Jindal Steel And Power Ltd

NSE:JINDALSTEL

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the JSPL Q4 FY '20 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, sir.

[Pallav Agarwal, Research Analyst]

Yes. Thank you, Stephen, and good afternoon, everyone. Thank you for taking the time out to attend the JSPL 4Q results call. I would like to welcome the senior management of JSPL and JPL and hand over the call to Mr. Nishant Baranwal, the Head of Investor Relations at JSPL. Over to you, Nishant.

[Nishant Baranwal, Head of Investor Relations]

Thank you, Pallav. Good day, everyone. Thank you for joining us to discuss the financial results for the fourth quarter FY '20 and full year fiscal '20. We hope you and everyone around you are safe and well. For today's conference call, we have with us our MD, JSPL, Mr. V R Sharma; our MD and CEO, JPL, Mr. Bharat Rohra; and our CFO, Mr. Deepak Sogani.To begin the opening remarks, I would request our MD, JSPL, Mr. V R Sharma, to begin. Thank you.

[Vidya Rattan Sharma, MD & Additional Executive Director]

Good morning, friends. That is good afternoon now. So thank you for organizing this call. The company is doing very well in this COVID time also. Last year results you have seen. JSPL stand-alone has come first time in profit in last 6 years. PAT is more than INR 618 crores. The Q4 had been excellent. We're at INR 310 crores. And we could maintain our EBITDA to INR 9,500 crore plus per tonne -- sorry, INR 9,500 per tonne. And we could also maintain our overall EBITDA in the range of 22% as stand-alone and 21% on consol basis.During COVID time, also, the company has done very well. Thanks to Ministry of Steel, and thanks to Honorable Prime Minister, who have declared steel industry as essential services industry, and we were allowed to continue our plants with all the norms laid by Government of India and by the state governments of Odisha, Jharkhand and Chhattisgarh by maintaining the social distance and also taking care of our workers, our staff and putting maximum people from work from home. We could do a record production in March, and we could also do a record production in April, and we are on the same wavelength in the month of May.So we are at a level of 560,000 tonnes on an average per month. That is 5.6 lakh tonnes. And we have done a maximum highest ever exports of 248,000 tonnes in the month of April. In the month of March, we have already crossed 270,000 tonnes, still 6 days yet to go. I think we will touch 400,000 tonnes of exports in this COVID time. Most of the exports we are doing to very strategic locations. We are exporting to France, the rail blooms, so that they can make the rails because they are short of steel. We're exporting plates to France, to Spain, Italy, Denmark, Germany. We are also exporting plates to Saudi Arabia, Qatar, Bahrain, UAE. We're also exporting round billets for making seamless pipes to Europe as well as to Middle East. We are also exporting a specialty angle iron for the power grid corporations of respective countries in Middle East. These are the very specialty products.Then, as you know, we are not only a steel company or I would say that we are an infrastructure steel company. We are not in hot-rolled coils, galvanized coils, cold-rolled coils, precision tubes, so that is not our business. Our business is producing something which is utilized by infrastructure organizations. So with the advent of new investments and declaration by Government of India, by Honorable Prime Minister, by Finance Minister and also by Mr. Nitin Gadkari, we are getting maximum benefit in terms of supplying steel to infrastructure-based organizations. So this is what the company is aiming to. And I'm sure we will continue to maintain our presence in the market and continue to lead as an infrastructure steel company and not only a steel company.Then if you see our performance in terms of cost reduction that has been very significant in terms of increase in NSR, net sales realization, that is, again, very significant. So we have attacked all 4 sites as to how we can reduce our costs and how can we increase the EBITDA level and how can we increase the NSR, net sales realization. So we have found a very right balance in between value addition and value engineering. So wherever the value engineering is to be implemented to increase the value addition or to increase the NSR, that we implemented very well.So good time as a whole, and we will continue to maintain this particular momentum. And I'm sure the country will also come out from this pandemic situation. Today, we are expecting that projects will be -- more and more projects will come, and they will be declared fit for the execution. And whatever small problem country is facing today in terms of labor migration, worker's migration from one state to another state, I think once the Indian Railways starts rolling down 200, 300 trains a day, then this problem will also be resolved. And because I feel personally that it is basically a proximity effect and people, they are scared today. Once they go back home, they will definitely find a need to come back on work. And their employers, whether it is a construction company or it is a manufacturing company, they will also be in the need of the people, and they'll also invite them to come back to work. So I think country will definitely come out from the current situation and the steel industry will grow.The other good thing what Government of India has done and also I am thankful to Ms. Nirmala Sitharaman and also to RBI Chairman that they allowed moratorium. They have extended the time period also. So it is basically up to second quarter, most of our customers, they are not stressed because my customer, if they are okay, they are comfortable, then they can pay us on time and they can buy the steel. So this is what we are expecting. So this is a very good move by government. So people, those who can afford, they will pay so that they will pay and they may use moratorium selectively. People, those who cannot pay, they can definitely delay the payment as per government law and as the RBI guidelines and as per their banker's comfort. So this is a very good sign that the country will come to economic wheel as fast as possible.So I think government has done enough and adequate for the nation. Now it is nation's call to give back something to the government. So we feel that, as per various economists, that the country may reach to -- may collect around INR 70,000 crores of GST in the month of May, and maybe June will be the ever highest more than INR 120,000 crores of GST collection. So that means more and more consumption will come up. And that eruption of consumption will definitely help the steel industry and also the consumer industry. So I am taking a very pragmatic and positive view of the overall situation. And the support of government is immense, and what government is doing, I think, that is commendable. The industry has always recognized the government's move and government's efforts. So we are also very, very complacent that government is trying their best so that the infrastructure projects, they come faster.As per Mr. Nitin Gadkari's statement, he has more than 400 projects on his table. More than 200 projects, the work has already started. Another 200 projects, work is likely to start maybe in next 1, 1.5 months' time. So that will be a great advantage. And the Sagarmala project also under the ministry has declared that the Sagarmala port projects in India will be on, and that will consume a lot of steel and cement.So overall, I feel people, those who have lost 2 months' time, that is in the month of April or May or maybe part of last week of March until the fourth week of May, I think they will recover in the next 10 months' time. So the rating agencies, sometimes they say that Indian GDP will be either minus or maybe negligible at plus. But I have a little different view. I think steel industry, construction industry, cement industry, agriculture sector will grow better. And we may challenge that negative GDP to a very positive GDP. I am contemplating somewhere about 3% to 5%. So -- but just so far, we can discuss after the first quarter what is going to happen.We have done very good in power sector. So the -- again, the special thanks to Government of India for extending INR 90,000 crores to DISCOMs. And the company like ours, like JPL, will get maximum benefit out of it because some of the state electricity boards or the Government of Tamil Nadu, for example, they owe about INR 1,600 crores from us. Our -- we will definitely get back our money though in installments, but they will ease us out in repayments. So this is a very good sign, though more details will be discussed during this conference by our CFO and by our Managing Director, JPL. But so far, so good. So hopefully, everything will be good, and the country will be recovering very fast.Thank you very much from my side.

