Q2 21/22

Oct 21, 2021

Ladies and gentlemen, good day, and welcome to the Q2 FY 'twenty two Earnings Conference Call of JSW's team, hosted by Pravidale Seerajal Private Limited. 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. T. Please note that this conference is being recorded. I now hand the conference over to Mr. Kamadish Bhagmur from Prabhu Dasilhara Private Limited. Thank you, and over to you, sir. Yes. Thank you, Ritujan. Good evening, everyone, and thanks for logging in for JSW Steel 2Q FY 'twenty two earnings call. Firstly, I want to thank the management for giving Subjatir Lila Limited an opportunity to host the call. Now I would hand over the call to Ashwin Bajaj, Group Head, Investor Relations, to introduce the management and take the call forward. Over to you, Ashwin. Yes. Thank you, Kamlesh, and thanks for hosting the call today for us. Good evening, ladies and gentlemen. This is Ashwin Dajjaj, and it's my pleasure to Steels on call for Q2 FY 2022. We have with us today the management team represented by Mr. Tashagiri Rao, Joint Managing Director and Group CFO Doctor. Vinod Mobal, Deputy Managing Director Mr. Jayanta Charyea, Director, Commercial and Marketing and Mr. Rajeev Pai, Chief Financial Officer. We will start with opening remarks by Mr. Rao and then open the floor to Q and A. So with that, over to you, Mr. Rao. I welcome you to the briefing of our second quarter performance for the financial year 2021x42. The Q2 generally is getting subdued due to monsoon in India. So at the beginning of the quarter, we thought we had to tackle about subdued demand in India, and we need to do good exports. But there are many kind of surprises and challenges that are coming. There is energy crisis. So that shortage of energy across the world has brought a lot of volatility. Cocaine oil prices have shot up to unsustainable levels of $400 per tonne that is in a very, very short span of time. Over the years ago that The Chinese policy, which are weaving around the 2 themes of widespread or common prosperity And also the weak organization, those policies which have been finalized by China That led to a visible slowdown in the go down economy, but also led to No investments in the residential property sector. So we have seen a contract with steel demand in China month after month. In the month of July, we observed that the steel demand has fallen by 13%, which went down in the month of August by 18%. The month of September, it went down by 24%. So the steel demand in China in the 1st 9 months of the calendar year has fallen to 731,000,000 tonne and a range of 736,000,000 tonne in the previous 5 months. The 0.7% lower demand in China, majorly due to the reasons which I just explained. The rest of the world is not exactly the way Chinese steel demand has fallen. Large expanding the resurgence of infections in some regions can be resulting in lockdown On the energy crisis in some regions, we have seen a good steel demand As the rest of the world is concerned, majorly due to strong manufacturing activity, lower interest rates and government focus on the infrastructure, energy transition. Those are the reasons which we could see why the steel demand in the rest of the world was stronger. Taking these factors into account, WSA has been given short range outlook in the month of October, they're exactly on the dot. They said the steel demand in the current calendar quarter, calendar year, it grew by 4.5%. Whereas if you look at the reason why it's breakup of the demand, China's demand will come down by 1%, which you already mentioned That it has come down by 0.7% in the 1st 9 months and more or less similar to what WSA has been saying. In the rest of the world, the steel demand will grow by 11.5%. So what I would like to share with you You said at one side when stainless steel demand is falling, rest of the lower steel demand is reasonably okay. In this context, if the liquid as far as India is concerned, we have consumed 49,000,000 tonnes of steel in the 1st 6 months of the financial year, which is almost 13,000,000, 14,000,000 tonne more than the corresponding period of last year. Generally, the second half will be much better. Already, we are seeing signs of improvement in the construction infrastructure project following the month's end. So we expect as we get into the beginning that the demand in the second half will be strong And we'll be close to 110,000,000 tonne as we have mentioned. In addition to this, there are some more developments which I would like to share with you. I'm very happy to say That our respected Chairman and Managing Director, Mr. Sajid Lindam, has been elected as the Chairman of Old Steel Association for the year 'twenty one, 'twenty two. It's the first time an Indian representing to occupy this position and to serve this position. We also must have noticed in our communications to stock exchanges and press releases. We have issued world's first I am also happy to share that JSW Steel Secures Award, Steely Award from WSA for Excellence in the In addition to that, one historic and notable event that has happened is the commissioning of The first time 5,000,000 tonne Brownfield expansion commissioning at once in India. We have commissioned the largest gas furnace Along with the Mel Shaw for 3 50 tonne converters, this is a very, very important event In the history of JSW Steel, as we have guided that