Ladies and gentlemen, good day and welcome to the JSW Steel Q3 FY 2026 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashwin Bajaj, Group Head of Investor Relations. Thank you, and over to you, sir.
Yes, thank you very much, Operator. So good evening, ladies and gentlemen. Welcome to JSW Steel's earnings call for Q3 of FY 2026. We have with us today the management team represented by Mr. Jayant Acharya, Joint MD and CEO, Mr GS Rathore , Chief Operating Officer, Mr. Arun Maheshwari, Director of Commercial and Marketing, and Mr. Swayam Saurabh, the CFO. We will start with opening remarks by Mr. Acharya and then open the floor to questions. So with that, over to you, Mr. Acharya.
Yeah, so good evening, everyone. Let me begin by talking a little bit on our strategy. JSW Steel has adopted a prudent strategy over the past years and has created significant value for our shareholders, actually for all our stakeholders. On 3rd December, the company announced a strategic joint venture with JFE Steel Japan for its BPSL steel business. With this transaction, JFE will take a stake of 50% in BPSL steel business at an equity value of INR 31,500 crore and an enterprise value of INR 53,000 crore. This transaction will enable a cash flow of INR 32,000 crore and a substantial deleveraging of about INR 37,000 crore for JSW Steel. This partnership allows us to grow the BPSL business with our project expertise and operational excellence and bring in the JFE technological expertise to be able to produce a variety of value-added products.
It will also allow JSW Steel to accelerate the growth across its portfolio of assets in a financially prudent manner to meet the demand growth in India. Today, the board has approved a 5-million-ton steel plant at our new site in Jagatsinghpur, Odisha. The project will be housed in our subsidiary, JSW Utkal Limited, and will entail a CapEx of INR 31,600 crore with commissioning by FY 2030. This project is the first phase with expansion potential to go to 13.2 million tons. We already had commenced setting up two 8-million-ton pellet plants, you will recall, at this site, and a 30-million-ton slurry pipeline is under construction by JSW Infra, which will transfer the iron ore from the mines to the plant.
This is a port-based facility with our own captive jetty, and coupled with the iron ore through the slurry pipeline, this is an extremely efficient location in terms of our overall logistics cost. Together, these milestones significantly accelerate our capacity growth plans. We are well on track to reach 50 million tons in India by FY 2031, other than the BPSL business. With India's steel demand rising rapidly, these strategic steps put JSW in a very strong position to grow responsibly and sustainably in the years ahead. Sorry. On the macroeconomic fronts, you would have seen the IMF has given an outlook of about 3.3% growth in 2026 and kept its outlook the same for 2027. The resilience in the global economy, in spite of the ongoing uncertainties, is a mention which IMF has given in their commentary. The momentum is being supported by strong tailwinds from AI and technology investments.
Growth is also getting a further lift from supportive policies and easing financial conditions. With advanced GDP estimates in India pegging the growth at about 7.4%, we remain the world's fastest-growing major economy. While global headwinds persist, the Indian government has provided various policy support measures and policy reforms. Alongside recent trade agreements, this bodes well for our medium-term prospects. We are seeing a strong post-GST momentum in consumption, further aided by income tax cuts and benign inflation. Rural indicators remain positive, driving strong tractors and two-wheeler sales. Central government CapEx, while it was low in October-November, is up 28% from April to November due to a strong H1. The annual CapEx target looks to be on track. While residential sales have remained somewhat soft, the commercial real estate shows a robust movement.
Conditions for private capex are increasingly becoming conducive, supported by a healthy balance sheet and RBI's recent rate cuts and lower inflation. India's steel consumption continued to grow, with a 9-month growth of about 7%, though Q3 was lower at 4.6%. However, the December demand on absolute number was about 14.5 million tons, and the demand in the quarter four, on a seasonally strong demand and restocking, looks good for volumes in the quarter ahead. Looking ahead for the year FY 2027, the demand is projected to grow in the range of 7%-9%. On the policy front, the government has taken steps to arrest unfair trade by imposing anti-dumping duties on hot-rolled coils from Vietnam in November and CRNO from China in December, and a safeguard duty has been finalized in December 2025. This will enable the local domestic industry to get a level playing field in India.
In China, the steel production was down 4.4% Y-O-Y in CY2025, a decline of about close to 44 million tons. However, their exports, including semi-finished steel, surged 14% to 133.5 million tons, primarily due to a weak domestic consumption. The elevated exports kept Asian prices subdued in 2025. Looking ahead, the anti-involution measures which have been taken up by the Chinese government, export licensing, and some production moderation which we see should help support the regional prices in Asia. Moving to sustainability, JSW Steel, I'm happy to mention, was ranked number one in the global steel sector in the S&P Global Corporate Sustainability Assessment and continues to remain a part of the Dow Jones Sustainability Index.