[Nishant Baranwal, Head of Investor Relations]

Now I would request our MD and CEO, JPL, Mr. Bharat Rohra, for his remarks.

[Bharat Rohra, MD & CEO of Power Business]

Good afternoon, friends. The performance of JPL in the fourth quarter as well as the full year of FY '19/'20 has seen significantly better results. The comparison of turnover on a Q-on-Q basis has seen an increase from INR 784 crores to INR 930 crores EBITDA. The EBITDA on a Q-on-Q basis has increased by 30% from INR 257 crores to INR 333 crores. And also on a year-on-year basis, it has increased by 25% from INR 267 crores to INR 333 crores, primarily due to higher generation and lower coal costs. The comparison of EBITDA on a yearly basis has also seen an increase from INR 1,155 crores to INR 1,249 crores. That is up by 8%.Cash profit on a yearly basis has also increased by 15% from INR 816 crores to INR 960 crores. Though on an overall basis, the power sector continues to be under stress, however, JPL, helped by some inherent advantages of being one of the lowest capital cost plants and also due to the low level of borrowings, very smartly managed all the adversities in the adverse outside environment.JPL has met all its debt service obligations, and the future appears to be pretty good due to the following 5 reasons. The first one is the coal availability. Government of India has finally realized that coal has to be made available in plenty if power for all is to be accomplished. And anytime during the next few weeks, about 50 mines are proposed to be auctioned for commercial mining. JPL shall also endeavor to bag a few mines in the vicinity of the plant to ensure fuel security of about 20 million tonnes per annum. Then the clearance of the past outstandings, as our MD from JSPL already mentioned that the package of INR 90,000 crores has been announced for the DISCOMs. And we should receive a substantial amount of our outstandings from this loan which PFC is going to give to the Tamil Nadu distribution company.Then another factor that is going to help us improve our cash flows in the next 1 or 2 months is the settlement of the change in law claim, which is already at the final stage in APTEL and 50% of the change in law amount has already been received by us by December 2019. And the balance 50%, along with the carrying cost is expected to be released to us in the final settlement of the case.Another factor that will be helping us in the future is the reduction in the auction prices of coal. In the last few weeks, due to the COVID impact, the demand for coal has drastically reduced. And the coal companies are not able to sell coal through auctions even at 0 premium. This is the first time in the history of IPPs that the coal companies are running after the IPPs that you please buy any coal. And it's a very dramatic change and very interesting that today, they are requesting us, you please buy the coal and pay us money. And a large number of IPPs are not able to buy the coal because they do not have the funds. Luckily, JPL has been systematically buying in these auctions, and we have coal booked for use up to end August 2020 at 0 premium, which will give a big boost to our margins.Then the long-awaited the fresh PPA of about 420 megawatts should see the light of day sometime towards the end of June, July, and the power should start flowing by October 2020. During the current year, the debt has reduced by about INR 699 crores. And we are now having a debt of about INR 6,501 crores in our books. JPL has also prepaid the debentures of Franklin Templeton amounting to INR 330 crores. And this has been done without any additional borrowings by utilizing the change in law payments received from TANGEDCO and also out of the interest being paid by JSPL on the loans given to JSPL.Now at the final stage, I will come to the impact of COVID lockdown. Nationwide, the lockdown to contain COVID-19 pandemic has wreak havoc on already stressed power sector in the country. The electricity demand declined by about 25%, and the price of electricity discovered on the exchanges fell to about INR 2. Number of DISCOMs cannot even pay a regular monthly energy bills, further worsening the cash flow situation.As far as the COVID-19 impact on JPL is concerned, JPL has not had any adverse impact as JPL PPAs are with Tamil Nadu and with Kerala, and both are in a peak summer season. And hence, they have not curtailed any power offtake from JPL. And full power is being scheduled to these states under the PPA. And our plant is also operating to generate the contracted power requirements without any hindrances.With all the above positives in favor of JPL, I feel that the -- and with the commercial mining being permitted and recovery of JPL receivables in sight, the performance of JPL is going to improve quarter-on-quarter, and by the end of FY 2021, would once again become a profitable venture.Thank you, friends.

