Ladies and gentlemen, good day and welcome to the Q4 FY 2025 earnings conference call for Sarda Energy & Minerals 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit from Stellar Investor Relations. Thank you, and over to you, sir.
Thank you, Akurath. Good evening, everyone, and thank you for joining us today. To discuss Q4 FY 2025 business performance, we have with us the senior management team of Sarda Energy & Minerals, represented by Mr. Pankaj Sarda, Managing Director, and Mr. Nilay Joshi, Executive Director. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after the statement is made. Documents relating to the company's financial performance, including investor presentation, have been uploaded on the stock exchange and company website. I now hand over the conference to Mr. Pankaj Sarda, and then we'll open the floor for Q&A. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. Welcome to Sarda Energy's Q4 FY 2025 earnings call. Macroeconomic overview. The reciprocal tariff imposed by the USA has disrupted global trade and fostered a shift towards protectionism. While the full impact is yet to be realized, India remains relatively well-positioned due to strong domestic demand, a growing manufacturing base, and the increasing focus of developed economies on diversifying supply chains. However, the dumping of goods from countries with which we have free trade agreements continues to pose challenges. The government remains vigilant and responsive with policy actions. The safeguard duty imposed on certain steel products in April has effectively curtailed cheap imports. India's fiscal deficit is projected to decline to 4.4% in FY 2026, down from an estimated 4.8% in FY 2025.
The RBI has infused liquidity into the banking system to ease interest rates, recently reducing the repo rate by another 0.25%. Inflation data suggests a continued easing trend. Banks have reduced deposit rates, and loan interest rates are expected to follow, which should bolster consumption and capital expenditure. Operational performance. FY 2025 was a landmark year in our growth journey, marked by the successful acquisition and integration of SKS Power Generation Chhattisgarh Limited. We achieved record-high production across coal, iron ore, and pellets from the newly acquired IPP. Hydropower generation grew by 5% YoY, supported by a strong monsoon. The IPP thermal power plant delivered significantly improved performance, achieving a plant load factor (PLF) of 80.42% in Q4, despite a fire incident that shut down one unit for 27 days and 73.32% for the full year, up from 56% in FY 2024.
Continuing operational efficiency measures played a key role in this improvement. Temporary shutdowns at our steel plant and one ferroalloy furnace for modifications led to a dip in production of metal products for the quarter. Our multi-pronged strategy to reduce carbon footprints includes the adoption of solar power, the replacement of diesel vehicles with electric ones, and the successful registration of our waste heat recovery project with I-REC for carbon credits. Expansion and project updates. Coal mines. Gare Palma IV/7. Final approval for increasing mining capacity from 1.68 million tonnes to 1.8 million tonnes is expected in this quarter. Gare Palma IV/5. Revised block boundaries require fresh approval, granted 57 months to commence production. Sahapur West Coal Mine. Mine opening permission was received on 10 March 2025. Mine development work has commenced, and production is expected before the end of the next financial year. Bartunga Hill JV Coal Mine.
DPR and mining plans have been submitted to SECL, and forest land diversion approval is underway. Power plants. Rehar Hydropower Project 25 MW. The trial run of the plant is complete. Commercial operations will commence when water flow improves. The PPA is expected to be finalized this quarter. Kuchebira Hydropower Project 25 MW. The project is in the approval stage, with work expected to begin by mid-FY 2026. Two additional small hydropower projects are in varying stages of approval. Captive solar plant. Execution is delayed due to the issues with the EPC contractor, that is, Gensol. Most equipment has been delivered, and transmission line work is ongoing. Project commissioning is expected in the current financial year. 30 MW TG Set replacement. Work is on schedule, with operations expected to begin by mid-FY 2027. Mineral wool project. Operations commenced on 28 March 2025.
Market response to the product has been positive. I would now hand over to Mr. Nilay Joshi to discuss financial performance.
Thank you, Pankaj. Financial performance for the quarter FY 2025 and full year financial year 2025. In Q4 FY 2025, the company achieved consolidated revenue of INR 1,239 crore, registering a growth of 39% YoY. However, revenue declined quarter- on- quarter by 6% due to the seasonal effect in the hydropower business, lower power sale realization, and shutdown of the steel and ferroalloy plant for modifications. Revenue grew by 20% YoY. Profitability. Despite challenges in the steel and ferroalloy segment due to a downturn in prices, operating EBITDA for the quarter increased YoY from 162 crores to 273 crores, and consolidated profit after tax grew 14% YoY to 100 crores. Operating EBITDA for the full year grew 56% to 1,247 crores, and PAT grew 34% to 702 crores.