Our focus on energy efficiency was also recognized at the 35th National Energy Conservation Awards 2025, where our Dolvi unit was awarded India's best-performing unit by the President of India, and BPSL received a certificate of merit. We continue to progress on energy transition with 1 GW of renewable capacity commissioned. We have already got the approval for 2.5 GW generation and a 320 MWh of battery storage, which is in various stages of construction. On the technology front, we commissioned India's first diesel-to-battery converted locomotive at Vijayanagar. These initiatives underscore our commitment to sustainability across our operations. On the digital front, JSW has deployed AI-based vision systems that monitor conveyors, sinter flames, flare stacks, and equipment in real time to improve yield, efficiency, and reliability. These digital solutions are delivering substantial impact through cost savings, reduced emissions, and preventions of over 1,000 safety incidents.
The system is deployable across multiple locations, and with additional use cases, we see the potential to save INR 100 crore per annum. On the projects front, apart from the board approval for our new plant in Odisha, let me briefly update you on the other projects. At JVML Vijayanagar, we reached a key operational milestone as the 5 million ton plant is now fully ramped up. The 1.5 million ton BF3 upgradation at Vijayanagar remains on track for commissioning by the end of quarter four FY 2026. At Dolvi, the phase three expansion from 10-15 million is progressing as planned, with completion expected by September 2027. Technical and commercial discussions for equipment are underway for the 1 million ton electric arc furnace and structural mill announced for Kadapa last quarter. Our value-added product capacity across Vijayanagar, Khopoli, and Raigarh is progressing steadily.
The Board has today approved 0.2 million ton tinplate capacity and 0.36 million ton capacity for GI and GL lines at our downstream units in Rajpura. Together, these value-added expansions will add about 4 million tons of flats and longs, complementing our steelmaking operations. This reinforces our long-term growth strategy and strengthens our competitive position as it adds to our value-added product portfolio. Strengthening our raw material security has been one of our key strategic priorities. We have 23 iron ore mines, which we have mentioned earlier, out of which 12 have been operating. During the quarter three, we have commenced the production from the 0.5 million ton Cudnem mine in Goa, taking the total number of operational mines to 13.
Once our mines are operationalized, coupled with some enhancements of existing capacities, we expect to produce about 50 million tons per annum, which will cover around 50% of our total iron ore requirement by FY 2031. On the coking coal front, we have secured three mines and coal linkages in India and taken a stake of 30% in the Illawarra Coking Coal PLV mine in Australia, which together will provide us about 5 million tons of coking coal. This will meet around 25% of our total coking coal requirement in FY 2031. Additionally, we are in the process of acquiring the Mozambique MdR high-grade coking coal deposit. This transaction is expected to be closed in quarter four of this calendar year by March. Therefore, the raw material side, we are strengthening both from iron ore and coking coal perspective.
Moving to our operational performance, we reported a strong operational performance amid the ongoing uncertainties. Our consolidated crude steel production stood at 7.48 million tons, up 6% Y-O-Y for the quarter. Our Indian operations delivered a production volume of 7.28 million tons, up 7% Y-O-Y. Production was down sequentially due to the blast furnace three at Vijayanagar being under shutdown for the capacity enhancement. Utilization of our Indian operations stood approximately at 93%, excluding the BF3. What it underlines is the consistency in the capacity utilization at JSW Steel across locations. We have been more or less at 90% or above across quarters. During quarter three, we achieved our best-ever sales, both from a consolidated as well as an Indian operation point of view, increasing by 14% Y-O-Y. This was mainly driven by the volumes from JVML plant ramp-up to its full capacity.
Our domestic sales rose by 10% Y-O-Y in quarter three and 12% in the first nine months, well ahead of India's consumption growth. This has enabled us to increase our market share. We have also liquidated 0.3 million tons of inventory during the quarter. The other positive is that the value-added product sales were the highest ever at 4.54 million tons, growing 16% Y-O-Y and forming about 61% of our total volumes, including JVML. The deliveries to the auto and renewable sectors were also at all-time highs. If you look at our financial results, the consolidated revenue stood at INR 45,991 crores, with adjusted EBITDA of INR 6,620 crores. The EBITDA per ton was close to 8,700 and a margin of 14.4%. The reported EBITDA for the quarter stands at INR 6,496 crores. During the quarter, steel prices were at a multi-year low and adversely impacted realizations.
Coking coal costs were higher by $1.05, in line with our guidance, while iron ore provided a slight cost benefit due to better blends. While margins were negatively impacted during the quarter, we were able to mitigate a drop in prices through value-added products and cost efficiencies. Our Indian operations delivered a total adjusted EBITDA of INR 6,522 crores and EBITDA per ton of close to INR 8,800 per ton, with a margin of 15%. This was enabled by strong growth in domestic sales and better value-added product mix. The U.S. operations delivered an operating EBITDA of $3.1 million, which was lower, primarily driven by lower volumes due to the plant shutdown at Ohio for the caster upgradation project and lower NSR for the plates.
For the 9 months of FY 2026, US operations have reported an EBITDA of $36 million, a substantial improvement versus an EBITDA loss of $32 million last year. Italian operations delivered an EBITDA of EUR 5.3 million during the quarter. During the quarter, the total EBITDA for our overseas operations was at INR 122 crores. Unrealized forex losses stood at INR 124 crores, which impacted the overall profitability during the quarter. With the enactment of the new labor code, the required changes in employee benefits have had a one-time impact of INR 529 crores, which has been shown as an exceptional item in the profit and loss account.