[Nishant Baranwal, Head of Investor Relations]

Now I would request our CFO, Mr. Deepak Sogani, for his comments.

[Deepak Sogani, Chief Financial Officer]

Good afternoon, everybody. Pleased to report an excellent set of numbers and performance. So the first point that I would like to cover in my commentary is the volume performance by us. On the stand-alone basis, we've done production of 6.3 million tonne or 5.6 million tonne last year, representing a 13% growth in volume on stand-alone basis. And on the consolidated basis, we have produced 8.17 million tonne as against 7.3 million tonne in the last year, which is also reflecting a 12% volume growth. And as you know, that in the year before that, in FY '18, if you compare FY '19 to FY '18, in that year also, we had consolidated volume growth of 23% and stand-alone growth of 32%. So volume growth for us has been consistent over the last 2 years. The volume guidance for us for stand-alone this year is between 7 million to 7.5 million tonne. And at midpoint, that will again reflect a 15% volume growth on a Y-o-Y basis in FY '21. And on a consolidated basis, our guidance is between 8.7 to 9.3, which will reflect 10% consolidated volume growth at the midpoint. So the core story of volume growth for us is intact and performing as we have been sharing with you from time to time.Let me now shift over to the commentary on the financial numbers. First, I will deal with the consolidated financials and I'll go to the stand-alone financials. So from a consolidated point of view, in the fourth quarter, we have reported positive PAT of INR 306 crore on consol basis after almost 6 years. So I think that is one key highlight that we wanted to share with you. The EBITDA in the last quarter has been INR 2,220 crore versus the corresponding quarter last year of INR 1,845 crore, representing a 20% growth in the EBITDA numbers on a Y-o-Y basis. On a sequential basis, the consol EBITDA of INR 2,220 crore was better than INR 1,820 crore reported in the last quarter. And the PAT of INR 306 crore was comparable to a minus INR 219 crore PAT in the last quarter. So obviously, the financial performance is good.On a full year basis, our gross revenues on a consolidated basis stood at INR 40,744 crore, representing a minus 6% change on a Y-o-Y basis, largely on account of reduction in the NSR by almost 10% in this year over last year. And the EBITDA on the consolidated basis was INR 7,854 crore as against INR 8,406 crore in the previous year. On the full year PAT basis, we have declared minus INR 400 crore PAT on the consolidated basis, which on a comparable basis in FY '19 was INR 2,412 crore negative, which had certain adjustments. On the PBT basis, the adjustments are about INR 1,187 crore. So if you factor that change, about INR 1,300 crore improvement in the consolidated profitability as per our report.Now I change to the stand-alone financials. In the last quarter, our stand-alone financials EBITDA was INR 1,562 crore, which as compared to the corresponding quarter of last year of INR 1,440 crore represents an 8% increase. The PAT, in this quarter, we have declared a PAT of INR 282 crore positive in India as against INR 1,154 crore negative in the last year, which had certain onetime adjustments as well.On a sequential quarter basis, our EBITDA is INR 1,562 crore versus INR 1,352 crore reported in the previous quarter, which represents a 16% sequential growth in the EBITDA. The PAT, INR 282 crore as against INR 97 crore positive in the last quarter, represents almost 200% growth in the PAT on a sequential basis. On a full year basis, our revenues were INR 30,021 crore, reflecting a 6% decline on a Y-o-Y basis. And the full year EBITDA was INR 5,777 crore, reflecting a minus 4% or a 4% decline from the last year EBITDA number of INR 6,070 crore. This year, we have declared a PAT, positive PAT of INR 618 crore in the stand-alone entity as against INR 263 crore negative last year. So that's the highlight that the business financial performance has improved very, very significantly.Let me kind of change my commentary to kind of include certain other aspects of our financial performance. Firstly, a quick commentary on the international business. The Mozambique business, as we have been sharing with you from time to time, has been able to increase its production quite significantly. And this year, the ROM production there has gone up by 47%, and it is now produced -- it has produced almost 2.5 million tonne of ROM in FY '20. And in FY '21, it will go up quite significantly from this level. So Mozambique is gradually kind of becoming better. South Africa was also positive. In fact, in the last quarter, other than Australia, all our entities showed healthy performance. As we've been sharing with you over the quarters, there has been a renewed focus to improve the operational performance of our international entities, and that is bearing good results, if you would. Even in Australia, we've been able to kind of optimize our expenses. We have been able to conclude a restructuring of the debt over there. And we are very close to getting approval for mining from the Russell Vale mine. So soon enough, Australia should also kind of start becoming EBITDA positive. So we're waiting for that to happen.Now a couple of further comments if you see. The depreciation in the consol this quarter or for the full year is lower. And if you go to the results section that have been circulated. And if we see the depreciation figure there, in the profit and loss account -- so the depreciation figure there showed a slight decline, that is primarily on account of the fact that in Australia, there was a full -- so if you see the quarter 4 depreciation, in the quarter 4 depreciation plus amortization is INR 757 crore versus last year INR 2,373 crore, which largely included onetime items. But in general, our depreciation is around INR 1,000 crore a quarter. And that has been lower by around INR 250 crore on a running basis, primarily because Australian business had kind of done a formal valuation exercise. Last year, as you're aware, we have taken impairment of around INR 1,200 crore based on mining estimates. And this time, a professional firm called [ Jio ] did a full valuation of the mining assets, et cetera. And the business carrying value has been increased by INR 293 crore. So I think that is the delta that is there as far as the depreciation is concerned.The second commentary is that when the results were being audited by Australian auditor, our international debt in Mauritius -- in Australia was still under negotiation. And therefore, the entire debt had been taken by them as current liability in the initial audited financials. And once we were able to conclude the agreement with the lenders there, and post that, they obviously have revised the financials based on the revised repayment schedule that has been agreed with our lenders. And that has shifted part of the current liability into noncurrent liability. The exact amount of shift is INR 2,659 crore. So I think that you will see in the notes to the account. And if you have any questions, I thought I'll just kind of quickly clarify.The other comment that is to be made on the notes and the financials, that in the segmental reporting, there is a INR 241 crore positive number that is being shown from the others category, income from the others category. Primarily, that reflects INR 293 crore on account of the valuation in Australia and INR 61 crore of FX loss has also been factored there. So that's one commentary. It's just a reconciliation item. The INR 293 crore Australian depreciation does not come into EBITDA. It is below the EBITDA from the line -- the depreciation line item, and it's covered there.So having completed the commentary on the main kind of financials and the notes to account, et cetera, there, let me now change my focus and discuss a little bit on the EBITDA. As our MD has highlighted, we saw a quarter where the NSRs had picked up by almost 8%. So our total EBITDA increase has been almost INR 3,100 per tonne. Our NSR has gone up by almost 8% or INR 2,700 crore. And in parallel, as you're aware, some of the commodity costs have started coming down. So coking coal costs have come down. The thermal coal costs has -- our JPL MD mentioned, that has also come down. The cost of refractories