One noteworthy observation is that the energy vertical between hydropower and thermal power, it has already contributed almost 50% of EBIT earnings before interest and tax in FY 2025. And this contribution is expected to increase further in FY 2026 with the full year of operation of the 600 MW thermal power plant and the improving PLFs. Debt and liquidity. Net consolidated debt, including working capital loans, is below INR 1,600 crores, less than INR 600 crores. Long-term loans repayable within the next year amount to INR 235 crores. Liquidity remains strong on the balance sheet, with cash and liquid investments exceeding INR 1,250 crores, which is in addition to loans given as part of treasury investments. I now hand over back to Mr. Pankaj Sarda to discuss the steel and ferroalloy industry overview and outlook. Over to Pankaj.
Thank you, Nilay. Industry overview. In FY 2025, global steel production declined by over 3% to 1,839 million tonnes, with China down by 0.6%. India bucked the trend with a 5.6% increase, producing 152 million tonnes. Domestic finished steel demand also grew by 12%. Despite strong demand, steel prices declined due to increased imports and reduced exports. Net steel imports rose to 4.2 million tonnes, up from 1.1 million tonnes in FY 2024. Domestic crude steel production in Q4 FY 2025 was 40.1 million tonnes, up 7% YoY and 4% QoQ. Finished steel consumption rose by 3% QoQ to 40.3 million tonnes. China's steel exports remained high despite reduced production driven by weaker domestic demand. Q4 FY 2025 exports increased by 6.3% to 27.429 million tonnes. Many countries have introduced safeguard measures against cheaper Chinese steel imports. Indian coal production crossed 1 billion tonnes in FY 2025, growing by 5%.
Coal imports fell by 9%, saving $6.93 billion in forex. The Indian coal index declined by 14.56%, and coking coal prices also softened, partly offsetting margin compression. The central government has introduced incentives for underground mining, including upfront fee waivers, reduced performance guarantees, and lower minimum bid prices. Ferroalloy exports dropped to 106,000 metric tons from 115,000 metric tons due to lower production. Exchange power prices fell by 17% in FY 2025 to INR 4.31 from INR 5.17 in FY 2024 and declined by 10% YoY in Q4. Outlook. RBI's liquidity measures and government spending are expected to support economic growth and credit expansions. China's recent cut in the reserve requirement ratio has released $138.6 billion into global markets. Safeguard measures taken by India should improve margins in the domestic steel industry. India continues to be the fastest-growing major economy, driven by robust domestic demand and stable demographics.
A reversal in the interest rate cycle will enhance competitiveness and spur capital investments, boosting demand for steel and other metals. Full year of operation for the 600 MW thermal power plant, improved PLF, better realization in the IPP business, and lower finance costs are expected to further strengthen profitability. That concludes our performance and outlook. 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 use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Marcel, an individual investor. Please go ahead.
Yeah, my one suggestion is there, because you know now we have got this thermal power plant of 600 MW, and our existing hydro are very small capacity, like 130 MW in Sikkim and other 20, 30 MW, something else. And moreover, these hydro are seasonal, like they basically operate at a good speed only in the Q2 of the FY and the first quarter, you can say, of the moderate capacity. But unfortunately, we have seen that in the segment reporting, you have put only one power. So I mean encourage and request that this segment should be divided in two parts. Number one should be thermal power, and number two would be hydro, or you can say, yeah, hydropower. So that the results are comparable.
Now, for example, in the Q4 results that's announced, our Sikkim power plant is almost closed, but we see still good profitability coming in power because of the thermal power plant. So this is distorting the result. So please, going forward, kindly have two separate segments, one for the thermal power, one for the hydropower.
Okay, sir. We'll look into that. Still, if you want to get some idea, you refer to slide number five of the investor presentation, where you'll get on the hydropower, the revenue and EBITDA margin details. But I take your suggestion.
But, sir, we can refer that. I already made like I even saw this, for example, last year, that what was the, for example, in the Q4, what was the hydropower? It was minuscule. So I could get some idea. But again, you know the profitability is much higher in hydro as compared to thermal because opex is almost three there. So whatever we like from the scale only, we cannot see this profitability. So that's why because see.
Y ou have some suggestion.
Yeah, thank you. And second thing, that like where do we stand in terms of, for example, another appeal going to Supreme Court, like what is the, for example, it's likely result, like are you anticipating? Number two, where do we stand in terms of the expansion of the another 600 MW of this SKS power?
Can you repeat your question? We couldn't get your question.
Yeah. My first question is that since you have taken over this SKS Power, but in the note, it is also mentioned that this unsuccessful bidders have filed appeal in the Supreme Court. So what are the current status of that, and what is your management considering?
The matter is sub judice, and the next hearing is coming in the next month's end.