The consolidated PAT stood at INR 2,410 crores compared to INR 719 crores in quarter three of last year. This profit in quarter three is after recognizing net deferred tax assets of INR 1,439 crores related to the slump sale of BPSL Steel business undertaking. Net debt was at INR 80,347 crore, and our debt ratios improved versus the last quarter. Net debt to EBITDA stood at 2.91 and net debt to equity at 0.92.
Our weighted average interest cost improved to 6.51% in the quarter, an improvement of approximately 60 basis points if you were to compare with last year. Our revenue acceptances stood at $2.36 billion. Our CapEx spend during the quarter was roughly about INR 3,500 crore, and total for nine months stood at INR 10,000 crore. For the FY 2026, we expect the total CapEx to be in the range of INR 15,000 crore-INR 16,000 crore. The JSW One platform has been doing well. It has seen a significant uptick in volumes, especially in steel, which grew by 43% Y-O-Y. Quarter three was strong, with a GMV of INR 4,544 crore, representing a solid 36% jump Y-O-Y.
Over INR 1,300 crores of that GMV was driven by JSW One's credit offerings. With these results, we have achieved over 74% of our total consolidated volume guidance for both production and sales for the FY 2026, and we expect to broadly achieve our full-year guidance of 30.5 million tons for production and 29.2 million tons for sales. To conclude, we continue to monitor Chinese steel exports and are cautiously optimistic that measures such as export licensing and anti-involution policies should provide some support to the regional prices. India's growth prospects remain strong, with the government's recent reform measures providing further impetus to consumption and private capex on the back of rising capacity utilization of companies. The upcoming union budget is expected to continue to see the government focus on reforms as well as public capex.
All this bodes well for the steel demand growth, and the trade measures announced by the government of India are most welcome and will help keep unfair imports in check. Looking ahead, steel prices have begun to recover in end December and have continued an uptrend in January. Quarter four margins should be better on the back of higher steel prices supported by seasonally strong demand, which is expected to offset the impact of higher raw material prices, especially coking coal. We expect the coking coal cost to increase between $15-$20, while iron ore prices are expected to be range-bound. We expect a strong quarter four volumes from JSW Steel due to a healthy demand in this quarter. And for the next year, we see a steel demand growth of 7%-9% for the FY 2027. We'd be happy to take questions which you may have. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question and to limit your questions to two per participant. If you have any further questions, you may rejoin the queue. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Sumangal Nevatia, your line has been unmuted. You may proceed with your question.
Yeah, yeah. Thanks. Thanks for the chance. Good evening, everyone, and congratulations on the new expansion announcement. So first question is the bookkeeping one. If you could just highlight what is the steel price increase we are seeing in the last three or four weeks? And as far as timeline is concerned, what is the update on the slurry pipeline and the JFE Bhushan deal closure timeline?
Yeah. So the prices of steel have started moving, have started recovering from the multi-year lows in the last quarter. In the end of December, we saw prices moving for flat steel by about roughly Rs 1,500 per ton. In the beginning of January, it has moved by about Rs 2,000 per ton. We see some recovery possibility during this quarter as we move ahead. The second question on the slurry pipeline, which you have asked, is expected to be somewhere in the quarter four of 2027, FY 2027. On the BPSL, I'll request Swayam to give an update on the BPSL asset.
So on the BPSL asset, we are pretty much on track versus the timeline we had indicated. Earlier this week, we received Competition Commission's approvals for the joint venture. We are right now in the process of obtaining shareholders' approval, which we expect to get by first week of February. As indicated, we should see slump sale getting concluded before end of this year, which is before end of March, and that should translate into about INR 24,400 crore of effective cash coming in JSW Steel and net leverage reduction of about INR 29,000 crore. The second leg also remains on track, but that is expected end of quarter one of FY 2027.
Which will be an additional 7,000.
Additional 7,800. 875 crore. Yeah.
Yeah, got it. I have one more question, and that's slightly on a medium to long-term strategy. So if you look at our expansion FY 2030, we would reach somewhere around 47 million tons in India, and we'll be adding capacity only at the rate of around 7%-8% CAGR. Now, given the Bhushan divestment, our balance sheet would be quite deleveraged, potentially around 1.5x net debt to EBITDA. So does it make sense to evaluate the other brownfield expansion opportunities parallelly, or should we now just expect this expansion till 2030 and then maybe evaluate sometime closer to FY 2028-2029 as the next expansion plan?
If you see the presentation which we have given for this quarter, we have given you an indication of the expansions likely by FY 2031, which takes it to about 56 million tons by FY 2031, which includes 1.5 million tons of Ohio and 4.5 million tons of the BPSL asset. So we have moved up with respect to our earlier goal of 50 million tons in India by the end of this decade. So I think that I would say the combination of the value unlock in BPSL certainly enables us, as you rightly said, to expand faster, which we are doing.
We have taken the Odisha project. We are doing a project in north of India for tin plate and substrate for GI and GL, and we will be able to fast-track our other brownfield expansions as we go along into this decade. So we are on track. I think we would be adding capacities in line to meet the India demand.
And sir, can I get your thoughts on?
