,000 crores of debt than when we created the asset. Now, those [ routes ] are coming. So now we are under [ Leverage ], maybe 2, 3 years is pushed. There's an opportunity to use our balance sheet from that? I'm just thinking a lot of it. Your thoughts would be helpful on this.
First of all, you are a very good analyst. Okay. You are done -- you have made our task easy. You're absolutely right. And why do we generate money in business, if not for capital asset creation? So obviously, capital assets have to be created.
But as you know, that we have been now changing the structure of the company in such a manner that we said that our existing investments, we will try to make sure that we move versus 0 net debt and convert this company into like a Holdco and have all these entities, such as RDSO, do the borrowing and investment on a 100% owned subsidiary model.
So you are seeing that our investments are coming up, and we have also stated our position very clearly that the maximum amount of debt that we would take is 1.5x our EBITDA.
So as our EBITDA grows, our capacity to take debt will grow. But that is -- that doesn't mean that just because you have the capacity, you use it. But you have then headroom to make ambitious plans. And those ambitious plans are always being drawn and you keep your powder dry for any acquisition opportunity, et cetera. So it is important to keep the powder dry. Having an ability to invest is a more important thing than actually investing all of that .
I hope that answers your question.
Sure, sir. That answers it. It has been more happier if at 1.5x. You said 3x, but still you answered the question.
I said 3x, no 2.5x.
So we are happy with 1.5x.
We have a next question from the line of Satyadeep Jain from AMBIT.
A couple of clarification questions.
The Monnet power deal, if I understood correctly, the 800-megawatt capacitive power plant in the site was already sufficient for the expansion plan also. So is that -- is it a power plant that is coming up more power for Angul 3? in light of the MOU you've already signed with Greenko , how does this Monnet power plant fit in the entire picture? Is it basically replacing the existing captive power plant you have on site? That's the first question.
First of all, we don't have 800-megawatt of power generation capacity. It is 165 to 6 -- how much is that? indiscernible] Around [ 150 ], yes. So -- but these are much less efficient compared to Monnet power. And our stated ambition is to decarbonize, eventually becoming a net 0 emission company.
But ROM was not built in a day, and you can't just jump into that future state. And it is better to have a journey where this opportunity is utilized in a very intelligent manner. And I'll give you some color to this statement so that you realize what is being done here. So first of all, 25% reduction on our power-related carbon footprint immediately comes some day. These assets are operated compared to the other assets. That is not the only thing that it does.
Now a couple of other changes that have happened as a result of this is that we need process team, and we would have spent money on investing in new Boilers. Instead, we will decommission or just isolate the turbine part of it and use the boiler part of those [ 165 ] into 2 and use it for process steam. That means our capital investment will reduce significantly from there.
And what also happens is that because this is a huge land in a contiguous territory, we can shorten the distance of travel for the coking coal -- Sorry, for the non-coking coal, the thermal coal that comes from other coal mines, which are next door. In fact, the length will be 2/3 to half of its current plan because we will also relocate our washery over there, and they already have another washery.
Now all there is makes it tremendous sense from a capital allocation perspective, from carbon footprint perspective and efficiency perspective, and we'll be producing cheapest thermal power. Now that is not contradictory to a future state where we are constantly wanting to invest in renewable and higher renewable power capacity. We have a stated ambition to have 1 gigawatt of renewable power tied up completely. And we -- the APL, for example, is already trying to make investments into hydropower and all that, so that we are able to make green power.
Our hydrogen based -- our CGP based yard is already using hydrogen as a reductant in its process because of syngas, and we are already capable of making a hydrogen-based DRI as and when green hydrogen is available.
Now all these dots, have to connect it together to be able to see the relevance of Monnet power into our larger scheme of things. I hope that satisfies you.
Just a follow-up on that. When you say efficient, is the Monnet power plant -- does it have much better station lead compared to the existing power plant?
Yes, [ 2,400 ] against [ 3,000 ].
Okay.