So that is going to the first hearing, or already a few hearings have happened?
No, so I'll just clarify. The matter is in the Supreme Court. It is sub judice. It has been in the Supreme Court. It has been ongoing for some time now. I think the next hearing is tomorrow, but it is a vacation bench. Let's see what happens. The matter is, I mean, whenever it will be heard as well, I mean, the Supreme Court prerogative. So it's going to come up.
That's okay. That's understandable. And sir, where do we stand in terms of the next expansion of this power plant, another 600 MW, for which we said, okay, that we already have this, for example, this utility ready?
Sir, regarding the next power plant expansion in SKS Power. So we had an environmental clearance, but it's not there because it has lapsed. So we have to again redo the public hearing and things like that. Our team is gearing it up. And in the coming one year or one and a half years, we'll have all the clearances in place, and then we can start the process.
Okay. Sir, my last question regarding our captive mining, whatever coal ore we have. So now we have reached this optimal extraction, or what other, for example, valuation is going to be easier to be made, which can push up our EBITDA?
Sir, I'll just make a correction. So we run commercial mines. I'm just correcting you. The mines, the commercial mines, except for the Gare Palma IV/7 mine, which is a captive mine, all the others are commercial mines, which means there's no restriction on the end use of the mineral. And details, if you refer to the investor presentation, you'll get the current status of each and every mine.
Okay. Okay.
So the investor is yet to come on board.
Okay, sir. Okay, sir. Thank you.
You can refer to slide number. I'll just tell you. You can refer to slide number 21 and 22, and that will give you a clear idea as to what are the levers of growth in mining and what is happening in each and every mine.
Okay. I can see that you all just loaded this presentation today. No problem. I'll go through it. Yeah, if I have any question, I'll come back on the queue. Thank you, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Rajesh Bhandari from Nakoda Engineers. Please go ahead.
Yeah. Good evening, sir. I just wanted to know what is the basic reason that this quarter the results were not that good? Normally, otherwise, Sarda results are quarter to quarter very good. What is the basic reason, sir?
No, no, sir. One is the results. I think the couple of things that you, I think, should look at, the results, I think the results are excellent. If you look, one, you should look at the cash profit, okay, because there's a different tax component. So look at the cash profit that is also disclosed in the presentation. That is one thing. Then if you look at the revenue growth and the EBITDA growth, YoY, you will get a very good idea as to, I mean, it's a significant growth, 39% growth, YoY, and 62% growth in EBITDA, I mean, in both for the quarter. And if you look at the for the year, there's a 44% growth in EBITDA. So numbers are, I think numbers are quite good.
The only reason, I mean, there are a few reasons that will make the numbers even better, which, I mean, one is that the ongoing post-acquisition, the stabilization efforts that SKS are on, which means the PLF will keep on improving from here. Also, the results only include partial, like seven months, less than seven months type of result for SKS. So all that will improve the results further. But I think the results are, I mean, if you can see any weakness, you can point out. But normally, I would say the numbers, both on cost, I mean, revenue growth or EBITDA growth or cash profit, they're quite good. There cannot be like-for-like comparison because you have hydropower in quarter.
Sir, normally, you have the SKS Power that you have. Normally, what is the PLF?
We already spoke in the call. The average PLF for FY 2025 has been 73%. But in the fourth, that is already mentioned in the con call address. But in the fourth quarter, because of the efforts that we have put in, the PLF improved to 80%. And we see an improving trajectory for the PLF. We don't want to put a number to it, but we see an improving trajectory to the PLF going forward. If you see, look at the slide number five. Not slide number five. Sorry, slide number six. So you will see that April, we had a 96% PLF, and the plant secured sixth position in the All India PLF rankings of CEA. So things are improving, and clearly, it's in the right direction.
Sir, is Ferroalloys' demand and price? Can we expect any improvement? Hello?
Hello?
Yeah.
Yeah, voice.
Yeah. Ferroalloys is demand and price.
Ferroalloys, pricing-wise, we will see probably a 5% depression. Mainly, but this is going to be mainly caused by the reduction of the ore prices more than anything else. Demand-wise, demand, we think domestic demand is going to be quite good, strong. Export demand is going to be a little stressed because of these tariff issues and safeguard investigations, everything going on all over the world. So there is a little unpredictability about the export demand scenario. It is a little tough.
So export and demand come [Foreign language].
No, the domestic profitability is quite good because in the domestic, we use less costly ore, right? The grades are quite different. And when we are seeing good support from the domestic, demand is pretty strong. And the second factor which is helping us in our area is that a lot of plants are facing an increased energy cost, especially in the West Bengal area, where DVC has increased the power rate by about INR 1.20 finally after a long time. So that's significant. About 30% of India's ferroalloys production happens in that belt.