Sorry to interrupt, sir. We request you to please rejoin the queue if you have any further questions.
Sure, sure. Thank you.
Thank you.
Thank you. Our next question comes from the line of Jashandeep Chadha from Nomura. Please go ahead.
Hello. Hi. Thank you for the opportunity. Am I audible?
Yes. Yes, you're audible, sir.
Yeah. Thank you for the opportunity. So my first question is on the lines of you are expecting 79% Y-O-Y volume growth or apparent steel consumption growth. Just wanted to understand if we go one step deeper, from which segments are you expecting majority or which segments will lead this demand? We understand that the GDP is growing and overall steel consumption will go up. But specific to JSW internally also, which segment do you believe will lead that growth? Is it the autos, industrials, retail, I mean, or even any other segment that you see? Just wanted to get your view on how the demand will be going ahead.
So we are seeing the growth across sectors. If you were to really look at the India story now, I think you'll see the growth across your construction and infrastructure. You see good growth in the commercial real estate. We are seeing good growth in industrial. And now, post the GST announcement, especially in the consumption side, automotive, appliances. The other area is the renewable energy. And I think you, by and large, I think we are seeing it across sectors.
Understandable, sir. So my related question to this will be, has the intensity of flat products in construction, retail, in the real estate sector, has it gone up in the last couple of years? And along with that, I just wanted to understand also the new capacity that you have announced. What will be the CapEx intensity of that and the product mix if you can?
The new capacity which we have announced will be flat steel. It will be a 5 million ton facility with hot strip mill and steel melting capability and blast furnace. The steel melting capability will be for roughly about 6.5-7 million tons. It has potential to grow. So the hot strip mill can ultimately be expanded once the second blast furnace is taken up to 6 million tons, sir. Your second question about the intensity of flat steel in construction.
The intensity of flat steel in construction has been increasing gradually. Globally, flat steel is used in construction through steel-based plated constructions, and we are seeing that slowly catch up in India. Now, steel buildings or steel and glass buildings are coming up in India. They are safer. They are faster to construct and unlock value in terms of time. So it is catching up, although at a slower pace than internationally.
But we are looking at this pace, improving the flat steel consumption in the construction and the infrastructure. Infrastructure also, the bridges which are coming up are also adding to the flat steel consumption. People are now looking at steel columns, steel supporting infrastructure for the bridges because it is able to finish the bridge faster. So yes, it is going up in terms of intensity.
Thank you for that. And also, if you can tell me the CapEx for the new capacity? Sorry if I missed it.
INR 31,600 crore.
Okay. Thank you so much, sir. I'll join back to you.
This is also building in some of the infrastructure for the expansion of the second phase. Yeah.
Understood. So the next phase of expansion will be at a lower intensity per ton?
Correct.
Understood, sir. I'll join back the queue and for further questions. Thank you.
Thank you. Our next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my questions. So my first question is, given strong volumes during the quarter as well, now your domestic volume guidance of 28.2 million tons would imply flat volumes on year-over-year basis for Q4. Now, how should we look at your Q4 volumes with respect to that? Would you revise your sales guidance? That's my number one question.
So I think from a sales guidance point of view, we are maintaining our guidance of 29.2 million tons. Production guidance also at 30.5 million tons is more or less on track. Going forward in the next year, as the BF3 capacity unlock happens, we will be able to add to our available capacities, and that would further increase the sales from all our assets.
Okay. So am I reading it right that your India volumes would be flat, assuming you don't change your guidance?
Why do you say flat?
On year-over-year basis.
Okay. So the inventory liquidation, probably you're not counting. So the potential, so we did an unlock of inventory of 300,000 tons in the last quarter. In the current quarter also, we have.
No, I meant for fourth quarter.
So if I look at the fourth quarter. I'm looking at the, yeah, I'm looking at the fourth quarter. I'm saying we liquidated inventory in quarter three. We are looking at some inventory liquidation in quarter four as well. So from a guidance perspective, we had sales of 7.64 million tons last quarter. Our guidance is that we will be able to meet 29.2 million tons. So maybe similar with respect to quarter three, quarter four, if that's what you're asking. From an Indian operations point of view, it will be slightly higher, but from an overall basis, it will not be very different.
Yeah. Got it. Got it. Thank you. Now, if I look at the detailed CapEx table that you have shared on slide 39, can you help us break down the mining CapEx and also value-added CapEx a bit further? Thanks for highlighting Mozambique and the downstream CapEx separately, but can you help us with more details? What all come into this?
I think the details the investor team can explain, but you're talking about the consolidated capacity update, right? That's what we have given you on that slide.
It's the CapEx guidance for the next five years, the amount of CapEx. But yeah, okay. I'll take that offline.
Yeah. What we are trying to say is that we will be spending this INR 100,000 crore over the next 4-5 years. We will give you the breakup year-wise in our annual board results in May. But roughly 4-5 years, you can spread it equally. It will be a little higher in the next year, next 2 years, and then slowly go down.
So I was actually looking for breakdown of mining and value-added, but I can take that offline. One final question is: If we look at realizations, on a reported basis, Q on Q, it has been much better. Now, adjusted for JVML, did the share of value-added products improve quarter on quarter, or am I missing anything over here?