and electrodes have come down. So various costs have come down, partly obviously because we have some inventory and some long-term orders, so all of it does not get reflected. But certainly, there was a fair amount of cost adjustment in the business also.In this quarter, our blast furnace in Angul had a shutdown, and we lost production of almost 40 days in this period, which led to a volume reduction also of about 2 lakh tonnes. And it also led to certain additional costs. But net of the additional costs that we incurred in the Angul blast furnace issue due to efficiencies in our business and due to raw material costs going down, we were still able to kind of see a net improvement in our cost by INR 400. So on the whole, the quarter was significantly positive from an EBITDA per tonne perspective.My next commentary is on the -- and another thing that I want to add on to the cost commentary, if you would. As you're aware, that the government is extremely keen to kind of allocate coal. They want the consumers to get access to coal and consume it as soon as possible and convert the inventory of the country into cash. They have also announced certain incentives that they will provide for coal gasification because that is a nonpolluting way of consuming coal. And we are the only plant that has a coal gasification plant, and we do believe that in due course, we will not only get coal but we will get additional concessions coming in for us to be able to consume coal in our coal gasification plant. So that's one good news, and we are waiting and watching. But eventually, the coal gasification plant will be a very big game changer for our business once the coal and the incentives are in place, right? So clearly, from a raw material security point of view, the availability of coal and the block that we had won in the iron ore, I think both of them are contributing to kind of enhance our raw material security in the country, and that will further provide strength to our cost structure.Now let me kind of give a commentary on the debt levels. In FY '20 -- 31st March FY '20 or 31st March 2020, our net debt -- reported net debt is INR 35,919 crore. And in FY '19, the net debt was INR 39,137 crore. In this year, due to foreign currency depreciation, we had to report an additional debt in our balance sheet of INR 1,161 crore. So net of FX, we retired INR 4,379 crores, which is in line with our target for the debt repayment from operations. We attempted to sell our Botswana, which could not get completed. And right now also, the process is on, but the market is extremely slow. So as and when, if that happens that is one good one. And in line with the broader thinking that India is obviously strategically important for us, we are gradually seeing if there are opportunities for us to divest our international assets, Botswana, we've attempted. Now we've also kind of putting a process to see if we can monetize our Oman business. We are in the process. As and when there is any progress, if there is a transaction, we will keep you updated. But yes, we are trying to kind of deleverage by monetizing our international assets as best as we can. So that's the base commentary on the debt side.As at the end of Q4, as you saw, INR 35,919 crore was the net debt. At the end of Q3, it was INR 35,457 crore, showing a reduction of INR 462 crore. In the last quarter due to foreign currency depreciation-related additional reporting of debt, INR 770 crore was added, net of foreign currency adjustments. The cash paid for debt repayment in the last quarter was INR 1,232 crore.I would also like to say that in -- due to the moratorium that has been permitted by the Reserve Bank of India, JSPL will be able to defer almost INR 1,350 crore of principal and interest into FY '22 from FY '21, partly FY '20 getting shifted to FY '22 and partly FY '21 getting shifted to FY '22. And JPL will also see a benefit of almost INR 700 crore. So ballpark around INR 2,000 crore, INR 2,100 crore of additional cash flow will come in into both the businesses on account of the moratorium that has been provided by the Reserve Bank, and that will help us to further strengthen the operating business in the near term. And obviously, as you're aware, our volumes are going up, and the profitability will increase, so FY '21 augurs well for us.Another point, I think, before you ask I think -- so debt commentary is over. I would like to just catch up on my commentary on the financial performance because I missed out adding one point. As you're aware, we have the iron ore fines now available to us. The Honorable Supreme Court had passed the order in our favor and around 12.2 million tonne iron ore fines are now available to us. We've started consuming partly in the last year but very marginal. But this year, we will be able to kind of consume a large part of the iron ore fines that are lying at the SMPL premises, which now -- which anyway belong to us, but now we have access to them. So I think that will further help us to improve our profitability in the current year quite significantly. So I think that is one important factor that will impact our financial performance.Now let me give you a quick commentary on the interest cost. In FY '19, our interest cost was INR 4,264 crore. In FY '20, the interest cost is INR 4,149 crore, which shows a reduction of INR 115 crore. In JSPL, the long-term loan led interest cost reduction was INR 241 crore. In JPL, against the long-term loans, INR 35 crore was reduced. In Australia, in last year, we were capitalizing the interest. So on a like-to-like basis, INR 151 crore is being accounted for there, which should not have been accounted for. So that is another issue. So I think ballpark, I would say that almost if you factor the capitalization and if you reverse it, almost INR 300 crore interest benefit has come in, in this year over kind of last year. So that's the commentary on the debt.Now let me shift my commentary to the CapEx side. Our guidance has been between INR 600 crore to INR 800 crore. And we are more or less intact are reported in our cash flows. On the stand-alone side, we have reported CapEx of INR 665 crore, variety of things. There are -- obviously, a gross block has moved by a larger amount. The gross block movement is INR 2,160 crore. But that is on account of the fact that certain amount of [ EBIT ] or INR 773 crore has been capitalized. And also certain leases from AS 116, INR 608 crore has been also accounted for. So the walk-through from our gross block to CapEx is INR 665 crore on the cash flow side. On the consol side, the cash flow is reflecting INR 1,665 crore of CapEx. But that factors a few things. In -- as I was mentioning that in our Australian business, there's been a INR 293 crore uptick in the valuation. Currently, that is being factored in the CapEx side. Ideally, we could have adjusted the CapEx and bought it down by INR 300 crore and change the depreciation figure down by INR 300 crore. But that adjustment, we'll have to see whether we can rectify. So that's one, perhaps the largest one.In addition to that, I think as we've had some additional CapEx in our Shadeed business, they had additional cash, and they were doing certain optimization to improve their profitability. So I think somewhere around INR 200 crore to INR 250 crore has been some additional CapEx in Shadeed. But mostly around INR 300-odd crore of past vendor retention money and given the fact that we had some additional cash flow, those have been paid as well. So ballpark on a global basis, if we kind of factor out these past payments of INR 200 crore, INR 300 crore and -- or still an adjustment about INR 1,000-odd crore of CapEx should be there in the system. We still would like to guide The Street on INR 600 crore to INR 800 crore for FY '21. We remain constant on that number.So I would say with that, I would like to -- so let me also kind of -- I think I've been told that people want to understand the blast furnace. So the blast furnace was shut down for around 40 days in the month of -- it started in January and early February and then it was closed. And it was for various improvements in the blast furnace. However, post that, it is still, again, running at 10,000 tonnes per day. So I think it's just that much.So guys, with that, I finish my opening commentary. Over to Nishant.