there will be a production of 1,500,000 1,500,000 tonne incrementally from our expansion project, and we will be able to sell 1,400,000 tonne from this expansion. Now we think it's a reality. I'm also happy to share that it is a very, very smooth start up, and we are reasonably confident that we'll be able to ramp up the capacity quickly. In this context, if you see our results, it is highest ever consolidated quarterly revenue, highest operating EBITDA and highest net profit. The volume numbers, as Paul, we already shared, is 4,100,000 tonne of cruise fleet production, 91% If there were no shutdowns at medium level plant for converters and also in the parent plant in Wafamis, The capacity utilization could have been higher. That is why you would see sequentially a flat Capacity utilization and production. The sales on a stand alone basis is 3,787,000 tonnes, and on a consolidated basis, it is 3,820,000 tonnes. So what is interesting in the sales profile is that our exports have gone up, as I mentioned, The domestic demand in this quarter is a bit subdued. We have supplemented with higher exports in this quarter. It is 38% of the total sales, the growth of 22% quarter on quarter in the overall export mix. Our value added steel product mix has We were at 60%, having 51% in the previous year. So we have maintained like in the quarter 1. Quarter 1 is around 61%. Our retail sales have gone up quarter on quarter by 25%. Our branded sales have gone up. Our sales The Solar and Appliances segment have won up quite substantially, even quarter on quarter year on year, they are some of the highlights of our sales mix. So in spite of that, if you look at the sales consolidated number, it's 3,800,000 tonnes. And year on year basis, it was slightly lower. Due to mainly accumulation of inventories, which has happened in the first half of this financial year. It is almost 500,000,000 tonne accumulation of inventory when I compare with As of 31 March 2021, if we compare 30 June, it is a 1 lakh tonne more inventory. As we have been explaining the kind of constraints The port logistics, availability of containers and the very high ship price, that's all the reasons where The port stock remained at the elevated levels even during this quarter. So the effort is going forward that to reduce this inventory that If I look at the Blended NSR cost and EBITDA per tonne on a standalone basis, the blended NSR Quarter on quarter went up by 5%, but the cost pressures are severe. So there are 2 points. One is, cooking coal prices have gone up globally. We have been guiding that in this quarter, there will be a $30 per ton incrementally cost will be to absorb on the coking coal that got reflected in the consumption. So what has happened in the iron ore prices because of the lower demand by China? The prices crashed from $2.13 plus globally to $120 per tonne. It is almost 50% reduction globally. So if Indian iron ore prices have not moved the way gold prices have moved, that is why we have to There is a brunt of very high unsustainable cocoon coal prices that have won up because of various reasons globally. Over and above that, the benefit of lower LMO prices internationally has not come to the Indian steel industry because the prices are still at elevated levels in India. Because of this reason, the cost sequentially went up by 19%, when the blended MSR went up by only 5%. The net impact of this, the EBITDA per tonne on a stand alone basis, was INR22,900 per tonne, sequentially lower by INR33 and 74. So the EBITDA stand alone is INR 8,673 crores, but only other income, just I would like to highlight one point, The Bhushan Power and Steel at the time when we made the investments through an SPV, You mentioned that we hold 49% in the company, and we also hold the optionally fully convertible debentures, balance instrument, When we have a right to convert into equity, as and when it gets converted, then our holding will go up So we exercised that option as of 1st October 2021. So from 1st October 2021, now we have control through SPV and EPSN. We hold 83.28%. So from Q3 onwards, there will be a consolidation of BPSL results and the debt while we announce the Q3 results onwards. Then at the time when more CDs were to be converted, there is a re measurement of the fair value of OLED CDs. So when we did that, there is an additional income, which has come as other income, which is approximately INR702 crores, Net plus tax, in fact, the net profit has gone up due to the SEK 559 crores. After considering that the profit after tax on a standalone basis is INR 5,383 crores. Our annual revenue growth capital has gone up from 42% to 50% in this quarter. Coming back to the overseas operations as we have been guiding, there will be continuous improvement in the overall operations. The EBITDA from U. S. Operations both beta and NIMO together went up to $61,400,000 Steep. I recognized $43,000,000 in the last quarter, 6th initial quarter. So there is a growth improvement as far as the Contribution from U. S. Is confirmed. At the same time, the Italian operations also Recorded a positive EBITDA in the last quarter, which is €6,100,000, as in which a loss of €5,000,000 sequentially in the quarter 1. So from overseas, I think it is a good turnaround. The EBITDA contribution was INR 4.85 crores compared to sequential number of INR 282 crores in the Q1. Indian subsidiaries also have