Yeah, yeah.
So that's about INR 4,000-INR 5,000 where production cost has increased. So even if there is some demand weakness, that puts a cap on how much they can reduce the price. Because they're already operating at very thin profitability levels that are quite historically on the lower side at the moment. So there's a limit beyond which they can go lower pricing-wise.
But our profitability will be then comparatively better because of the availability of the power at a cheaper rate?
Yes, sir. Meaning definitely. And if you see across the industry, we are on the top 25% in the costing-wise for the power cost. For example, plants which are having some abnormal power rate, which are remaining all are above INR 7, INR 6, INR 7. Because some plants are paying around INR 6, but there is a deferred element to it, right? They have a subsidy which is not sustainable. So we don't see major price depression happening at the moment. It's not so strong, that we have to admit. But then a lot of capacity is also getting cut systematically. As the higher price, people are using higher price electricity are just closing production.
[Foreign language] , SKS's?
So that keeps on changing because [Foreign language] raw material use [Foreign language] and the power that you get, definitely captive coal [Foreign language] definitely pricing [Foreign language] advantage [Foreign language] .
[Foreign language] , sir?
No, [Foreign language] , but yes, our costs are very, very competitive.
[Foreign language] . All the best for the future, sir.
Thank you.
Thank you.
Thank you, sir.
Thank you. Participants who wish to ask questions, may please press star and one at this time. The next question is from the line of Rakesh Roy from Omkara Capital. Please go ahead.
Hi, sir. My first question regarding, sir, if you see our steel volume, it is down nearly 11%, nearly 13%, sorry. 13% even nearly. Any reason demand is slow or anything else?
Rakesh, there are two, three things I've covered in my con call address also that we had taken some breakdown corrections in our plant, so we had stopped our plant for 30 days, 30 to 45 days for further improvement in the plant. One is that. Second is the intermittently, when the power rates in the grid is higher, we tend to stop our productions because better realization and giving power to IEX, so we reduce our production there and we sell power in the grid, so that could be also the reason.
Okay. But sir, are you saying you sell the power to the grid, isn't it? If you see your power realization for this quarter, is nearby INR 650, if I'm right, compared to last quarter is INR 664?
No. See, in quarter four, the realizations were weaker. Now, in the first quarter, it has gone up.
Okay. So first quarter has gone up. But that's why I'm saying as in Q4, as you say, due to the higher realization, you make sale of the power to the grid. That's why the production is down. But as you say, if you.
Main reason, if you refer to our con call address, also the main reason is because the plant was not operational, doing certain modifications for better quality and efficiency and all of that, which you will see in terms of better results going forward. The plant was under maintenance and improvement for more than a month. Different units were under different days of closure. That is the reason, main reason. Of course, yes, we have sold certain part to the IEX and all. That depends on the time of the average might have been lesser, but certain times of the day you get so. That way, I mean, you have to work out the economics.
Okay. Sir, my next question is, any guidelines for FY 2026 in terms of volume for this steel and power for 26 and 27?
Normally, we don't give forward guidance. But I mean, we have taken modifications and we expect things to be because the plant will now be operational and with a better efficiency. So things should be better. But in terms of numbers, we don't give forward-looking guidance.
No, no. I'm not asking in terms of number. I'm telling you in terms of percentage, 5%, 10% from here for FY 2025 like this step in terms of volume.
Commodity prices, you cannot predict how the commodity prices will.
No, no. I'm just saying if prices remain same, could the prices remain like for a whole year, how much volume you are expecting?
See, the logic is that it should come back to the regular levels of production. The production will come back to the normal levels which was there in FY 2024 and maybe improve a little bit because of the modifications we have done. But then beyond that, saying anything will be very difficult because it's a very volatile market, prices, you don't know in commodity to put a price. So that is very difficult.
Okay. My second question is, sir, are you seeing any margin improvement from here because coal price is down? And if you see margin improvement from Q1 or Q2 from here onwards?
Power definitely will, I think, Q1, I mean, compared to Q4 things will be, I mean, normally thermal power, Q1 is the best quarter.
Okay. So we see the margin will improve from as per your question versus margin will improve in Q1 compared to Q4?
Very hard to say for commodity prices. It's very hard to say that. But there are raw material prices are also going down as well as the finished prices are also going down. But there is a lag when the finished product prices go down and the because after generally the raw material prices go down later. But we can see the trend that the raw material prices and finished prices going a little bit down from there.
Okay. Sir, my last question is, any chance that in next two, three years, you will hive off your power business because power revenue is nearly 45% of total revenue nearly after SKS? So any chance are you planning to hive off this power business to separate company like this? Any plan?