And just another clarification question on the Australian coal mine, you said it is being sold and the NSR is very low. I was -- if I'm understanding correctly, historically, the idea was that the coking coal from that mine will be exported and used in the JSP's steels work. Is that coking -- IS that mine selling coals from the [indiscernible] thermal coals?
Okay. First of all, I think you are on third question rather than a second, but it's okay. I will --
Australia, I think we have to get better, and we are working in that direction. Currently, this coal has so much of ash content without having a washery that we are having to sell it more like a thermal coal. We are not getting the coking coal prices for this. Of course, we are in negotiation and discussion with parties that have [indiscernible] washing capacity and are hungry for coal of its nature so that they can get the right coking coal. And we would like to sell coking coal assets from a coking coal asset of coking coal rather than thermal coal.
So all this is an improvement on which we are working. But obviously, we are not where we should have been.
And maybe if I can add just -- you think the [indiscernible] of whether it is going to be consumed captively or sold externally, it has to be made on a dynamic basis.
So for example, in the second quarter, 100% of it was consumed category. In third quarter, because of the quality-related issues, we have to make those changes. So I think that's how it will be on a dynamic basis.
We have a next question from the line of Ritesh Shah from Investec.
Can you just update us on the CapEx [ ends ]? You have indicated around INR 18,000 crores that is not taken into account the mining CapEx. So if you can just help us with some numbers, what we should bake in for full year FY '23, '24 and '25? [indiscernible], please?
We will -- first of all, that number was not INR 18,000 crores. I think it is INR 22,000 crores, including monitored is INR 24,000 crores. So if that is a number that you would like to keep in mind, it is that number and not -- I think you might have numbers without GST or something like that. So just kindly make that correction with yourself.
Okay. And as far as mining assets are concerned, obviously, we will have to get back to you with the full assessment of our mining plans.
We are making -- we are kind of finalizing the entire slate of CapEx over the next few years. And then maybe over the next quarters or so, we would be in a position to share more clearer numbers to the question.
Sure, sir.
And sir, I just -- the question that I just want to follow up on the prior questions which I asked, the one more specifically on Botswana. You indicated JPS is doing some things we don't have much to say. I just wanted to check, we have a coal mine, I think under JSPL, which is in Botswana. Did it have anything to do with, if at all, our power plant comes under JPL over there? I'm just trying to just have some sense from a [indiscernible] transition going forward.
Yes, we will be the beneficiary. They don't have any other source of coals.
Okay.
But sir, in the current write-off that we took, I think you indicated that it also included the ReWealth of Bolivia and Botswana. So I'm just trying to connect the dots again over here, just trying to understand the rationale if the impairment had to be done and why are we doing it now? If there is some hope at the JPL to put up a power plant and do something with the coal mine over there?
So maybe you will have to -- we will have to look at it in 2 ways. First is this JPL, when the power plant will come, et cetera, is a bit of unknown [indiscernible]. I don't think it is an immediate short term to medium term, it is going to be operational. I mean, we don't have all the details, but that is number one.
Number 2 is in terms of the provision that we have taken. That is an assessment, best case assessment based on what we see now, yes? If conditions change, if things improve, if we see better value available at a later point of time, then we'll have to relook at it at that point of time.
Again, in these provisions, we have considered 2 things. One is a net present value of the inflows. And also, you would have considered the terminal value of the reserves that are here. So I think that is how the value of the assets would be made. So the terminal value of some of these assets have been considered appropriately.
Sure.
Sir, can I squeeze in one question, I think it's important for investors as well. Like looking at the history of the company, we have seen first it was Oman , then it was JPL. We divested it for the right reasons. It ended up in the [polls] of the promoters at the right costing, right valuation, that's perfectly fine .
Sir, how -- would you be able to give some assurance that something of that sort of probably -- see, if I look at Botswana coal mine, if I look at the Australian assets, we have taken a write back. And if I go back in history, I think the same things that we played out for the other assets in parts as well. So will we look at the [ high off ] over there divested, it's a hypothetical question, but I think if you can give some color over here, some assurance, I think that would be good.