done quite well, Either coated, ARCL, Invitipi and other subsidiaries altogether contributed 11.94 crores. Sequentially, it is higher when compared to level 45 number in the Q1. So the net addition after existing consolidated adjustments, this has given on the consolidation RUB 17.45 crores EBITDA incrementally, both Indian and overseas operations together. So with that, the operating EBITDA On a consolidated basis, it is INR 10,417 crores. So here, what is important here, as we have been guiding, In the Q1, the EBITDA was IN the Q2, notwithstanding The EBITDA margin per tonne has come down. Still, we could show a higher EBITDA in the Q2 or Q1. TMB10,417 crores, which is 32%. EBITDA per tonne was INR26,170 per tonne in the quarter 2. Over and above contribution from overseas operations and also Indian subsidiary, The joint venture countries under control, particularly BP itself, have done extremely well. So in the last quarter, They have posted a net profit of INR 14.48 crores. So taking into account the proportionate profit pertaining to JSW Steel And also proportionate from Monnit, additionally, the share of joint venture contribution was INR603 crores In the last quarter, I think it's INR 3.23 in the quarter 1. So with all this, I think the highest ever profit of tax of INR7179 for the quarter. Here, what is important is that in the entire financial year, FY 'twenty one, when JSW Steel posted an EBITDA of INR 20,141 crores, in the first half itself, The EBITDA posted by the company is INR 20,691 crores. So it is higher than the entire year of last year, The first half EBITDA. Similarly, the profit after tax number is INR 13,079 crores is the net profit for 1st 6 months as in the 700,873 crores of last year for full year. One more thing here is generally when we announce the results, we don't add the Production and sales numbers of the companies under joint control and also overseas operations. So if you look at the stand alone Consolidate stand alone production number was 4.1. It's to add the Mango Junction production. And also the monet spot, the JAS SPL, JASW Spark Specialty of Stream Products and also BPSL, both together 5,070,000 tonnes of crude steel production in 1 quarter we have done. If you look at first half, This number is 10,140,000 tonnes. So in the Q2, there is a growth of 29% in the crude steel production. Similarly, in the sales side, the similar number on a comparable basis is 4,830,000 tonnes, which is at 14% growth. These are all very sizable numbers in terms of both production and sales if I consolidate the companies under joint control also. The overall debt of the company has gone up slightly in this quarter compared to Q1. It's INR 55,394 crores, that is INR54,900 crores. So there is TMB54,900 crores. So there is a final crores approximately the increase in the net debt. Because there is an increase in inventory and overall working capital Steve. Investment happened in the 1st 6 months. Total INR8,200 crores is the total investments which we have made in the working capital either in terms of Increase in inventories or increase in iron ore inventories or the stocks build or raw material build for Commencement of production at our building net, altogether with incremental 8,000 tonne growth. We expect part of this 8,000 tonne growth will get released In the second half, the debt to A2T, debt to EBITDA, everything has improved substantially, whether compared to 30 June or 31 March. I'm also happy to say that the projects which we have taken up at Ujjainagar, ground fuel expansion of 5,000,000 tonnes is progressing quite well. What is not commissioned at Vijay Nager is only CGL 2 that we will be commissioning in Q3 'twenty two and one color coded line that is in Q3 We'll commission that also. The total plan we will do in changes, partly in this financial year, partly in the next financial year. So these are what is going on in Vijayanagar other than ground fuel expansions. The Wasson and Parapol, more or less everything has been completed, excepting 1 galvanizing line which we are commissioning in this quarter and a CAL line and complete line that we will do in March June 2022. With that, these projects which we have taken up in the last 3 years more or less get completed? Then the outlook, yes, I would like to spend 1 or 2 minutes here. As regards to the overall demand, as I mentioned, we expect Indian steel demand will pick up in the second half. As far as global steel demand particularly is very encouraging when we see our WSA short range outlook. So we expect this demand will remain Steel. Then the iron ore side, the kind of Demand is falling from China, so we expect iron ore prices to fall further from the current level. Coking coal prices are at a very limited level. So we anticipate that there will be some correction downwards in the coking coal prices. But as long as these costs remain at these levels, we expect steel prices also to pick up. They won't fall Down because of very high and elevated cost pressures, which are there right now. In view of this volatility, which we have seen in the Coca Cola price, which is very difficult for any company to manage, we are also observing what is happening globally. The company is when such exceptional situations arise, we contemplate looking at additional surcharges to pass it on those Unsustainable increases. So as and when the prices come down, the