So we have been reporting in the last few quarters. We have been giving you the value-added numbers without the JVML. This time, including JVML, the value-added product mix is 61%. Excluding JVML, it is 67%.
Okay. Got it. That's helpful. Thank you.
Yeah. Right.
Thank you. Our next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi. Good evening and thanks for the opportunity. So first, a bookkeeping question. In the quarter, what was iron ore sales that you made?
Just one second. What's your other question? Maybe we answer that first while we get the. It is about 0.13 million tons. Okay.
And what was it the last quarter? Why I'm asking that is because the revenues don't seem to have gone down in terms of the realization decline that was expected.
Indeed. So you are seeing the standalone numbers, right?
Yeah. I'm looking at the standalone numbers.
Yeah. So we'll give you this input offline. It's primarily iron ore sales.
In Q3, you mean?
Yes.
Okay. Sure. And also, when I look at JVML numbers, again, over there, the realization seems to have been down. So is it some sale of some semis that has happened over there? What is really the reason?
No, basically, see, we look at JVML and Vijayanagar from an operations point of view as a combined decision-making process. We have certain advantages in JVML on the cost side. We have some advantages in JVML on the state tax side. So we have a state tax advantage even if you sell outside the state. So therefore, outside state movement like to north, we prefer to do from there, which is the higher freight incidence.
And therefore, you see a lower realization, but that enables us to overall optimize our total Vijayanagar blend because the other unit is able to supply to Karnataka, which has got a tax advantage in Karnataka. JVML is able to leverage the sales to other locations where we get the tax advantage.
Okay. Okay. Understood. And just also.
Amit, sorry to interrupt. May we request you to please rejoin the queue for further questions? Thank you.
Our next question comes from the line of Vikas Singh from ICICI Securities. Please go ahead.
Hi, sir. Good evening and thank you for the opportunity. So I just wanted to understand our stance on the CBAM. What is our exposure currently on the European side and any strategy which we are going to tackle in terms of whatever export which we are doing to Europe?
Hi. I'm Arun Maheshwari. Firstly, CBAM has impacted overall the entire exports happening to Europe. So it is not that it is impacting as JSW alone or India alone. However, the impact is not.
Pardon me? Sorry to interrupt, sir. May we request you to please come a little closer to the mic when you're speaking, sir?
Yeah. Sorry. It's better now?
Yes. This is better. Please go ahead.
Okay. Thank you. Okay. So I would say that the CBAM impact is not in particular for India or JSW. It has been impacting all the exporters who have been doing to Europe. The overall real-time impact assessment is still yet to come out because it's still very new. People are still understanding the impact. However, I would say our export has been quite a sizable component has been into Europe. But the way, because if the impact is to overall European exporters, then it will find its own way how to export it out over there. So I don't think that it will be having a bigger impact on us as a company.
Any figures which you would like to put in terms of exposure in terms of annual basis?
Not really. So I see basically we have been doing somewhere around 1.2-1.3 million tons kind of export into Europe. But the way the markets are shaping up in other geographies also, probably we can consume our tonnages over there. At the same time, India market is also growing much faster. So if you see year-on-year, our export component in the overall sales has been dropping. So I don't see that this will have a major impact on our sales following to exports.
So from a percentage point of view, just to answer your questions, Europe as a percentage of our total exports is going down. Asia, Middle East, other countries are picking up. So therefore, some part is already getting mitigated. We will understand the guidelines fully as and when they come, and we'll be able to give you maybe some more color as we go along. But some readjustment in the prices in Europe also is something which will take place. So let us understand the market once the full guidelines play out.
Sir, my second question pertains to our CapEx plan in Odisha. The INR 6,300 crore per million ton for a greenfield plant seems to be pretty low. So what. Pretty low. Actually, this is at some of the brownfield plant probably is expanding more than that. So what differential thing we are doing in this, or there's a scope or a risk of further enhancing this CapEx as we progress?
So first of all, I would just like to say that from a CapEx point of view, if you see our Dolvi plant expansion, which we have just undertaken, which is on, is actually specific investment is even lower than this. This is slightly higher because of being a green plant. The other reason is that we are doing this plant in a modular fashion. So we already had announced the pellet plant and some enabling infrastructure before that. That is something which is happening parallelly. But even then, if you look at the plant, this INR 31,600 crore also includes some enabling infrastructure for phase two expansion.
So when you look at a 10 million ton expansion, including the next phase, I think our CapEx cost will be further competitive if you were to compare with others. How we are able to do it, I think over time, that's the project expertise which JSW has developed, and we are able to do specific investment costs lower over time. And faster.
So there's no risk of overrunning in this CapEx as of now?
We don't see so.
Thank you, sir. Thank you.
Thank you. Our next question comes from the line of Parthiv Jhonsa from Anand Rathi. Please go ahead.
Hi. Thank you for the opportunity. I hope I'm affordable. So my first question is pertaining to the CapEx. You have a mark almost over INR 100,000 crore in the next 4-5 years, coupled with this INR 80,000 crore kind of a net debt. As mentioned earlier on the call, you expect the CapEx to be high in the first couple of years. Do you think that this will load your balance sheets despite receiving the money from BPSL?
