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Steel Authority of India Ltd
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Ladies and gentlemen, good day, and welcome to Steel Authority of India Q4 FY '23 Earnings Conference Call hosted by Nuvama Wealth Management. [Operator Instructions] I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Wealth Management. Thank you, and over to you.
Thank you, Arvind. Good morning, everyone. On behalf of Nuvama Institutional Equities, we welcome you all for Q4 FY '23 Conference Call of SAIL. We are happy to host Mr. Anil Tulsiani, Director of Finance, along with his team. Now I request Mr. Tulsiani for his opening remarks, and thereafter, we can open the call for Q&A. Over to you, sir.
Thank you, Ashish ji. Good afternoon, everyone. It is my pleasure to welcome you all to the investor con call on the for Q4 and financial year 2023.
Let me first briefly run through the economic scenario in which we operated during the financial year '22, '23, which was quite challenging. We saw a consistent decline in the prices of steel in the first 3 quarters on the back of international prices. There was some elevation of prices in Q4. The year also saw fluctuating prices of inputs, inflationary pressures forcing corrective action by the Central Bank, which in turn led to growth making compromise, disruptions in supply chains, slowdown in Europe and U.S., lockdown in China, et cetera, which impacted the GDP of economics across the globe. As a result, the steel consumption has declined over 3% during the calendar year '22 over the previous year. Indian economy, however, fared better than the other major economies and the growth during financial year '23 is estimated at 7%.
The domestic production and consumption of steel registered growth of 5% and 13%, respectively, during financial year '23. As for WSA, India at a rate of 5.8% was the one of the only 2 countries to register a positive growth during calendar year '22 among the top 10 steel-producing nations.
Coming to the performance of the company, SAIL despite all challenges registered best ever production and sales performance during financial year '23.
During the financial year, the company produced the highest ever hot metal, good steel as well as steel. The hot production stood at 19.4 million tonnes as against the previous best of 18.7 million tonnes. Crude steel production stood at 18.3 million tonnes as against previous best of 17.3 million tonnes in financial year '22. Salable steel production stood at 17.2 million tonnes as against the previous best of 16.9 million tonnes in financial year '22.
Now coming to marketing. The marketing had to face numerous challenges as already narrated. Despite the same, the company registered its best-ever sales volume during the -- financial year '23 at 16.20 million tonnes, marginally higher than the previous best of 16.15 million tonnes achieved in financial year '22.
In fact, the domestic sale at 15.8 million tonnes grew by 7% over 14.8 million tonnes during financial year '22. The exports, however, declined to 0.4 million tonnes in financial year '23 from 1.4 million tonnes in financial year '22, a degrowth of 68% as the international market faced
On the financial front, the company once again breached the INR 1 lakh crore mark for its turnover. The turnover of INR 1.3758 lakh crores was the best ever outperformed the previous best of INR 1.2805 lakh crores achieved during financial year '22. The profitability, however, could not crack the level achieved during financial year '22, majorly due to high input prices and marginal decline in the NSR. EBITDA for the year stood at INR 9,379 crores, a reduction of 58% over CPLY of INR 22,364 crores. PBT and PAT at INR 2,637 crores and INR 1,903 crores, respectively, saw reduction vis-a-vis INR 16,039 crores and INR 12,015 crores in the previous year. The borrowings have increased to INR 29,270 crores as on 31st December '22 as against INR 13,386 crores as on 31 March '22, and has reduced in the Q4 by around about INR 3,608 crores, coming down to INR 25,662 crores as of 31st March '23. The recent decline in the steel prices, especially for the long products is again a cause of concern and may affect the profitability to some extent. However, the simultaneous prices of imported coal is expected to cover up the sales.
Now coming to our sustenance and operational efficiencies. In addition to the production and sales in the current year, the company is committed to take measures for ensuring sustainable operations. In the efficiency, the company has been making steady progress for reducing coal and coke consumption, higher usage of CDI and improving its productivity. The company has achieved its best ever performance on these 5 parameters during financial year '23.