benefit will pass it down to the customer. If it goes up, it will be increased. We are also looking at very seriously the kind of volatility we are seeing in the coking coal prices and our Indian company's dependency, industry company's dependency And for the coking coal, we're also looking at whether we should introduce the energy per charge Compensating for the increase in the coking coal prices. Then the Dolby operations are concerned, as I mentioned, with the expansion project, the cost will be lower when comparing to the existing operations, which is gas based And the DRI is used in the mix, whereas the expansion project is completely hot metal. So the costs are expected to be significantly lower in our expansion of the unit and almost 1,500,000 tonne production and 1,400,000 tonne sales from Bouygues expansion, we expect the Steel. With that, I open the floor for any clarifications or questions. Thank you. Thank you. Operator, we will begin. Thank you very much. We will now begin the question and answer session. Steel. The first question is from the line of Ahmed Bakhshid from Eagle Voice. Please go ahead. Steep. Good evening, sir. Thanks for taking my questions. I have a couple of questions. The first one is on The pro form a debt including BSPL and what would be the EBITDA of BSPL in this quarter And what is the same coding that you are contemplating for the year? The EBITDA for BTSL in the quarter 2, the net profit It was INR 14.8 crores and the EBITDA was INR 20.22 crores. And for pro form a debt number including Steel. In the BPFL, the debt outstanding as of today's room was INR9,000. We have repaid part of the debt in October. So we have repaid INR 14 100 crores INR 18 100 crores IN THIS QUARTER. So the debt will come down INR 9,000 minuteus INR 18 100 crores. So the pro form a will have as on date is INR 7,000 crores. The second question that is on R and D. We have seen that in this quarter it has come down significantly compared to last quarter. Any specific reason for the same? Can you repeat the question, please? I don't know royalty cost that we report on the standalone number. It has come down significantly. So just wanted to know the reason for this thing. So in the last quarter, our 1 year MBPA commitment we had to meet in June, that's why the dispatches were significantly higher in the last quarter, Whereas in this quarter, it is lower by 3,000,000 tonnes, whatever we have commitment corresponding to this year, to that extent we have done. If you have seen in the previous year, in the quarter 1, the despite quarter 1 and quarter 2, the despite is for lower that was made up in the Q3 and Q4 And also partly in the Q1. That is why the premium paid in the Q1 quarter was higher Related to the Q2. Despite it, some years by 3 years. Okay. Got it. So this is more the reflective of Because more a reflection of the sustainable loyalty label that we can consider, the premium label actually, if your dispatches are already in the same. Okay. Approximately at that level, yes. But the premium will depend upon market price. So we have to look at what would be the That is right. It can go up or down, but the volumes will be in the similar range. Great, sir. Thanks and all the best. Thank you. The next question is from the line of Tanakhan from JPMorgan. Please go ahead. Thank you very much, sir. So my first question, I'm sorry, but I did not get the number. You mentioned BPC and EBITDA in this second quarter was how much, sir? 2.02 EBITDA per ton was INR 23,000. So I was just trying to understand that EBITDA per ton at DKKN of INR 23,000. Stifel. And for JSW standalone operations, it was also similar number. So should we Do you expect this convergence to stay because expecting to see asset towards a relatively higher cost asset Steel. It will take some time for the margins to recover. But your voice is breaking, sir. Can you please check? Sure. So, sir, I mean, the expectation was that the DTCL asset was higher cost, but the margins are similar. So should we expect this convergence of margins to sustain? So number 1, when you compare with JSW Steel on a blended basis, you have to look at we have multiple locations Steel. So the cost structure in each location was different. So you can only see it is completely gas based, battery gas based So the cost structure is different. And iron ore cost for getting from Woristra is different. Simply, we didn't have a cost Steel. So as far as BPSL is concerned, there are a lot of things which are happening, as I mentioned to you, Cost reduction with PCI is getting commissioned. We have recently commissioned the Cogon plant. So there are a lot of things which we have done to reduce the cost further. So assuming that steel prices will remain at the same level, then BPSL should do well. Understood, sir. This is very helpful. Just trying to understand the steel prices and coking coal cost movement in Poland now. Correct me if I'm wrong, but what we understand is that flat product prices have seen a significant price hike in the month of October. Is it possible to assume that JSW will sell more in the second half, particularly in this case, give higher premium? And there is also the tailwind of auto Steve. So there will be material NSR increase. Against that, sir, there will be a coking coal and gas price increase also supported Steve. So how do you look at the complaint kind of at this point