No, we do not think it will load our balance sheet. I think from a ratio point of view, we will remain financially prudent while we invest. And from our perspective, I think we are quite well placed to be able to manage these expansions while we keep our ratios in control. You will see the additional volume from BF3, the full ramp-up of JVML, the new capacities from Dolvi, which will come in in phase three. All these will generate additional cash flows, which will contribute to the internal accruals, which we'll be able to spend for the CapEx. So from that perspective, we are fine. We don't see any challenge.
No, we definitely do agree that. Just to add to this, BPSL transaction, once it's concluded, would also add significant new cash, which you have to take into account while plotting the numbers. We do agree that receiving BPSL would definitely help in the next couple of quarters, but then Dolvi is still down the line. And plus, we have taken up additional 5 million ton CapEx. So just want to add, and plus, you have just mentioned a couple of minutes back that in the first two years, the CapEx would be much higher. So assuming it's about INR 25,000 crores-INR 30,000 crores, which will be the net of against what we receive from BPSL in the immediate term, do you think that this INR 80,000 crore of net debt can go to, say, one lakh crore, or is there any threshold leverage what you expect?
No, so we are right now below 3 net debt to EBITDA. We reported 2.91. If you look at INR 100,000 crore on its totality over five years, four to five years, we are talking about INR 20,000-INR 25,000 crore in certain years. It can go up. Certain years, it will come down, which is not very different from the CapEx we have been historically doing. You add BPSL cash in the mix, and you will realize that perhaps it's not as big a problem as it looks like.
All right. All right. Thanks for the clarity, sir. Just my next question is again o n Europe front.
Parthiv, can we request you to please rejoin the queue if you have any further questions?
That's just the first question.
Oh, please go ahead.
Yeah. Please go ahead, sir. Yeah.
Considering you export 11% volumes and, like mentioned, about 1.2-1.3 million tons goes to Europe, considering CBAM, I know there are a lot of noise around CBAM, but have you given a thought by internal calculation based on your emission norms? What is the impact on a per ton basis? Is there a number which you have finalized?
No. So basically, from a standpoint of exports, I would basically request you not to take right now any numbers because one is that the domestic demand is going up. If I were to look at incrementally this year, we are expected to add about 11 million tons in India. Roughly, we close at about 163 million tons of demand. Next year, even if you were to look at a growth at about roughly 8%, we'll be 176 million tons.
This incremental demand which is being created in India, we feel that this will provide ample opportunity for us to be using our capacities within the country. The need for exports will gradually also reduce. Therefore, the export moderation will happen in general, and that we will basically take a call which area to reduce. With respect to your question on CBAM calculation, I think those are in process. I wouldn't like to give you any number right now because we haven't really finalized anything at this stage.
But as for the latest circular, it is just purely based on scope one, right? If I'm not mistaken, or even because they are based on direct emissions, if I'm not mistaken, right? Is the understanding correct?
Yes. But yeah, so there are different technologies, different numbers. Asset to asset, there is a difference. So my emission level in Vijayanagar will be different from Dolvi level. So that's why I'm saying that there are different moving parts. So let us wait for some more clarity once we do it. Yeah.
Sounds good. Thank you so much for the opportunity.
Thank you. And best of luck.
Thank you.
Thank you. Our next question comes from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. Just, I know too many questions on CBAM. Just one more question on this. There has been a two-year transition period. So just wanted to confirm because one other company mentioned this that none of the Indian companies have got their emissions verified as of now. Just clarifying, there has been no verifier identified. Have you or have you not got emissions verified so far? Is there still ambiguity whether the verified emissions will be for a company group level, or will they allow plant-specific emissions? Just a clarity on this.
We are in the process of getting the verifications done. The CBAM will be asset-wise. Basically, it will be location plant-wise, not for the company as one.
Okay. How long will this verification process? When do you expect this to get done?
It'll be gradually. I think any exports which happen today in the year 2026 will basically be you will have to give them a certificate after the end of the year. The importer will have to look at it and take a certificate from a verified source, which we will be able to provide to them. Based on that, the importers on record will have to pay the CBAM differential, whatever, at that point of time. So that will happen sometime in the beginning of 2027 for the year 2026.
Fair enough. And secondly, on the CapEx, just on the Dolvi, first of all, can you remind us how much you spent so far? I think initial expectation for this was about INR 19,000-INR 20,000. Just wanted to see what have you spent so far, how much is left. And when you look at Odisha in the configuration, how much CPP, when you look at power sourcing, how much captive are you looking at? Because you're also looking at increasing renewable penetration, WHRSN, and captive configuration for the new 5 million ton.
So on Dolvi, we are on track. I would not be able to give you figures exactly how much we have spent right now, but we are on track for our expenditure. The total cost of the project, including some additional CapEx which we had declared during the last board meetings, I think is close to INR 20,800 crore-INR 20,900 crore. We are on track for that expansion. Odisha, you are asking with respect to the power?
Correct.
So we would be putting up capacity for power, which we would require. In addition to that, we would be buying something from the grid. So it's a combination which we would be doing, but let's say that a major part will be from our own captive, and some will be drawn from the grid and other sources.