The company is leveraging its new facilities to a good effect. We had already stopped production through has run a suit. The production of inward is also being brought down consistently. [indiscernible] financials '23 the same stood stood at 200% was 1.1 in financial '22. The share of value-added steel increased to 32.7% in financial year '23 vis-a-vis 51.1% in financial year '22. The percentage of in production is also coming down with higher capacity utilization of the percentage which stood at 19.3% in financial year '22 has now gone up to 30.1% in financial year '23. By engaging conversion services in and around the plant, demand pockets the percentage share of semi in sales has been even lower at 9% coming down from 15% in financial year '22.
As a responsible we have been working for clean and green steel by ensuring preservation over the years by use of initiatives like utilization of 100% in financial year '23 as compared to 83% in financial year '17. Reduction in carbon footprints, various projects under our commitments to 0 liquid discharge, ecorestoration of areas, regions around the plants and mines, plantation of more than 21 million saplings till date, use of alternate social energy like hydro power and solar park. Towards stakeholder management, the company has paid a total dividend of INR 3.25 per share in financial year '23, which included INR 2.25 per share as final dividend of financial '22 and INR 1 as interim dividend of financial year '23. Further, the Board of Directors has recommended a final dividend of INR 0.5 per share for financial year '23 is subject to shareholders' approval at AGM. As a means to improve transparency, the company has been procuring materials through government e-marketplace, the procurement doubles during financial year industry to around about INR 9,200 crores against the previous year figure of around INR 4,600 crores. The company has been engaging in numerous CSR activities across the country and primarily in the vicinity of our plants and units. The activities undertaken in conformity with the company's act as well as DPE guidelines.
IMF in its latest world economic outlook of April 23 has projected a global growth to bottom out at 2.8% this year. As supply chain disruptions are unwinding, dislocations to energy and food markets are IMF expects global growth to rise modestly to 3% in 2024 as inflation comes further to 4.9%. The major advanced economies are seeking much lower increase in GDP growth at 1.3% for 2023, with Germany and U.K. actually projected to contract by 0.1% and 0.3%. The emerging economies are expected to fare much better than the advanced counterpart growing at 3.9%.
The Indian economy meanwhile stands out as a silver lining with a strong demand and consumption pattern. Among major economies, we are placed much better and beating the growth projections even for China. India expects to grow in the range of 6% to 7% over the next few years in various reports like IMF, WEO World Bank projection, Money Policy Committee of RBI, et cetera. As per IMF, growth in India is expected to moderate in 23 to 5. 9%, before climbing higher to 6.3% in 2024.
As per the World Steel Association, demand we see a 2.3% rebound this year to reach 1,822.3 million tonnes. Steel demand is forecast to grow by 1.7% in 2024 to reach 1,854 million tonnes. In area, the demand is expected to show healthy growth of 7.3% in 2023 and 6.2% in 2024.
I'm hopeful that the good times to await abate us and I know so. With these words, I hand it back to Mr. Kejriwal for opening the Q&A session. I'm sure you all have some queries on the performance. Thank you.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Dikshit from ICICI Securities.
I have a couple of questions. The first one is on coking coal cost. If you could let us know what was the change Q-o-Q in the coking coal cost in Q4? And what do you expect in Q1? That is the first question.
Yes, the imported coking coal cost during the third quarter was around INR 25,500, and in the fourth quarter also, it was the same rate of around about INR 25,500. And coming to the projections for the next few months, it will be a bit higher at around about 28,000.
So when you get the benefit of the lower coking coal prices prevailing in the country? See, the cycle is around about, you can say, around about 75 to 80 days. Like when we get coal from U.S. so the time taken by -- to reach our port is around about 40 to 45 days. And when it is from Australia, it is about 25 -- 20 to 25 days. So 40 to 45 days plus the movement inside within India, and support. So the average is about 75 to 80 bps. So the benefit of, you can say, the month of May is -- from May, we have started getting the real benefit of lower prices of coal, April and May. It will probably carry -- always start getting it from the last week of June -- 2nd half of June and July onwards.