No. I mean, see. No plan. The name of the company is Sarda Energy & Minerals Limited.
Okay.
Right. So it begins with energy. It begins with energy. And energy, as I said in the opening remark also, energy is going to become more and more prominent. That is the clear guidance that we can give you that energy vertical is going to become more and more prominent in terms of contribution to both top line and bottom line. If you see slide number five of the presentation, already the contribution of the energy vertical is almost 50%.
Exactly.
We expect that to go up significantly because of various reasons which are already captured in that slide. So the energy vertical for Sarda Energy & Minerals is going to become more and more prominent and the name itself is Sarda Energy. So you know.
Nice. Okay, sir. Okay. Thank you, sir. Thank you for my side.
Thank you. Thank you. Bye.
Thank you. Participants who wish to ask questions may please press star and one at this time. To ask a question, please press star and one now. The next question is from the line of Bharat Pathak, an individual investor. Please go ahead.
Hello. Hello.
Hello.
Yeah. Is my voice audible?
Audible. Audible.
Yes. Thank you, sir, for giving me the support to answer the question. And first of all, congratulations to the entire team for such phenomenal results.
Thank you .
My question is not actually a question. I just wanted to understand. It's page number 36, that thermal power generation versus sales. So we see that the generation is 3,482 million kilowatt hours, but the sales is only 2,096 million kilowatt hours. Can you compare it with me?
Balance is captive consumption.
Balance is captive consumption.
And auxiliary as well.
Oh. Thank you. Thank you, sir. That was my only question.
So we have in thermal power, as you would appreciate, we have two types of assets in thermal power. One is the power plant, I mean, the IPP where we sell the power to the grid or under PPA or whatever. So where we basically sell the power. And the other is the captive power plant for 160 megawatt. So those captive power plants we use for internal consumption for manufacturing of steel or ferroalloy. So that is why the difference that you see between the generation and sales. I hope that I clarified.
Yeah. I understood that part. I mean, if you allow me, maybe I can ask one more question?
Repeat, please.
Yeah. I was looking at this metals production and sales numbers for iron ore pellets and sponge iron, steel billets, wire rod, HB wire, and ferroalloys. I see that it's like last four, five years is completely flat, maybe hardly some 4%, 2.3%, - 2.5% growth, 2.5% growth. So is this a common trend across industry or is it something specific only to our company?
No. You are talking about the production numbers, volume?
Yes. Production and sales thing is almost flat for the last four to five years.
So sir, it is like this that production-wise, so now we have on a big picture basis, now we have basically three verticals: energy, minerals, and metals. Okay. Metals is our legacy business, which is already under optimum utilization or optimum production level. There might be minor delta in production here and there because of some improvement that we do in the plant, etc. But there is no major expansion that we are planning on the metal side as of now. Largely, the expansions that are happening are either on the mineral side or on the energy side. As you can see from the revenue growth and EBITDA growth numbers also, that the growth is coming from energy and minerals, right?
The metal side type of growth or rather the type of improvement that will happen will be either carbon footprint reduction or improving efficiency, which includes projects like solar project or the mineral fiber project that we did recently. So those are things which reduce cost, save cost, or improve efficiency or reduce carbon footprint for the company as a whole and make the steel more greener and all of that. So we are not doing any large capacity expansion on the steel side. Bharatji, you want to add anything to it?
Yeah. I totally agree. Strategically, we have taken a decision. The group has taken a decision that we would want to grow in energy and minerals direction. And that's how we have put our CapExes in the last five years in those areas.
So the EBITDA for this coal-based thermal power generation, like you said, for the hydro thing, it comes to around 72% EBITDA margin. Is it something similar for coal or it is much lower?
Coal is much lower, sir. Coal is much lower. Hydro because there is no cost in hydro. The only cost in hydro is during the putting up the CapEx. Otherwise, water is free.
Okay. Okay. Thank you, sir. Thank you for answering the question.
Thank you.
Thank you. The next question is from the line of Rajesh Bhandari from Nakoda Engineers. Please go ahead.
Thanks for giving me a chance once again. Sir, in fact, [Foreign language] growth [Foreign language] energy [Foreign language] mineral [Foreign language] , that is the best thing as a matter of fact because they will be the basic price owner. [Foreign language], sir, energy [Foreign language] the demand in India is going to increase every day. [Foreign language] solar project [Foreign langugae] power plant [Foreign language] SKS [Foreign language] , sir, [Foreign language] solar [Foreign language] ?
Sir, as of now, we are putting 150 near Raipur.
150 megawatt?
50 megawatts.