of time? Is it contract materially Or is being rolled out at what the second quarter level is, right? So on the quoting call side, the Coping coincide numbers which we had guided last time for quarter 2 was $30 to $35 more than the previous quarter. And that has played out. We were in the range of $158 for quarter 2. We expect that the coking coal price impact for quarter Steel. B. Lowe:] will be higher by about $95 to $100 per tonne. As you said rightly, the The impact of the cost increase is getting reflected gradually in the market. The prices of steel products in India, which was lagging the international price cycle, is now going up. October, we have seen some price increases. And going forward, in November December, we see price adjustments going upwards to balance the cost increase. There will be some play out on the iron ore side, which the cost reductions which we are expecting on the iron ore side And sir, what about the gas cost increase at Dolby given, I mean, what is the I mean JSW sources gas for the Dolby operation? So naturally gas, whatever we are buying both at Steel. And Salal is at the market price because there's nothing available under APM. So we are buying whatever market price is there. That's why the costs are 1 up as far as Boolvy is concerned. But here, what is important, as I mentioned, is the expansion project is not gas So the cost varies, as I mentioned, are close to 15%, 20% lower than the existing operations in Dolby. One more important information is the total debt of So BPS Telecom, when we took over was INR 10,800 crores. And at the same time, we also had the SPV Additional debt of INR2500 crores. So total debt, which we raised is INR13,000 crores, including the debt in the HPV. Out of that total paid, including payments made in October is INR 3,300 crores was prepaid. So the bank debt that is there today in Canton Networks. That is one correction to the numbers which I mentioned. Thank you. The next question is from the line of Souvangar Nivedhya from Kotak Securities. Please go ahead. Yes. Good evening. Thank you for your opportunity. Just continuing on the previous question, just want to understand the A little bit better. So one is so $95 to $100 is on a quarter of $40 are we talking or on the steel front? And second, what will be our inventory in terms of number of months? And for the Q4, are we, I mean, already buying at The current $3.50 to $400 per ton prices. So this cost, which we indicated, 90 Steel. $500 is a ton of cooking drill. As far as the inventory is concerned, we usually have Inventories of about 2 months in the system. Understood. And I mean, with respect to I mean, is there any hedging or any long term or medium term contracts available in the market, which you might Steel. So the liquidity in the coking coal It doesn't mean if you're aware it's limited from a futures perspective. So I think we have Contractual pricing and index linked mechanisms for cooking coal, which would We are calculating the cost for cooking code arrivals into India. However, our stocks in the system which are there will be We have about 45 to 60,000,000. Understood. Thank you. Yes. In regards to the cost you've concerned, So as we mentioned around $95,100 per ton of cooking coal is an increase which we may have to absorb in the Quarter 3. But at the same time, iron ore prices, the correction has happened From INR 6,560 peak we have seen in June to INR 4,760 current price INR 1800 per tonne Steel. So this reduction in the annual price, but also will get reflected By the way, the lower annual prices, it's not more reductions that may happen in annual. That will compensate to some extent to the increase in the equipment cost. The 4th point is the Dolby expansion, which I already highlighted, but it is significantly lower, 15% to 20% lower than the That benefit will also come in the Q3. Over and above that, the Turnaround of overseas operations, which also I touched upon, where the capacity utilization at Nuho Junction and Baytown is in the range of around 50%, 55%. That is expected to go up. So some more upside in terms of overall improvement in EBITDA from overseas. Downstream where the contribution by JSW Coating was in the last quarter So this will be higher than either Q1 or corresponding quarter of last year. So we expect more volumes from coated Steel. So all this together, these are the additional benefits which would flow Over and over the volume growth in India, which can happen. Steel. In addition to all these factors, we are also contemplating, as I mentioned about, energy such as, is it possible to pass it on Hello? Hello. Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead. Hi. Thanks for the opportunity. My first question is on the royalty that's stable on iron ore transfer to EPS from JSW. So what is the rate of royalty we are paying on that iron ore? And once BCSL comes in as a subsidiary, will it have a lower rate of royalty or because it's a subsidiary, We will continue with the higher sales after the company comes in the ask. As shown by understanding as far as royalty payment is concerned, any mines which are Sir, any mines which are secured in the auction, those companies can supply to subsidiaries for captive personnel So up to 25% of the total production without any implication of traditional royalty. Anything that is to be supplied in excess of 25% from the captive mine, then their extra royalty is applicable. We agree other than Capital Mine, for instance, today we have 4 mines. Out of 4 mines, In Narayan, Poshy is the capital mine. Balanced mines, I think, we'll be able to supply Steel. Without any problem, we can supply to anybody. There is no restriction in the auction rates other than capital. Capital, 25% later. Sure. Thanks a lot. My second question is on the surcharge that you referred to on higher coal costs. So what would be the difference between like taking it as a surcharge and outside increasing the prices? I mean we can also change prices as and when the calls go down. So is there any other implication or is it more like having a separate line item for that? The cooking coal prices, the rate moved up every day, dollars 15, dollars 20 per tonne. This is very difficult for any company to manage this type of And at the same time, the rate went up, it may come down also. Actually, we don't want to have any extra from this Steel. So whatever to the base, the prices have gone up. We wanted to put separate line item. If it comes down, the benefit will be passed down. What we are contemplating, we are not taking the call yet. Sure. And lastly, again, on DTS, is there any kind of run rate that we should be looking at for the second half and next year in terms of production and sales force? What's the kind of ramp up we can expect? They're operating right now at a level of And this is 2,700,000, 2,800,000 tonnes. They're already spending money to complete The expansion to 3,500,000 tonne and 3,500,000 to 5,000,000 tonne. So at least and also the reduction in the Cost of production by setting up the Kokone plant, the BCA system, the lime plant, Steel. So this will get completed partly by end of this financial year and also partly in the next year. So these benefits also will come higher volumes, lower costs That can come in from details. Sure. That's all for my time. Steep. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, JSW. The next question is from the line of Abhishek Pothar from HDFC Stifel. Please go ahead. Yes, thanks for taking my question. Sir, in terms of steel realization compared to How has the spot the DYBAR and HRC prices moved? Any color on that? You're asking a question is regarding movement of current prices vis a vis Teo, which? Yes, sir. Just trying to see how much increase we have taken. Okay. So I mean the increases in the month of October, We have been able to begin the month of July to September in India from a demand perspective was weak on a seasonally weak quarter, and we mentioned that in the earlier deliberations. So the price improvements have started taking place from October. So we have increased between $12.50 to $1500 in the flat As on 1st October, for the month of October, and we have increased long products in the range of 3,500 rupees For tonne beginning of October. There have been some intermittent increases in the during the course of the month For some retail markets, but I think that is for a smaller portion of the volumes. The we are looking at how the overall demand and the price absorption plays out, And we are hoping to increase prices and collect it upwards from 1st November. How to do the So charge mechanism as a factor of the price is something, as we said, we are concentrating and will look into and accordingly increment. Understood. And compared to export realization, how does the HRC price in domestic market faring for us? So as we had mentioned earlier also, the international markets over the last, let's say, 6 months have been very robust. International prices have been higher. As we know, in U. S. And Europe, the prices are much higher than what is prevalent in Asia. India has been among the lower priced markets globally in the past few months. So we have now seen the Indian prices picking up. And if you were to look at the value added space, I think the international markets And Indian markets will probably be very similar in nature with respect to realizations going forward. As far as HOTOLD is concerned, I think there are certain markets which are restricted right now because of certain quotas and certain safeguard measures. So hot coal prices vary from region to region. But by and large, I would say that the domestic price pickup post November may make the domestic prices slightly higher than the export prices. Understood. And just one last question regarding the tax loss at BPS and how much is there and how we'll be utilizing it? So it remains as separate independent entity until 2nd course judgment comes in, final outcome comes in. So here only our holding has increased to 83%, that has become subsidiary today to SBA. Okay. Understood, sir. Thanks. Thank you. The next question is from the line of Vishal Sandak from Dam Capital. Please go ahead. Yes. Thank you for the opportunity and congratulations on a very good set of numbers. My first question is with respect to the thermal coal prices and how is it going to impact Our cost of crush will be 3rd quarter, given the strong rise in the international coal prices. So, Dharmil coal prices are going up because we have 600 millawatt captive unit at Vijayanagar and also PPA with JW Energy For another 600 megawatts. So on this 200 megawatts, whatever cost increase that will happen The variable cost due to increase in the thermal coal prices, so that would come in. The point here is