So first of all, you have yourselves that at the right value, something has been done. And if today, DSP is having a strong balance sheet, it is thanks to some of these divestments. Otherwise, from a INR 46,800 crores level of cost debt, we won't having a INR 10,000-odd crores of gross debt if some of these divestments wouldn't have been made. So why would somebody be looking for assurances, et cetera, if there is such a positive story to talk about?
So -- and in any case, the second point is forward-looking statements, we can't form. And you are asking for assurance on something that we don't even know that it is an assurance or what is your fear because as far as the history is concerned, the company has done well by taking the divestments.
Right.
Sir, the fear is basically JPL was divested as an example, and we are looking at Monnet assets right now, citing the rationale of [ station], heat rate and logistics. So I'm just trying to, again, just connect the dots, so that's why I used the word assurance. As the right price it's fine but then the rationale that we have cited earlier and what we are citing in I noted, if I look in the history of the company, I'm just not able to connect the dots there.
No, we have given very, very clear rationale and logic for Monnet acquisition. And if -- so I don't know if I can say something today, why we'll end up do it? And should I allow somebody else to take a large piece of land like right next door, which is actually literally going for a [ song ]? How much money, time, energy that is to be spent in acquiring additional land. Even if there was no power plant over there, that land would have been acquired at a price, and it would have been still worth it. That is the kind of valuation that we did.
It is a completely different matter that it has got a half-finished power plant, which happens to be extremely efficient. And therefore, that asset -- acquiring that asset mix is so much of a no-brainer sense that the first time I visited it after I became the MD of this company, It was not even on the horizon, but I started saying that this asset must be acquired without any consideration to what we have done to JPL, et cetera, or what the market would think because this is the most logical thing to do with such a huge area under the cleaner title ownership with the boundary who are continuous to our own plant. It made so much sense that even if we had any history of power plant or not, we could have acquired it. Even if we had to dismantle that power plant.
We have a next question from the line of Kirtan Mehta from BOB Capital Markets.
Just in terms of the asset write-off, the JSP mail we've done at INR 7,000 crores, could you give us sort of the asset value as well as the trade structure under that subsidiary? And how the -- how much loans are existing, and whether they are -- the capital structure is sufficient to take care of it?
Some of this is already externally available inflation. You can access it in our previous annual reports. Or if you have further questions, our team can share you the details. This is all publicly-available information.
The interest of time, this was the last question. So I would like to continue.
Yes, sir.
I would now like to hand the call over to Mr. Pallav Agarwal. Please go ahead, sir.
Yes. Thank you.
Yes, I would like to thank the management of JSP for giving us the opportunity to host the call. And also, Mr. Jha, closing remarks, if and all?
Yes. I think it will be helpful probably to look at the results from an [ expressionist ] perspective. Some of the analysts have already taken the right view on these results. I have always maintained that profit is an opinion and cash is the reality. And if you look at cash position, the company has done well. If you look at the investment, it has made the right kind of investments, it has made the right calls. I think much has been -- unnecessarily been -- some are interested about this acquisition of Monnet Power. Particularly thanks to the JPL divestment, it didn't make sense.
But I guess we have been able to give a constant, consistent reply around the subject, both from a decarbonization perspective as well as from the strategic perspective of this plan, which lies right next to us. What we realized in the course of diligence was that there were so many more pluses that it was completely a no-brainer to make this acquisition for many, many other reasons, leave alone the power plant.
So I think everybody would be hopefully convinced. If anybody wants to come and pay a visit to that area, we would welcome you very much because what I see, you will be able to see. And I would only say that keep trusting the company for the kind of decisions that we are making.
At the moment, we are the strongest balance sheet company in India compared to any other steel company. We are also completely focused on infrastructure and construction, which is the thrust area for the government. So even at 6.6% GDP growth rate, normally, you would expect a steel intensity of the growth rate to take you to a [ 8.5% ] increase in steel demand. But we have seen the first 9 months of the year had a 12% increase in steel demand, and most of it is from infrastructure and construction. The fact that JSPL portfolio is completely focused on infrastructure and construction, you should feel more and more confident about the company and its policies.
Thank you very much. Hope to see you next quarter with similar kind of results. Thank you.
Thank you.
On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.