50 megawatt. Okay.
As of now, we are putting 50 megawatts, and major CapExes on solar side as of now is this much only.
Okay. Green steel [Foreign langugae] advantage [Foreign langugae] , sir, price-wise? Any incentive?
Mohanji?
Greener steel?
No. Green Steel as such, there is no policy of the government at the moment to price it over or give a price incentive. But going forward, as a group, you are reducing your carbon footprint, which is important. That is the major thing. As of now, there's no settled norm from the government that they will pay extra for some Green Steel or something. The technologies which are going to be used in Green Steel also are still under study.
Study. Yeah. Yeah.
So additional technology like hydrogen or they will do some radical improvement in the current steel making by reducing the amount of the carbon burning or different way of reduction. So it's a technology under transition at the moment. Very difficult to say anything.
Yeah. Yeah. Sir, [Foreign language] ?
Sir, we evaluate opportunities in the verticals that we are focusing on, which is energy and minerals. We keep on evaluating opportunities. Our balance sheet is very strong. I think historically, the capital allocation that we have done has been very prudent. So we keep on evaluating, sir, [Foreign language] to and use there, so we'll definitely look at it.
right now, like, this Bhushan Steel and Power is getting scrap through JSW to the port.
Sir, [Foreign language] .
Huh, sir?
[Foreign language] .
[Foreign language] .
Sir, [Foreign language] matter is totally different.
Different.
We cannot compare.
Yeah. Yeah. Yeah.
Apples to apples. Right.
[Foreign language] , sir. Okay, sir. Thank you, sir. Thank you.
Okay.
Thank you. The next question is from the line of Marcel, an individual investor. Please go ahead.
Yeah. I have gone through your previous slides. Just, I have two questions. Number one is regarding coal. That means currently for this SKS power unit, how much approximately coal is being consumed and how much coal is and against that, how much coal we are utilizing from our captive production and how much we are buying. Number one, in the same regard, suppose once we like Gare Palma, suppose if we just expand 1.8 million tons, then what will be our cost of production for the coal? And currently, the coal which we are buying for SKS power, at what rate are we buying?
I'll answer this. Sir, every day if the plant is running at full capacity, we are consuming 10,000 tons of coal. Depending on the GCV and the ARB, generally, I'm just giving you a thumb rule how the consumption is happening. So the government comes out with SHAKTI Coal linkages, which the coal prices are much, much cheaper. So if we are lucky and if we get good pricing and SHAKTI Coal linkages, we try to take as much as coal from SHAKTI Coal linkages. And the shortfall is always we have a facility of a coal mine from where we can always utilize our coal. So but our coal mine is, as told also in earlier question, it's a commercial coal mine. So if it is not consumed in our captive power plants or IPP, it can be sold in the market as well.
That's very good, sir. Yeah. My second question regarding this one of the unit was shut down for about a month. So was it properly insured? Did we file a claim on the insurance for the shutdown? Because there was a fire incident also, so did we file a claim for the loss of profit as well? Because this insurance has nowhere been mentioned in the accounts also.
No, no. I'll just so you have to appreciate one thing, sir. The asset or this plant was taken under NCLT, which means it was an NPA, and it was basically being, I mean, not run as a regular plant, right? So hence, after we came in, we are doing regular improvements and things like that. But it takes whatever distressed asset some time before you can kind of stabilize it properly and take it, I mean, make the operations proper and efficient the way you want a regular asset to run. So you will see in the initial a distressed asset, you will always find these type of challenges and something happens, something missing. That is where all the.
No, actually, I'm not referring to the first shutdown, which was the maintenance shutdown, which is like normal part and parcel of any plant, like from September to October. I'm talking about a fire incident.
Yes. I'm happy to share that there was no loss of asset, and I'm very proud of our team who had worked day and night to bring back the equipment in running condition.
But sir, like.
We were immediately able to procure them and could import them on a timely basis or on a fast basis. So.
The fire was detected very fast, and it was quenched almost immediately. Within half an hour, everything was over. Well, that's a very good question, sir. [Foreign language] due to this consequently, we also lost profit for one month. So [Foreign language] claim [Foreign language] policy [Foreign langugae] .
Loss of profit requires a shutdown of 45 days or something like that, and it didn't get triggered.
Okay.
Minimum requirement [Foreign language] .
Sarda sir.
It has to be minimum 45 days, and it didn't get triggered.
Huh. [Foreign language] .
[Foreign langugae].
Sir, you correctly.
Fill [Foreign language] . That's what I was trying to tell you [Foreign language] our team has been continuously on the job after the takeover of the asset. But any NPA asset, [Foreign language] normally proper form [Foreign language] because.