Okay. The second question is essentially on demand. What we have seen that in several quarters, there are -- as we talk to different channel guys, they mentioned about the subdued demand prevailing in the country currently. While we are arguably, we are saying that the demand will grow by 13-odd percent. Now given all this, where in which sectors do you see for yourself, demand growing? And what would be our sales volume target for this year, FY '24?
For the year FY '24, we have projected a sales volume of around 18.7 million tonnes, which is an improvement of 15% over '22 to '23. And we expect the demand to be there also, in all the segments, especially in the infrastructure, and of course, there will be a slowdown in the demand during the monsoon season. But we expect more or less a consistent further demand thereafter also.
In last 2 months, have you seen any slowdown in demand, particularly infra and sectors?
No, no, no. There is no slowdown in demand, at least for
The next question is from the line of Somaiah V from
The first question is on [indiscernible]
There is a lot of disturbance on your line.
We shall take the next question. The next question is from the line of Mohit Bhansali from Bonanza Portfolio Limited.
Yes. First of all, I want to know what was the employee strength comparatively in the year-end, last year to this year, how much reduction it has been?
There has been a reduction of around 3,000. 2,800 to be exact there is a reduction in manpower.
3,800?
Right.
So I'm curious to know that since the reduction is year-to-year, why the employee cost has gone up 15% year-to-year?
15%. I don't think year-on-year, there has been a reduction of around about INR 800 crores, last year, it was INR 3,000 crores, it is showing, now it is showing INR 3,400 crores.
I think you are talking about quarter-to-quarter.
No, I'm talking about last March quarter, last financial year March quarter.
Quarter-to-quarter, I think you're talking quarter-on-quarter.
Yes, yes.
Yes. Actually, what has happened is, in fact, at the year end, normally, what happens is we have a fresh valuation of from -- our So based are -- because otherwise normally grow by the previous year's figures only with some marginal escalation. When we have done the actuarial valuation this year, there was an increase of around about INR 400 crores because of that. so which has impacted in the particular quarter. And besides that, the pension provision, which we had made up to the third quarter, that was considering since the profit was low at -- up to the third quarter, we had taken it at 3%. And now we had to do it at the rate of 6.6%.
So the 3.6% additional pension and another INR 300 crores to INR 400 credit is approximately for this revaluation after the actuarial had given the figures for '22, '23.
Okay. So what is the call for this financial year? Or what will -- it will be gradual, like earlier in -- earlier con call, you said that we will gradually come down.
Yes, it will be coming down this year also. See, there is a reduction of almost 5%. When the manpower is coming down, there is the reduction for that. But that there is a normal increment and the provision, which we have to keep. So that also has some impact on the salaries and wages. At least you can say 6% to 7% for the normal employees who are still working. So basically, everywhere we can expect for around 4% to 5% in salaries and wages.
Okay. So it will be more or less same or it may come down a little bit?
It will come down.
Okay. Second question is on your debt trajectory. What do you think your debt trajectory will be in this financial year. It will come down or it will go up?
We expect it to come down, especially with the softening of the coal prices, we will really get a benefit of that because at the present whatever is the outflow for coal, it is only expected to come down by, you can say, around about INR 1,000 crores to INR 1,200 crores per month. But the other thing which plays our actual role is the net sales realization of products. So we have to keep our fingers crossed for that. So if this happens so, maybe with the CapEx also, what we are planning around about INR 6,000 crores, we may still be that to some extent.
One thing I just want to submit that FX you are doing every year, INR 4,000 crores to INR 5,000 crores. So that is a huge CapEx. So why don't you mention what CapEx you are doing in your presentation like new coking or SMS in our Rourkela? And what is the time line of completion. It will be very helpful for us if you mention everything in your presentation as well.