[Nishant Baranwal, Head of Investor Relations]

Thanks, Deepak. Now we would be able to move on to the question-and-answer session. [Operator Instructions] And let's get strategic questions on the call. For data questions, me and Gaurav on the IR team are always there to help you with it. Operator, let's start with the questions.

[Operator]

[Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss.

[Amit A. Dixit, Financial Analyst]

Congratulations for a good set of numbers. The question is on international subsidiaries, particularly the Australian one. So in the notes to account, you have mentioned that there was some breach in debt covenants. And also that you have revised the long-term estimates for coking coal prices. So I just wanted to get more color on the same?

[Deepak Sogani, Chief Financial Officer]

Yes. Amit, so I had covered it partly in my opening commentary. And let me, for the benefit of the audience, kind of, repeat it. See, the situation was like this that we had done a restructuring scheme in Australia. And because of COVID-related matters, et cetera, we were not able to kind of complete the condition precedents on time. The scheme thereafter was again put up in the court, and it was approved on the 5th of May. So today, we have a fully approved scheme in place. The main issue was that when the audit was conducted, the auditors did not have the benefit of the scheme having been approved by them. And therefore, they decided to include the entire Australian debt as a current liability. And once the scheme was approved by the court, based on the repayment schedule, it was kind of in the revise and they shifted around INR 2,659 crore, which was earlier taken in the current liability into noncurrent liability section. So that's one shift that's happened.The second, as you are aware, that in the last year, we had impaired the Australian assets by almost INR 1,200 crore, which was based on management estimates and, obviously, based on certain professional imports also, but this year, we were able to kind of do a complete valuation exercise. And based on that, we were able to kind of see a valuation increase by INR 293 crore. So that has been factored there. I would also like to say that it's not a breach of covenant, it was just that we had to get the scheme finally closed out with certain conditions precedent, et cetera, which are now completely over and the matter has been completely settled. Okay?

[Amit A. Dixit, Financial Analyst]

So we won't see a breach in debt covenants anymore...

[Operator]

Mr. Dixit?

[Amit A. Dixit, Financial Analyst]

Yes. No, just a follow-up. I need clarification.

[Deepak Sogani, Chief Financial Officer]

Sorry?

[Amit A. Dixit, Financial Analyst]

No. So what I'm saying is that now it is highly unlikely that we would face the similar breach in debt covenants?