Can you clarify how much megawatt of capacity will you be setting up for this 5 million ton on your own? The 31,600 includes how much captive power plant?
Yeah, we have that detail. We can give it to you offline.
Yeah. Okay. Thank you.
It's about 340-50 MW, but we'll give it to you offline.
Thank you. Our next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, three questions. First is, sir, overall on capital allocation, where does the 51% stake in JSW Realty? And I think with respect to Saffron Resources, it does indicate there's a land bank. Where do these variables fit in the overall scheme of things? That's one. Second question is on safeguards. How do you see the risk of circumventions and potentially higher volumes from Japan and Korea limiting our ability to raise prices? If you could highlight some numbers on parity map, that would be great. And third question is, we have two blocks (correct me if I'm wrong over here) Ajgaon and Surjagad in Maharashtra.
What are our plans over here, and is there any probability of MSMC granting any leases to any company on linkage basis or something which can potentially reduce the cost curve for, say, any company? Those are the three questions. Thank you.
So Ritesh, so I'm here. I'll take the first question, and thanks for asking. Our capital allocation principles remain intact. Capital goes to what is core to us, which is steelmaking. Saffron land acquisition is earmarked for a potential steel facility in the future, and there will be no other use for that. On the JSW Realty deal, I mean, we have not spelled out the details, but what we require is essentially office space as we are expanding as a company. And what we will get out of this is a very lucrative return in terms of cost invested in an office space. This is our whole intention of being in that deal, and there is nothing more to that.
The second question was on safeguards, Ritesh?
Yes. Sir, effectiveness of safeguards - this comes circumvention imports probably from Japan and Korea - restricting our ability to increase prices?
Yeah. No, the safeguard is certainly - even if you look at Japan and Korea, 12% safeguard is certainly very helpful. We expect that to limit unfair trade to a large extent. It still allows us scope to increase the price, and along with depreciation of the currency, I think it leaves room for some price improvement during February and March. So that's something which we will see. Also, keep in mind that the prices in India fell actually more. It came to a discount versus imports. So that's something which anyway has to come back to a sensible level. From the iron ore point of view, I think I'll request Arun to respond on Maharashtra and Surjagad.
Yeah. So anyway, we have concession available with us, which we are exploring all the ways to how do we make it operationalized in the coming years. So the work is on for that money.
And also, the last question, sir, any probability of state government granting out leases on linkage basis, anything of that sort?
Where?
In Maharashtra.
No, nothing to our knowledge as of now.
So, n othing so far.
Sure. This is helpful. Thank you so much.
Thank you.
Thank you. Our next question comes from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. You already addressed some of the pricing question, but effectively in this quarter, what was the realization change that you witnessed without the mix impact?
There was a drop in realization in this quarter. I think the market, if you were to look at the market price for, for example, if I were to take an example of a hot-rolled coil, the market dropped quarter-on-quarter by about INR 2,200 per ton. We, as a blend, were able to reduce the impact of this through value-added mix, which we have in our value-added mix was the ever highest, as I mentioned. So our drop was close to 1,400-odd INR per ton on the overall mix of JSW Steel drop.
Understood. And as of now, the increase that you mentioned in December and January is about INR 3,500 with further scope for upside.
Yeah. Yeah. 1,500-odd, I think, in December and about 2,000-odd in January.
Got it. On the cost side, you already paid the iron ore as well as the coking coal cost, but on a blended basis, how did the costs move sequentially?
Sequentially from quarter two to quarter three?
Yes.
Quarter two to quarter three, as we said, $5 on account of the price. There was an impact of coking coal. There was some related cost related to the shutdown of BF3, which came in, and there were some shutdowns in Salem which came in. So from a cost perspective, we had an impact of close to INR 500-INR 600 per ton.
And what was the captive iron ore proportion?
Last quarter, I think 33%.
Got it. Okay. Thank you.
Thank you. Our next question is from the line of Ashish Jain from Macquarie, India. Please go ahead.
Hi, sir. Good evening. So my first question is on the Odisha expansion. Given the location, are we planning to do from a technology-wise or otherwise to be export-compliant and low carbon, or is it like does the standard mill we set up with a focus on India market?
So the location is very conducive for exports, primarily because we are on the port. And we would be looking at the product mix would be tailored to look at some of the export requirements as well. From a renewable energy or from gas utilization point of view to reduce the carbon emissions, I think those discussions are ongoing. We're trying to see if we are able to get in some gas and reduce the. The best available technologies. Yeah. Whatever the best available technologies which are available will be. Yeah, will be used, including the blast furnace.
So today, the technologies in blast furnaces have also got very advanced in terms of oxygen injection or other coke and gas usage or the other one which we have used just now in Dolvi.
What was that?
Dehumidification. These are essentially reducing your carbon footprint. We are going to be using all available technologies, even in the blast furnace, to reduce the normal level which a blast furnace has.
Right. Right. And sir, also, given Dolvi location-wise is much hello?
Yes.
Sir, given Dolvi location-wise is more conducive to export to the west, the latest line we are setting up, will it have materially lower carbon emission, again, from a technology point of view? And does it make it easier for us once Dolvi ramps up to access some of these Europe some of the export markets?