Okay. We'll keep it in mind.
The next question is from the line of Pratim Roy Roy from B&K Securities.
Yes. First question is that you have mentioned our full year sales guidance of 18.7 million tonnes. So if you can tell you the where this is coming from, whether domestic or export and how the mix will come in. So that will be -- that is my first question.
Shall I get back to you regarding the domestic and this thing in a few minutes -- by the end of this call?
And my main question is that, is there any -- what is the mix on that? And from which sector it will come from? That is the main question. And the second question is that, that to expense, that you have explained just now, other expense, there is a jump in sequential basis. So if you can mention, is there any one-off on that basis or anything else that you can
There was a substantial jump in this year because of the foreign currency losses which we have taken in this year because of the sudden hike in the dollar rate. You know that most of our export -- imports are are there. Nearly 85% of our entire pool is being imported. So because of the sudden jump of the dollar rate in this particular financial year, we had to take quite a lot of it hit because of that.
Okay. And the question that the overall debt will come down by INR 6,000 crores for the FY '24, right?
Yes, like our original planning is bringing on the debt, but we are not too sure about this thing. It depends -- it entirely depends on the market dynamics, the NSR as the coal prices. The coal prices, if they continue like this, then there are a good -- there is a good chance of the debt coming down.
By 6,000 crores, right?
We cannot comment on figures at this point.
And the last question is 20% CapEx number for this full year?
Come again?
CapEx guidance for the year?
CapEx, you want to know about '22, '23?
'24.
We have projected CapEx of round about INR 6,500 crores.
For the coming year, right?
Yes.
The next question is from the line of Sumangal Nevatia from Kotak Securities.
I have a couple of questions. first, on the volume guidance of 15% growth, if we look at last 5, 6 years, I mean it took us almost 5 to 6 years to achieve this 15% growth from say 14 million to 16 million tonnes. Now we are guiding to achieve a similar performance in 1 year. So just want to understand some breakup as to which all plants? And how should we see on a quarter-on-quarter basis, the growth coming? Is it more back-ended? Or should we start seeing this growth from 1Q itself?
Actually, the growth is more or less -- from the quarter 3, it will be substantially higher. Like if you see that even in every year, we have a substantial growth from the third quarter onwards. But we have done bad -- too bad in the month of April also. I think we have crossed -- 1.3 we've crossed. So if you take that 1.3 x 12 million, that only works out around about 16 million tonnes. And with some sort of growth towards the third and fourth quarter, we expect to achieve this target.
Okay. Got it. sir, my next question is on working capital. Every year, there's a big swing. Last 2 years, there was a release of almost more than INR 20,000 crores. And in FY '23, the working capital increase is almost INR 14-odd-thousand crores. So sir, what is a stable level here to expect? And why such sharp increase in working capital?
See, basically, what is happening is this -- we are basically -- the trade payables, whatever we have got, and they are fluctuating a lot. That is basically depending on the coal prices and we have got these deferred payment terms. So that is basically playing a major role in this working capital this thing. Collections, we are doing quite well. Our debtors are coming down, means you can see that they are in the range of around about INR 5,000 crores. There was there last year also and -- and this year also they are on the same level. So basically -- it's basically the payables which are dominance it's entirely dependent on our payment terms with our whole suppliers.
So what is net debt as of the year-end?
28,400. And there is one more thing. There has been an increase in the stock of steel this year as compared to last year, by around about 4.5 lakh tonnes. So that has also had an impact on the working capital.
Understood. Sir, one last question on the iron ore sales. Sir, what is the sales we did in FY '23? And I mean we are still carrying the inventories and we revalued in 2019 of around INR 8,000 crores, INR 4,000 in each current and noncurrent. So what is the comfort we are having in terms of realizing this value...