We are setting up or we already commissioned part of it, 175 plus 60, 235 megawatt power plant Using the gases that would come out of Blackburn and Cocoa at Dhruvie. So there the cost increases won't be there Due to power, so that power becomes cheaper. It's why I have been repeatedly highlighting that the Cost of operation of the expansion project is much cheaper compared to the existing operation of 5,000,000 Internet Bmb. So this power cost will be much lower The expansion project. Sir, would it be safer to assume that the overall cost Thermal cost impact will be close to about INR 1000 to INR2500 on a blended basis at the companywide level in Q3. Generally, in average, the 600 Units per tonne upskill is a consumption. So then I'll leave it to you how much you will take based on thermal crude price. We really need to go some changing. Very difficult to say this is the price. So whatever price you take for the per unit And add to that, 70, 80,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Okay. My second question was again with respect to BPSL. Now we are increasing the capacity of BPSL from 3.6000000 to 0.5000000 to balance of plan. So by when can we expect the EPSL to reach 3.5000000 capacity? Today, it is operating at 5,000,000 tonnes. Sure. As on date, it is operating at 100 percent of existing capacity. So we are spending INR 1500 crores For cost reduction plus expansion to 3,500,000 tonne, this is expected to be completed in the first half of next financial year. So the expansion from 3,500,000 to 5,000,000 tonnes, we are spending another 2,000 tonnes, So that is expected to be completed by end of FY2023 or in the early 2024 financial year. So if everything falls in place by end of FY 2023, DTSL itself would be 5,000,000 tonnes. Correct. And on top of it, we have Vijayanagar coming in by second half of FY 'twenty three with another 5,000,000 tons. So will there another 5,000,000 tonne will come by FY 24 end? No, no. In 3 year time frame, sir, about 15,000,000 tonnes, not 12,500,000 tonnes of incremental capacity. Are we looking at exports market again? Or we believe that Indian market would be wide enough to absorb this kind of volume? Vishal, I mentioned in my opening remarks that the demand will be 110,000,000 tonne in this year, I think it's 94,000,000 tonne last year. So 16,000,000 tonne incremental demand, which we are expecting. And the exports last year were 17,000,000 tonne. In past 6 months, we've already done 11,000,000 ton as a country. So exports are quite strong for me there. So taking these two factors Steel. Into account in my view, there is enough demand that could be available in India to absorb the capacity. If capacities don't come, there could be shortages. Mr. Vishal Sandak, may be requested to please rejoin the queue. We have Steep. The next question is from the line of Pavan Cherda from Enam Holdings. Please go ahead. Yes, congratulations on turning around overseas Steel. So first question on So Bhushan Power, there was no exceptional in this 23,000 EBITDA per tonne and if the streams remain constant as we have seen 65 and EBITDA, can you see in line with whatever JSW Steel is doing right now? Bharat, the way you have to look at the EBITDA per tonne number is the EBITDA Steel you are comparing the JSW's team. P. Vijay Kumar:] Yes. P. Vijay Kumar:] So it's really one [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Then we will definitely in a blended basis it will be higher. So VPSL, out of the 2,800,000 tonnes, a significant portion of that is That is why the margins are quite heavy. Sure. And so what was the figure of that? Any one capital acceptance in the quarter? Raw material expenses slightly have gone up because Coca Cola prices have gone up globally. It is $1014,000,000 is the raw material acceptances, But the capital acceptance that we continue to pay, it is outstanding at RMB369 1,000,000. So the 13.83 both raw material and CapEx acceptances together, which has come down from 15.20 in the 30th June. So there is a reduction in the overall excess taxes, but basically in the capital side. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, two questions. One is, How should one understand or make up the residual 17% stake in BPFL? Any timeline or targets that you're looking at over here? After conversion, now it is 83.28 and balance is held by the good That is the amount they have contributed. That is why their holding is 17 around 17% as on date. In addition to that, there is a INR 2,500 crores of debt outstanding along with the crude interest in that company. In the SPV, what I'm going to say, the 2,500 quotes, there are warrants that are available both to the shareholders. At the relevant time, we will contribute, how much we will contribute to the 2,500 core payment. Based on that, the holding can undergo a change, but I won't date 2,500 crores treating me as a debt, then it is 83.17. Right. Sir, I was trying to understand, basically, you indicated there was a Supreme Court verdict, which is also there and there is a fact angle also, which is there. Just trying to understand when will we see the entity entirely in March so that there could be a tax benefit at a consult level as well? If you see the ratios today, they are comparably While the JSW Steel ratios are there, but because of the Supreme Court Litigation is pending. It will be very difficult to alert a guess when we