[Deepak Sogani, Chief Financial Officer]

No, this is just a one time. This was a scheme, restructuring scheme-related issue, which is now already approved by the court, right?

[Operator]

The next question is from the line of Ritesh Shah from Investec.

[Ritesh Shah, Analyst]

Pay and supply agreement. If we have at all, what is the quantum? How does it impact our working capital balance sheet? And is it related to covenants by any chance? And just a related question. We had $200 million of payments which were due in March, and this was shifted to September. So what is the status over here?

[Deepak Sogani, Chief Financial Officer]

So Ritesh, I could not follow your first question. But second question, let me attempt right now. Obviously, we had $200 million of liability as on 31st March. As you're aware, we were in the market to do an international bond. We had completed all the process work for it. Unfortunately, the Hong Kong and the Singapore markets shut down. London market shut down, and there was significant dislocation and disruption in the market because of which we could not complete our refinancing plan on time. Obviously, international lenders understand the issue, and they were in negotiation with us. And we have reached an agreement to kind of pay this amount by September. So that's how it is, okay?

[Ritesh Shah, Analyst]

Right. Sir, that's helpful. And sir, we have this advanced pay and supply agreement, typically for export volumes. We do get advances against the committed export volumes. So just wanted to understand how it sits on the balance sheet, how it impacts our net debt and covenants.

[Deepak Sogani, Chief Financial Officer]

So we -- see, as you're aware, this is mainly a trade finance-related cash inflow. In past, we were exporting about $400 million to $500 million worth of goods. But of late, our exports have picked up quite a bit. On the pellet side, we were like exporting around 200,000 tonnes a month. But now we are exporting almost 400,000 tonnes a month. So there's a significant uptick in the pellet export. Even on the steel export, given our higher volume and, obviously, the current COVID, et cetera, we will see significant increase in our export from the steel side also.This year, hopefully, we will be able to kind of see an export turnover of more than $1 billion. There'll be significant uptick in export. The advanced payment, et cetera, is basically surety that we will be able to sell the goods. So we sell those goods to traders in advance partly. And in view of the agreement with them, they give us some trade advance, which typically gets liquidated in the next 2 to 3 months. It's in regular -- even in India, when we do business, we take customer advances, and that's the factor. So it's a regular cash flow item. It appears in the customer advances section. It does not impact the reported debt.

[Ritesh Shah, Analyst]

And sir, does it have any impact on the...

[Operator]

Mr. Shah?

[Ritesh Shah, Analyst]

It's a related question, sorry.

[Operator]

Shah, I'm so sorry. But for any follow-up, request you to rejoin the queue, please. [Operator Instructions] Our next question is from the line of [ Prasad Kumar ] from CGS-CIMB.

[Unknown Analyst]

Sir, wanted to -- we are doing really well in terms of cash flow and in terms of operating profit, et cetera. So just want to -- in this context, wanted to understand the rationale for doing some sort of a divestment or monetization of the Oman asset which is doing well. I just wanted to understand the thought process here.

[Deepak Sogani, Chief Financial Officer]

So I think the strategic thought is to kind of focus on India and make sure there are enough growth opportunities in India. And there is a fair amount of international debt that is a bit of a drag on the Indian cash flow. So over a period of time, when all the foreign debt was taken to invest in the international businesses, the right way to solve for the internal debt is to be able to kind of monetize some of our international assets. Therefore, from a strategic point of view -- it is not just Oman, I think. We are very keen to look at all opportunities. Botswana, we shared with you. If Australia is available, we'll be open to that also. We've done our feelers on that as well. I think it's -- the entire business can be looked at it from a strategic point of view that we want to now focus mainly on India and reduce our international linkages to the extent possible. Oman is a mature asset, and it's perhaps easier to sell through. So therefore, the process for that is being run right.

[Operator]

The next question is from the line of Sumangal Nevatia from Kotak Securities.

[Sumangal Nevatia, Senior Vice President]

My question is with respect to debt repayment. So if you could share what is the total repayment now after considering all the moratorium, et cetera for FY '21? And what sort of quarterly schedule are we looking at? And also if we have acceptances, which is outside of net debt and what is the quantum of that?

[Deepak Sogani, Chief Financial Officer]

So the question, let me say, next year, as I already said that we have almost INR 1,400 crore of cash flow benefit in JSPL, okay? Partly, it is on account of the reduced principal repayment obligation in the JSPL business of around INR 700-odd crore and partly because the term loan interest also will get deferred for future. So that will provide additional cash flow of around INR 1,400 crore to us in the Indian business. The Indian business, therefore, will have around INR 1,600 crore of principal repayment, and it will have a lower interest repayment. Typically, we have interest repayment of around INR 2,000-odd crore in India. That will come down very significantly to around INR 1,500-odd crore. So there is extra cash flow that will come in versus 20 -- FY '20 in India. Similar is the case with JPL. We also have an obligation to pay the Australia and Mauritius loans of around INR 3,300-odd crore. So if you look at domestic businesses and international businesses, we have around INR 6,100 crore to be paid, of which Oman is going to pay from its own cash flow, INR 600 crore. For Australia and Mauritius, we are looking at multiple options to repay that debt, including monetization of international assets, but also looking at some refinancing through bond structure, et cetera. So net of the international debt, the total payment in India is only INR 1,630 crore in JSPL, yes?

[Sumangal Nevatia, Senior Vice President]

Okay. And consol is INR 6,100 crore after the benefits of moratorium?