See, basically, the majority of our iron ore is located in Jharkhand. So there are some issues about issues with -- in case of Jharkhand for evacuation of ore from there. Some clearances are required from the Jharkhand government. So we are working on that. And we are optimistic that it will be cleared very soon. We've already deposited some royalty also in the portal also evacuation of ore. So we feel that it will be -- we'll be able to evacuate quite a lot of quantity in this particular year. Like I think we have projected almost -- more than about 2 million tonnes from Jharkhand mines in this particular financial year. And last year, I think the total sale of ore is almost 4 lakh tonnes. So that is -- and yes, we are optimistic. And regarding this -- we plan to liquidate these stocks in a rapid manner because we have got a, you can say, a 3-pronged strategy in this. We'll be supplying to our own steel plants. We'll be using it for conversion to pellets, try to sell it also. And we are also planning beneficiation at the pellet plant mines through an MDO route. So we feel that this evacuation will be quite fast once all the things fall in place.
Okay. So you said 4 lakh tonnes, right, for FY '23.
Yes.
The next question is from the line of Rahul Jain from Systematix.
Sir, firstly, on the -- there is a large amount of reginal sales. So when you -- something around INR 8,500-odd crores, you mentioned in the results. So when is this going to conclude? And what do you expect the direction of -- is it going to go higher? And also how much is receivable out of this?
Yes. Actually, this is mainly -- we have this provisional sales for our rail which we -- which is supplied to the railways. So basically, what is happening is the pricing is done after the financial year ends. But the issue which has come up is that till now, we have not been able to get the price for '21, '22 also. So we -- so the price at which we are billing to the railways is around INR 67,500 per tonne. So we expect a substantial amount from the railways once the CA cost finalizes this -- pricing of the railways for '21, '22. And '22, '23 also, we will try to get it this year, otherwise -- because there's normally a lag of round about 1 year. So '21, '22 we expect and say by the beginning or say by the second quarter of '23, '24. And we'll try to get the '22, '23 pricing also, which is again still at 67,500, and ennd of '23, '24, or maybe '24, '25 beginning.
So you have booked INR 30,000 crores cumulatively, right? So on that number, we should see a big jump, right? Is that the right way to look at it?
Yes. And that will probably add [indiscernible] the bottom line also.
Right, right. Any number you want to give, what percentage or range?
We have submitted a cost, but then I think we should not disclose it at the moment because it is subject to CA cost checking it and finalizing it.
Yes. Secondly, sir, we have now completed this large around of CapEx, which took us almost a decade. Any further plans to look at, say, go to $30 million or beyond, what is the big picture here?
Yes, we have got plans lines up. We have -- we will be going in for ramping up of some of our facilities. And that will add around about 3 million tonnes in the next, you can say, 3 to 4 years. And besides this, we are planning expansion plans in [indiscernible] of around about 4.5 million tonnes. And another, you can say, 3 million tonnes in Bokaro, and even to some extent, we may also up to 30 to 33 -- 31, 32, we can have a plant in Rourkela Steel Plant. So our plans are to achieve around, you can say, 35 million tonnes by you can say 31, 32.
So already, we have obtained the in-principle approval of the Board to go ahead with the preparation of DPS for Bokaro and And shortly, we'll be also going in for Durgapur in some time now. Durgapur also we are planning expansion.
And so in the next 2 to 3 years, any meaningful number, like, for example, for this year, you have said 15% volume growth, say, in the next 3 years, any number which we have worked based on the plans you have?
Yes. Actually, the -- what I was telling you that tere are some debottlenecking facilities and some new facilities, which will be bringing up which will help us to increase our production by around about 2.5 million to 3 million tonnes. by -- in the next 3 to 4 years. And after that, the benefits of the expansion will also start coming in.
The next question is from the line of Siddharth from Kotak Institutional Equities.
Sir, a small clarification. Sir, our in this year has been around 15%-odd and this is the cash so do we have any leftover credits? And what will be the in the future year, sir? Any guidance on that?
At 25%?
So we've exhausted all our previous year tax credit, sir?