Huh. Fully agree. Fully agree, sir. Fully agree. Fully agree, sir.
Sir, you correctly.
So sir, in the same sequence, I want to give you one more valid input here because 45 days, for example, as our other colleague has mentioned regarding this, it is the minimum required for the policy. But sir, let me tell you, those minimum criteria are set by different insurer is different. And these can be negotiated. So 45 days is a too large period. So I will request that. [Foreign language] .
Fully take your point, sir. That is why I said at the beginning that there will be gaps in any NPA asset, and the team is working to fill those gaps. We appreciate it.
Fantastic. Fantastic, sir. [Foreign language] mineral fiber project, what is mineral fiber project? Can you just give some highlight on this one?
Mineral fiber is basically from waste slag mixing. The project has just come online in March. We have started supplying some product in the market, and we will come back with details as market acceptance and sales pick up all of that.
[Foreign language] cost is the CapEx project?
It's basically a waste to wealth project.
How much CapEx was incurred, sir?
50 tons.
50?
50 tons.
Any CapEx? CapEx means how much?
CapEx was INR 70 crores.
70 crores. So like.
70 crores of CapEx happened.
Will it be breaking positive, sir, or the money is gone?
Sorry, sir?
Will it be breaking positive in the near future?
Sir, we are positive. We are positive on the product. We have just started supply. We have built a good team, and we have just started supplying to the market. So that's why I said maybe in the next quarter, we will comment more on the product. But we also are more, I mean, the market acceptance and all of that increases. It takes some time to build the market. So we are in that condition.
Understood. Understood. And, sir, one other humble submission and suggestion is. There is a lot of.
Sir, there is a lot of disturbance from your side. I think so you are in some traffic.
Hello? Is it okay?
Better.
What I was saying, that's like, as you mentioned, that we are using 10,000 metric tons of coal per day. So it means there is a huge amount of logistics and transportation required for the coal movement as well as the ore also. So sir, I have seen, because in my own experience, this logistics cost for this commodity business, like be it cement or steel, it's very high. 30% cost is generally the logistics cost. So are you 100% taking this transportation on hire, or did you also create your own fleet and transport department? Because we could save a lot if we do our own CapEx, for example, CapEx transportation.
Sir, as of now, we don't have our own fleet, and managing fleets is a different ball game. And you need to have that bandwidth also to handle all the truckers and the drivers and the helpers and the trucks and the maintenance, etc. So as of now, we don't have this facility in place. And right now, as Mr. Nilay Joshi discussed, the first and primary objective of this IPP plant is to run at full capacity and to have PLF numbers. So we are focused.
Sorry to interrupt, sir.
The movement.
Sorry to interrupt.
Yes.
Mr. Marcel, I would request you to mute your lines while the management is answering your question. There's a lot of disturbance from your background.
Okay. Okay.
So that is the idea. So we are focused on improving the PLF of the plant. Maybe in future, we can think of that.
So just to add on to what Mr. Sarda said, from the logistics side, the power plant, the IPP plant already has a running railway siding, okay, on which the coal delivery happens every day also. I mean, that is the best way of logistics for coal. Our Siltara plant also has a railway siding, and we are in the process of developing a railway siding at our coal mine. So we see that the best way to transport coal in the most cost-effective manner is through railways. And we are working already. Both our major plants are having a railway siding in place, and we are developing a railway siding on our coal mine also. So I think that should largely take care of the logistics of getting the logistics part under control.
Sir, I fully agree. Just because my own experience, I'm only sharing with you.
I understand that currently our prime focus, our prime objective is to maximize the PLF, no doubt. I'm not saying to do today, but what I'm saying, since we are also shareholder for the long term, what I'm saying that, for example, even if this railway siding is there, if the railway siding is coming to the pit or to the head of the plant, it's fantastic. But again, for example, this unloading loading is there. I have seen that how the transporters are minting money. I have seen for my own. Anyone can? Sir, I have seen that how the transporters have become multimillion. I have seen them growing in the last 30 years. So that's what I'm saying. Not now.
Means we can create a separate department or separate profit center, like be it sufficient admin guy, transporter guy, whosoever, because since our volume is too huge and plus we are more investing in the minerals and the mines, so this requirement is going to be more and more and more because, sir, this transporter, a person who buys a truck today, within 24 months, his truck becomes cost of free. So what I'm saying, this is kind of the delta we are making. So please, if we cannot replace 100% of the transporter, at least 30%, 40%, 50%, we should start. We should make a plan so that in the next one year or two , we can start it. And we are a fund-plus company. And there is no problem in funding those things. But yes, I fully agree. Existing manpower of the transport department cannot run it.