need to decide it, when we can take a call On this issue, then we can decide on this issue. So therefore, we have to wait eventually for the certain court mitigation outcome. Pending that now, consolidation will happen as a subsidiary. Thank you. The next question is from the line of Rajesh Chopra from Citigroup. Please go ahead. Thank you. So just trying to understand something that coking coal prices will go up at about $100 in this quarter, that's obviously not capturing feed prices. And while you're anticipating price steel price increases to come through in the next couple of months, would there be enough to offset that inflation? And second is, how much what is the advantage that you're likely to see in the IMO prices in this quarter? So I know prices as I mentioned to you, there is an INR1800 reduction in India, which is not reflected Steel. To a major extent, the benefit in the account in Q2. So as soon as it become any further reductions. So if you look at the drop in international prices versus local iron ore prices, there is a big gap. So we expect some more corrections will happen in iron ore prices that benefit will come. So that will neutralize, to some extent, the increase in the cotton coal price. Okay. And the other thing is that the energy surcharge that you were referring to now, it's Obviously, price increases in India have been steel price increases have been slower given that they've been more or less constant in the last team. So is it really easy to kind of for even if you're bringing in any of the surcharges, you need to pass on the benefits eventually on reversal, but will you find it easy to kind of pass it on if implemented? It's a new concept to India. Steel. As far as overseas is concerned, not only industry sector, in other sectors, it is prevalent. The concept is known. So that's why we are not saying we've already taken a call to do this. We are contemplating because the markets are so uncertain, so volatile. Every day, if it goes up by $50 it comes down by $50 It's very difficult to manage that type of volatility. So this concept, which is internationally accepted principle, We're also looking at discussing to our customers and then take a call. Thank you. Just one last question on Fusion Power. Next year's CapEx will be about INR 2,000 crores, right? And how much are we building for this year? Corporate CapEx is INR 3,500 crores, including INR 1500 crores for capacity expansion So 3,500,000 ton and cost reduction, both today and 3 total time cost. This amount will be spent over a period of 2 years, 2.5 years. Okay. Thank you. Thank you. The next question is from the line of Sidharth Sahikar from UTI Asset Management. Please go ahead. Hello, sir? Yes. Hello. Yes, yes. Sir, just for Anish, first of all, Bhushan towers this date, you told total date is around 13,300 per annum, which is 10,000 in Sublime, 3,300 in the this one. So this First of all, this 3,300 is it the impact that we are seeing in 55,000 crores. Thanks, Shetam. And then you said that out of this 2024 has been, retail. So is it in the STV only, this entire 10,000 is now only No, I think I have to correct you. The numbers which I gave to you, at the time when we took over Bushel Power and Steel, the debt was INR 10,800 crores. Then there was another INR 2,500 crores in the STV. So the total debt At the time of take over was INR 13,300 crores. Out of that, we have prepaid INR 3,300 crores. That means BPSL plus SPV together, the debt outstanding is INR 10,000 crores. Okay. So this INR10,000 crores is not included in JSW Steel, INR55,000 crores number, which we have given it to you. So when we consolidate in this quarter, next quarter, then it gets consolidated along with the EBITDA. Okay. So currently it is out of this 35 100? Correct. Yes. Thank you. Ladies and gentlemen, this will be the last question for today, which is from the line of Rahul Jain from Systematics. Please go ahead. Yes. Hi, sir. So I just want to check on your volumes. So are we maintaining guidance for this year of 18.5% and 17.5% of production? If you see, Rohini, the first 6 months, we have postpaid a production of 8,200,000 tonnes from existing operations. We are doing the guidance of GBP 70,000,000 from existing operations. So if we can make adjustments of shutdowns which has happened in the Q2 An oxygen shortage in the Q1, which will not be there in the Q3 and Q4. So 17,000,000 tonne will be repatriated through the existing operation. Similarly, the way we have now we have smooth commissioning of our expansion project, the 1,500,000 tonne from expansion, We are confident that we'll be able to get from there. So 18,500,000 time is within achievable reach. Right, right. And sir, what about the downstream? Are we fully equipped now on the expanded operations for in the other JSW coated? Yes. We are fully equipped, except for all the lines have Steel. Starting with first one line and for galvanized and GL in Waffen, which should start up in the next Other than that, all the units are operating now fully in a definite manner. Right. Thank you so much. Thank you. Ladies and gentlemen, as this was the last question for today, I would now like to hand the conference over to the management for closing comments. Thank you, ladies and gentlemen, for joining us today. Steel. Thank you. On behalf of Prabhupada Selahir Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.