Yes. Yes. We have exhausted.
Understood. Understood, sir. And secondly, just a small clarification. So we are spending around INR 4,000 crores annually when it comes to our CapEx. But when it comes to capacity additions, there hasn't been any really meaningful capacity additions. So am I to assume that this INR 4,000 crore odd number is mainly for the maintenance CapEx level? Is that understanding correct, sir?
Yes, yes. You are correct to a very large extent. See, we have got these old battery. So every 15 to 20 years, we have to keep changing these batteries, to replace the battery, maybe on the same foundation, but we have to replace it. So it is basically these and then some improvement in the product for up the improvement in productivities and all those things. We have these BS stores, and we also have some facilities within the SMS and all, which actually will help us improve the operations, but will not add to the capacities. So there are debottlenecking, and like improvement efficiency, improvement facilities, which having installed these -- in our plants at the moment.
If that is the case, when do we start to actually start incurring growth CapEx, sir, because you highlighted repeatedly that we plan to expand our capacities. My question is on the time line, sir, what sort of time line do we expect for the growth CapEx for to come in?
Growth CapEx, as I was telling you that we are in the stage of preparing the DPR for our and also for Bokaro, it has also started. So these DPRs once they are finalized, it will take some time for the DPR and the tender specifications to be finalized, which will be around over 6 months, you can see from now onwards 5 to 6 months. By August and September, we will be getting our Stage 1 clearances for our -- these projects, these expansion projects. Then we go out for a tendering activity and maybe another 4 to 5 months down the line, we'll be able to finalize the tenders and come back for order placements. So we can actually end of this financial year, we'll be ready for order placement.
Understood, sir. And one, sir, last small question. What sort of steel price change are we seeing quarter-on-quarter for us, sir, Q3 versus Q4 in the realization, sir?
Q3 versus Q4. In case of long products, there was an increase of around about INR 2,000. And in case of flat products, there was an increase of around about INR 2,700.
And sir, the guidance for the upcoming quarters?
Upcoming has not been too good, like the there has been -- April was quite steady, may slightly down as compared to April, they were around around INR 2,000 to INR 2,500.
Okay. So basically, you are back at 3Q levels?
Basically, it means you are roughly back at 3Q levels, all the gains of the past quarter have sort of
We'll be at that level or slightly marginally more than that.
The next question is from the line of Aditya from Axis Securities.
Sir, you just touch based on the next -- expansion so for FY '25, what will be our CapEx guidance. So I just wanted to understand from each year, there will be a material increase in CapEx going forward.
Material increase in CapEx will probably be from -- you can say from FY '25 second half because we will be trying to place the orders by the end of FY '24. And then initially, like basically the upfront payments, which are almost given the 3% to 5% of the total budget cost for design and engineering and all. But the real thing will start probably from the second half of FY '25.
So what will be the full year FY '25 CapEx
We are not because since the DPR is not yet ready, so we are not yet sure what will be the total outlay. We have projected a total outlay of nearly INR 1 lakh crore for our entire expansion and these debottlenecking facilities over the next, you can say, 9 to 10 years. And it will be peaking basically in the year, '27, '28 and '28, '29, when all the modernization will be there -- means going on together. So initially, in '24, '25, u don't expect much in that because it will be only 1 particular plant which will -- for which the expansion will be commencing.
'25, '26, the next plant expansion will commence. So basically, the real expenditure will start coming from '27, '28, and '28, '29.
So second question on the other expenses, you can see in this quarter, there was a jump of 9% sequentially and 6% on a year-on-year basis. Any one-off in that? Or it's largely because of the decreased production?
You're talking about the financial year?
No, I'm talking about Q4 other expenses.
Q4. Can you just give me some time for that. I just revert back to you. I will send it to you separately.
The next question is from the line of Mohit Bhansali from Bonanza Portfolio Limited.
What is the inventory level closing here?
The inventory level is 1.05 million tonnes.