[Deepak Sogani, Chief Financial Officer]

Yes, that is true. INR 6,100 crore, of which bulk is international debt, of which maximum is stable on 31st of March of 2021, right? And we obviously -- as you are aware, we were looking to do a $500 million to $800 million bond. The window should open up at any time soon, and then we should be able to kind of take that forward from that point of view. So I would expect a lot of this international debt to be either refinanced or funded through international monetization and related kind of activities.

[Sumangal Nevatia, Senior Vice President]

Okay. And sir, acceptances?

[Deepak Sogani, Chief Financial Officer]

Acceptances are basically regular. We do trade finance. We do other things. So acceptances, letters of credits will always be there.

[Sumangal Nevatia, Senior Vice President]

Yes. So quantum, sir, if possible, to share?

[Deepak Sogani, Chief Financial Officer]

I don't have it handy right now because we don't really consider it as a part of our core debt, but we can share it with you later.

[Operator]

The next question is from the line of Sudeep M from JM Financial.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

This is Subhadip here. So my questions are on JPL. Just wanted to get your deeper understanding on the open capacities. So in April and May, how have you seen these open capacities operating in terms of realizations on IEX? And I think in the opening comments, you also mentioned that you have a pipeline in terms of the pilot 2 PPA that's coming up. Some color on that as well.

[Bharat Rohra, MD & CEO of Power Business]

Yes, please. Mr. Jain, April and May, we have been operating 2 units of 600 megawatts and 1 unit of 250 megawatts, which is better than the fourth quarter of the last year. And as far as the exchange sales are concerned, though the prices on the exchange came down drastically, they have come down to the level of INR 2 and INR 2.20. But because we were uncertain of the payments coming in, so we decided to convert the coal into cash so that we get money alternate day on the exchange. So we have been regularly selling at least 200 to 250 megawatts on the exchange and creating some cash surplus for us on a daily basis. And going forward, because the coal has become affordable now, there are no takers for the coal presently. So we are trying to buy as much coal as possible so that this methodology continues in the next few months.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

And on the pilot 2, sir?

[Bharat Rohra, MD & CEO of Power Business]

And the pilot 2 scheme, you see because of the COVID, the shared discount, the people were not at all coming to the offices, and they have all gone slow on this. But since yesterday, we have been in touch with the coordinator, which is the PTC. And they have said that the states are now in a position to sign the PPAs. And towards the end of June, we should have the PPAs in position. Jammu and Kashmir, I am told has given an inclination to buy 500 megawatts, and Jharkhand has also given an indication to buy. There are other states which were already there with them. So I'm very hopeful that these PPAs should be signed towards the end of June.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

So if my understanding is correct, the offtake is expected to start in October?

[Bharat Rohra, MD & CEO of Power Business]

Yes. In my projections, I have assumed that it will start in October.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

And the expected realization, last question.

[Bharat Rohra, MD & CEO of Power Business]

Well, the realization happens in the next month.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

No, no, I understand. But what is the rate that you're expecting...

[Bharat Rohra, MD & CEO of Power Business]

The rate is fixed, INR 3.25.

[Subhadip Mitra, Power Analyst of Institutional Equities Research]

If you can repeat it, how much, sorry, 3?

[Bharat Rohra, MD & CEO of Power Business]

INR 3.25 for a period of 3 years.

[Operator]

[Operator Instructions] The next question is from the line of [ Preet from Wealth Invisors. ]

[Unknown Analyst]

Sir, I wanted to understand that what are the kind of blended EBITDA we are seeing for the month of April and May that were excluded? If -- I'm assuming it will be lower than what we would have done otherwise.

[Deepak Sogani, Chief Financial Officer]

Yes. The April, May and June EBITDA this first quarter, we'll maintain INR 9,000 per tonne because the product mix is excellent and the cost of production has been reduced significantly. We are not compromising on our EBITDA numbers.

[Unknown Analyst]

Okay, sir. The guide -- so just related to the guidance for the entire year, is that it should be at around INR 9,000 per tonne?

[Deepak Sogani, Chief Financial Officer]

I think INR 9,000 plus.

[Unknown Analyst]

INR 9,000 plus. Okay. And what will be the impact of Sarda on that? Because Sarda has gone and there's another mine that was done. So you do think that allows you to bring down the prices -- I mean, to improve your margins...

[Deepak Sogani, Chief Financial Officer]

See, we have been -- our material was lying there, as you know. So the stock -- for the last couple of years, the stock was there. Thanks to Honorable Supreme Court, they have allowed us to shift our material. So we have started shifting it, and we are using it in our different locations. And because this was already cost paid, duty paid, royalty paid, so that part of iron ore will keep coming because it is already factored in the previous balance sheet. So -- and now what we need is, we will be incurring a cost of transportation and also beneficiation wherever it is required. So definitely, in the current financial year, that advantage we will get.

[Unknown Analyst]

And is that advantage factored into the INR 9,000 plus per tonne EBITDA number you're giving? Or that will be more?

[Deepak Sogani, Chief Financial Officer]

I think it's very difficult to factor it because there is a product mix. But looking to the situation, now also, if you see our EBITDA, basically, the aim is to reach to INR 10,000 crore plus -- INR 10,000 per tonne plus. And that, if you add this factor, then definitely, it will be INR 10,000. But we are not aiming today, we are not factoring that because we are utilizing iron ore whatever is required because we have to do beneficiation also. And we had to transport. We cannot transport millions of tonnes, I mean, overnight. So we will selectively use it. And whenever we have short of iron ore from the outside sources, then we'll use it. We are not fully dependent, and we are not fully banking upon it.