Definitely. Yeah. Talking about Dolvi, see, any new addition is coming up with the latest of the technologies in those blast furnaces. So definitely, the carbon emission in the new production line will be slightly better than the existing ones. There's absolutely no doubt. Our best.
For blast furnace also, same. The best, see, the phase three, which is being there at Dolvi, will also have a blast furnace with all the best available technology what was being explained for Paradeep. So overall, blast furnace will have less emission in terms of gases. And then this is CSP. So overall energy spent for production will be quite low. So our asset at Dolvi emissions are lower than normally other locations. That is one.
Second thing, I think when you're looking at supplies to Europe or you're looking at low-emission supplies, we have already communicated to you that we are looking at an asset for green steel or low-emission steel through the electric arc furnace, natural gas, renewable energy route at Salav, which will take care of the requirement for anybody who has low-emission carbon requirement.
Okay. Okay. Got it, sir. Thank you so much.
Thank you. Our next question comes from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir, for the opportunity. One more follow-up on the CBAM. Basically, the way you said is our emission will get certified till end of FY 20 27 or so. So in the meanwhile, would we be willing to sort of do the exports, assuming the emissions at our end, or sort of give a guarantee to buyer to compensate for the impact? How would it transpire during the period when the emissions are not certified, basically?
No, one thing we almost know about it, that CBAM impact is overall for everyone, similar impact. So prices in Europe will go up to that extent of the CBAM impact. So while we are still assessing what will be the real impact of the CBAM, while the policies are still being understood by everyone, by the importers as well as the exporters. So eventually, Europe will remain a market for the people despite having CBAM because overall cost in Europe will go up. So this is where we look at it. We are waiting for this entire policy coming out in understanding, and thereafter, we will take a call on that.
Okay. Second question was regarding the Odisha plant. Have we also finalized the downstream plan for the product, or would we be announcing that separately beyond this CapEx of INR 31,600 crore?
As of now, this is up to the hot strip mill. We have not yet announced any downstream plan at Odisha. Currently, what we have announced is the downstream plant in the north of India, which I mentioned about tinplate and galvanized and Galvalume capabilities for our color-coated lines. We will look at the Odisha downstream at a later stage.
Sure, sir. Just one last question, if I can include. We also had a plan for a couple of years. So is that getting shifted with the announcement of this plan?
The Kadapa project, which basically is an electric arc furnace project we just announced last quarter, that has capacity to expand as well if we require. But keep in mind that electric arc furnaces in India don't have really scrap. So electric arc furnaces depend on scrap or on high-grade DRI, which basically relies on imported iron ore. So you effectively have to do some mix which is viable from an India standpoint. But what we are doing at Salav is, again, going to be electric arc furnace-based DRI-based production. Kadapa also, it's electric arc furnace-based, 1 million. And we already have electric arc furnaces currently operating at various locations.
Right, sir. Understood. Thank you.
Thank you. Our next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Thanks for the follow-up. I wanted your outlook on iron ore. So this year, if you see imports have increased and we've also imported. Wanted to know, is it strategic or is it some quality issue? And also, when we look at 50% being met through captive, for the remaining 50% over the next 5, 6 years, are we seeing domestic availability or there might be some shortages which will have to be then imported?
So iron ore import is largely because of great availability in India, is very poor. It's going down every year. So that's why we had gone for the higher grade of imports of iron ore. So it is more of a combination requirement in the production usage. At the same time, availability of iron ore in different geographies are different. So we have to consider that while we take our buying decis ion. So it may not remain uniform every year, but whenever we see this opportunity coming up, we would like to shift our security base accordingly.
It's basically for blending, especially larger blast furnaces which require some improved grades. We'll continue to look at it and take the call.
Mr. Acharya, what is our medium-term view? For the remaining 50%, which is market for us over the next five years, will we have enough domestic iron ore or do you see a domestic shortage increasing over years?
No, I don't think so.
Yeah. I think the government is also having a lot of policy intervention coming in, and they are ensuring that the iron ore availability is not compromised in line with the national steel policy, what they are targeting. So iron ore availability will be maintained with all the initiatives that even government is taking and the way the private miners are also trying to increase their capacity or production.
So new mines will also come up for auction apart from unlocking mines which have been held up due to various reasons. So we do not envisage a shortage in India as we go along, but we may have to put facilities for beneficiation or value addition into pellets as the case may be. But yes, we have ample resources in India. So from an availability point of view, we don't see a concern.
Got it. Thank you and all the best.
Thank you.
Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much for the time. Just to reiterate that we look forward to a good quarter four, stronger volumes based on a seasonally strong demand in quarter four. Margins are likely to be better with prices recovering and offsetting some of the raw material price. I think from the next year's perspective, the BF3 will be up and running from April onwards, and we will be well positioned to meet the requirements in India from next year onwards. Our capacity in India will be close to 36 million tons after the BF3 expansion is finished. Thank you and all the best.
Thank you, everyone. Please reach out to us if you have any further questions. Bye-bye.
Thank you. On behalf of JSW Steel Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.