1.05 million tonne. And since you are saying that coking coal is very important and major factor. So you're, again, going for the big large expansion. So are you going to -- in the DPR, are you going to make sure that you have the raw material security or that is -- will what -- we are at present doing that sourcing coal from other sources, the same will go on.
See, basically, at the moment, we are sourcing -- you can say, around about 84% to 85% of our coal from, say -- from our resources at Mozambique, the Australia and USA. We are importing from there. We are importing from our own our -- own ICVL supplying around about 1 million tonne of coal. And the sense that indigenous coal is around 15%, which is mainly supplied from BCCL and some of our own operations. But shortly, we will be now operating our mine. So this mine will be able to give us about 1.6 million to 1.7 million tonnes of coal annually. Number one. And the ICVL has got a lot of results and it has got a lot of potential. So the additional -- some more additional capacity beyond this 1 million tonne also, we will be sourcing from our own resources in Mozambique.
So we will be requiring some more additional coal from Australia and U.S. and Canada. So we will be going in for long-term agreements for that. And we are also trying to get our coal from Russia also now. We have started that also.
Okay. Basically, the question was like you always have this volatility and how you are going to step from the volatility because already you're going to spend a lot of money on the expansion. And after that expansion, if same problems larger, then you will be like in trouble again. That was...
We have actually worked out a strategy where the -- the expansion is phased out. Like initially, we are planning expansion in Scope 1 and the next expansion, which is -- which you are planning is in Bokaro, which will come, you can say around about a 1 year later -- a year down the line. And then which will again be a year further down the line. All the fund requirement is not bulged up at 1 place. So this is our strategy, which we have worked out, and we hope we'll be successful in this distant.
Okay. And you said that mine you're going to start. So when it is expected to start, sir?
Tata mine, we have already finalized the tender. So we will be -- let us see as soon as possible.
So all the permissions are in place to mine?
Yes, yes, clearances are there. All clearances are there.
And second thing is that I was going through some news that in parliament, the steel ministry has put up that the expansions which sales are doing around of INR 2,500 crores are delayed, and because of contractor issue. So are these issues are resolved or still going on?
See, we are resolving issues one by one. Like we had some issues in Rourkela, which we resolved last year. And maybe in this particular year also we will try to resolve as many issues as possible. But there's one thing that I've not known in the parliament, whatever it is there. But we are trying -- our objective now is to pull all the old contracts. So that like -- we have to win the confidence of the people who are our partners So our objection is difficult in that. So we have closed quite a lot of projects in the last, you can say, 1.5 years. So and that closed the projects as soon as possible. So whatever is there, we are -- even sometimes going in for out-of-court settlement with to the parties also.
Mr. Mohit, we request that you return to the question queue for follow-up questions. The next question is from the line of Kirtan Mehta from BOB Capital Markets.
I had a specific question on the Rourkela and Bokaro profitability. When I compare the Q4 profitability with the average quarterly profitability that we have seen over FY '22, Rourkela and Bokaro still operates at 20% to 20% -- 30% level. So are there any specific factors which is holding market profited these 2 mills?
Actually, there is a thing that what has happened in '21, '22, we got a very -- we fetched a very good price for our flat product. Basically, if you see the difference between flat and long products in '21, '22 was in the range of INR 11,000 to INR 12,000. Now this has come down. And especially if you see in the last, you can say, 3 quarters, Q2, Q3, Q4, there's hardly a difference between the long and the flat products in the market. So the major reason for very good profits last year was the good NSR, which we got all the flat products. I think all the -- the entire steel industry whoever is in the flat product made substantial profit because of that.
So largely, is I understand it's attributable to the external pricing factor and there are no material plant-related issues here?
No plant-related issue or anything. It is basically the external factor, which has played a very big role last year.
Understood, sir. Another question was about understanding the specific improvements that has been done this year. Particularly, we see that the semis volume has gone down from 19% in FY '22 to 13% in FY '23. WAP products have also increased from 49% to 52.7%. So what are the specific improvements that has come through this year, which is helping in this?