[Operator]

The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher.

[Kamlesh Bagmar, Research Analyst]

Just one question on the other current liability. If I see as compared to FY '18, so our current liabilities, which were INR 2,600 crore, that has moved up to, like, say, INR 5,700 crore, almost doubled. As against that, revenue is up hardly 30% over that on an absolute basis. So this -- primarily it includes like the customer advantage and a statutory view. How the movement has been? Because even on the year-on-year basis, over FY '19, it has moved up by around INR 1,600 crore?

[Deepak Sogani, Chief Financial Officer]

Right. I'm just going through the schedule [indiscernible]. But I guess the best thing to do to answer your question is to go into the detailed schedule and then kind of walk you through that. So I would prefer to call you separately and discuss this based on the schedule, so yes.

[Kamlesh Bagmar, Research Analyst]

And even for other financial liabilities, so that has also moved up significantly, INR 2,000 crore year-over-year increase.

[Deepak Sogani, Chief Financial Officer]

No problem. I think we can walk you through. But as you are aware, big picture is that export advances obviously are increasing because our exports are increasing, and we do business based on customer advances only, right? So partly, that may be the very thing. But I don't have the full schedule in front of me right now. So we will just get access to [indiscernible]. Okay?

[Kamlesh Bagmar, Research Analyst]

And sir, any time line for our global or overseas debt refinancing or bonds or anything?

[Deepak Sogani, Chief Financial Officer]

So the time line is gone. We wanted to do it in last quarter, right? Now we are obviously wanting to do it as quickly as we can. As and when the window opens, we will do it. We are ready. We're absolutely ready. The documents are already. The legal work is ready. The team is ready. So really not an issue.

[Operator]

The next question is from the line of Ashish Kumar from Infinity Alternatives.We take the last question from the line of Ashish Kumar from Infinity Alternatives.

[Ashish Kumar;Infinity Alternatives;Managing Partner]

Congratulations for a good set of results in a tough time. My question was in relation to the Australia debt restructuring. Given the fact that there are no cash flows, can you give us some more details on the debt restructuring? Is there some other benefit that one is expecting in terms of -- how do you propose to repay the debt out there? Would it be a call on the parent? Or would it be something else that you are looking at?

[Bharat Rohra, MD & CEO of Power Business]

All our international debt strategically will be paid by a combination of alternatives, right? A, refinancing, wherever we can, so I think, that we will do. Partly monetizations in Australia, for example, we have land, which we will be able to monetize. Post the restructuring, the land is available. We have prime land available. We should be able to get a fair amount, $50 million to $100 million from there. There is some implicit reduction in the debt also, which has been factored into the restructuring. So I think that benefit will also come. Partly Australian business will have to start generating its cash flow also. So I think their mining approval is around the corner. So I think there are a variety of things based on which the repayment will happen. But I would say refinancing international monetization of either land and other things or entities, in addition to international cash flows, Mozambique has increased its cash flow and other businesses are increasing their cash flow, I think that will be one part of the situation. If there is any residual, obviously, Indian cash flow is strong enough to support, but that's the way it is, okay?

[Ashish Kumar;Infinity Alternatives;Managing Partner]

Right. But do you expect any call from the Indian cash flows? Or do you expect that the international operations can take care on their own?

[Bharat Rohra, MD & CEO of Power Business]

No, so international...

[Ashish Kumar;Infinity Alternatives;Managing Partner]

Over, let's say, a 3-year window.

[Bharat Rohra, MD & CEO of Power Business]

So over a 3-year window, see, international businesses are maturing each year. Partly, we will have to monetize our international assets to reduce the debt there, right? That's a larger story. Okay?

[Operator]

I now hand the conference over to Mr. Pallav Agarwal.

[Vidya Rattan Sharma, MD & Additional Executive Director]

Yes. Thank you. Thank you so much.

[Pallav Agarwal, Research Analyst]

Yes. Thank you, sir. Any closing comments from your side?

[Vidya Rattan Sharma, MD & Additional Executive Director]

Yes. I'm thankful to my investors, stakeholders and my lenders. And I'll only assure you on behalf of my entire Board and on behalf of Mr. Naveen Jindal that the company is progressing fast. The company has its first approach not to spend money on new investment on infrastructure -- or any kind of CapEx. We are not interested in putting more and more facilities. We are interested in leveraging. We are interested in sweating out the existing facilities fully. And this is what we are going to do. We will [ have done ] more than 7 million tonnes steel in the current year. Though many of the international rating agencies, they always say that steel industry is in trouble. But I assure you that we are not only a steel-making industry, we are a steel-making company for infrastructure industries. The government support is immense. The Ministry of Railway, the Ministry of Steel, Ministry of Coal, and above all, great support from our investors [indiscernible]. So we'll continue to do this, and we'll continue to work together to bring the company to old glorious days when we used to enjoy a very high rate of EBITDA and when we used to enjoy very high rate of profitability. I think we are heading towards there. The first baby step we have taken. I think in this current year, you'll find bigger steps and bigger jumps. Thank you very much.

[Nishant Baranwal, Head of Investor Relations]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

[Deepak Sogani, Chief Financial Officer]

Thank you.

[Pallav Agarwal, Research Analyst]

Thank you, sir. Thank you, everybody, for joining us on the conference call. Thank you very much. Have a good day.