See, basically, what is happening is -- our mills are performing quite well, especially the long product mills. We had set up a medium structure mill in Durgapur and Universal Structure mill in ISP. So these have started performing really very well. Means like earlier, the thing was that they were producing something like just a 4 lakh, also 3.5 lakh tonnes per annum. Now we have seen that the production from these mills have gone up to even you can say 6 lakh tonnes per annum or average of 50,000 tonnes per month and Universal Structure mill is also doing very well. So this is the major factor because of which we are having less of semis for sale now, and more of our own finished products.
Would you be able to also share the utilization -- current utilization level at both these mills?
I just conveyed to you later on. This is okay?
Sure, sir. And one more question. I just want to know -- I'm not sure whether this has been shared earlier. What was the iron ore sale during the year?
4 lakh tonnes. I just wanted to -- somebody wanted to know what is the -- why was the increase in expenditure during Q4 as compared to Q3? So the major is a royalty, which has gone up by around INR 270 crores, then conversion charges of INR 23 crores and expenditure on CSR of around about INR 91 crores. These are the major 3 reasons for which the expenditure in Q4 was higher than Q3.
The next question is from the line of Sumangal Nevatia from Kotak Securities.
Just two things. One is overall, in terms of capacity from the currently 20-odd what -- for the next 3 years, where are we going? And what is the overall CapEx intensity of this expansion?
See the total CapEx, which we have planned up to INR 31, INR 32 is in excess of INR 1 lakh crores, okay. And with it peaking in the years from '27, '28 and '28, '29. This is the main thing. And otherwise, the normal CapEx which we'll be having, say, our debottlenecking and our normal AMR schemes and rebuilding and all. That will be, you can say, around INR 5,000 crores to INR 5,500 crores every year. This is going to be our normal expenditure, and the expansion
Okay. So INR 5,000 normal expenditure, which includes maintenance and then maybe around INR 1 lakh crore over the next 7, 8 years.
And sir, what sort of leverage level are we comfortable? Because today also, I mean, FY '23, we have almost 3.5x net debt to EBITDA. So this sort of CapEx of around INR 1.40 lakh crore, INR 1.50 lakh crores over the next 7, 8 years?
Actually, debt-to-EBITDA is bad because of difficulty -- the EBITDA being low also. The denominator being low also is a cause of worry for us. It was very good last year. But this year, again, it's a call of concern. We also understand that. See, last year, it was around about 0.59, now it is in the range of 3%. Hopefully, our EBITDA improves. I think it will have a corresponding effects on the debt part also because we'll be able to reduce our debt also to some extent
Yes. But sir, beyond what level then we will reassess our expansion plans, I mean, what -- to what level from the current 3, 3.5, we are comfortable in increasing the leverage to?
We have got our plans where our cash flows are there. We have done first, well it really works. We are trying to restrict our debt to equity ratio to 1:1. Not booked beyond that. So that is the sort of plans we've got on hand.
Due to time constraints, this was the last question. I would now like to hand the conference over to the management for closing comments.
Thank you. The global economy which was earlier reeling under the stress due to inflationary [indiscernible] acting monetary policies, supply chain disruptions has started to breathe easy as inflation is also coming under control. Even in case of steel production and apparent consumption, India is expected to outperform its peers quite handsomely, which always well for the industry in India. With a strong government spending on infrastructure, the share of investment in GDP has been rising consistently. The residential sector is also expected to grow back by affordable housing projects and urban demand. Private investment is improving on the back of production-linked incentive schemes. India's capital sector is also expected to benefit from the momentum in infrastructure and investment in renewable energy. Automotive and consumer durables are expected to maintain healthy growth driven by sustained growth in the private consumption. We hope that sales will also be able to deliver performance consistent with the projections for the domestic industry. Thank you.
Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.