It has to create a separate vertical, which itself has to be profit center. So definitely, it will bring some more profit for the company, sir. And currently, we think it is, for example, we are taking it as granted. But there is money which can be saved for the company, sir.
Sir, thanks for your suggestion. We'll look into it. Thank you.
Thank you.
And sir, regarding PPA, you mentioned that in the Q4, it was 80%.
Mr. Marcel, sorry to interrupt. May we request you to return to the question queue for a follow-up question as we have participants waiting in the question queue? Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Vedant Sarda from Nirmal Bang Securities Private Limited. Please go ahead.
Thank you for the opportunity. I want to just ask, our new capacity of 600 megawatts, which is fully operational in the current year, what kind of revenue addition we can expect and a bit from that project?
So you mean the SKS Power? The 600 megawatt?
Yes, yes.
Right, so you can take maybe, I mean, 400 crores of salable units, maybe.
400 units.
Crore.
400 crore of revenue?
Yeah. No, no. Units. Salable units.
Our last quarter we produced around 3,700 million units. So this year, our target would be to produce 1,200 million units. Yeah?
Okay.
Thank you. The next question is from the line of Pranay from Alpha Invest. Please go ahead.
Hi. Hello, I'm audible? I'm sorry.
Yes.
All right, so yeah, just continuing on the last participant's question, you mentioned that you're hoping to produce some 4,000 million units, so what is the average price per unit that you're expecting?
No, the price is very.
Yeah, yeah, yeah. For sure. But still, yeah.
For 400 megawatts, we have a PPA in place. But for the balance, it depends on short-term business. But I can tell you more broader picture, what we are doing is as a strategy, we are trying to tie up a large part of the capacity long-term. We are working on that. We have.
Sorry to interrupt, Mr. Pranay. Can I request you to mute your lines while the manager is answering your question? Thank you.
Sure. Sure.
Sir, you may go ahead.
Yeah. So I was saying that as a strategy, I mean, we right now have around 100 megawatt of medium-term PPA. And we are trying to basically see that a larger part of the capacities can be tied up into medium-term PPAs or long-term PPAs so that, I mean, you have more stability in terms of price at that point in time. But right now, to comment on one single price, it will be very difficult because short-term arrangements on sale of power or on IEX, whatever, that keeps on varying. It's a seasonal thing. The summers, you get a very good high price, and then any season, you'll get a low price. So it changes. So you have to get into long-term or medium-term PPAs to give a proper price guidance.
Okay. So then, can you just give a guidance on what are the current PPAs being done at the current rate and market? Not the exchange rate, but PPA rate.
No, the existing 100 megawatt is at 5.2.
Okay. All right. And on average, we can assume INR 5 considering summers are later on less.
I think average between five to six for the whole year.
Okay, and just one or two more questions on this side. What is the debt of the thermal power plant? How long is the expected life of this asset that you have prepared?
The first question, I didn't get the second part of the question.
The first.
The total funding requirement of the cost for acquiring the project was INR 1,950 crores, and that was actually funded in a debt-to-equity of 70/30, so around INR 1,380 crores of bank debt is what we had taken, and we are already repayment has started.
Acha, so just wanted to confirm when we acquired the project, we acquired the company. There was no debt on the company itself, right, on SKS?
So this acquisition happened under IBC, where basically, so it had already become NPA, right? The asset was an NPA asset.
Okay. Yeah.
So basically, the payout that we made went to financial creditors or operating creditors.
Yeah.
So that debt was settled in that sense.
The company itself is debt-free. We have taken some debt to fund the acquisition, 70/30.
Now it is merged, actually. Now it is a single entity.
So the debt is just the one we have. So INR 2,000 crores is the total acquisition.
The only debt which came with the asset was the one that we raised to fund the acquisition.
Okay.
There was no debt which came along with the asset.
Okay. And the second part of the question was, what is the expected life of this asset?
Pankaj, you want to answer that?
It would be around 30 years from now because it has run very little.
Okay. Usual thermal power plant run 35 years or so, I'm assuming. 30 years-35 years.
30.
Thank you very much.
Thank you. The next question is from the line of Rajesh Bhandari from Nakoda Engineers. Please go ahead.
Sir, [Foreign langugae] , SKS Power, is it being maintained still by NTPC?
No. Just within a month after our acquisition, we terminated the contract, and we are looking after with the existing people only, and we will.
Oh, Sarda is in a position to maintain such a big plant. That's really commendable.
The result shows.
Yeah, yeah. It's really commendable, sir.
Sir, we have a very highly qualified team of people, very, very senior people from NTPC and other established organizations who have joined us over a period of time, including, I mean, the gentleman Mr. Sengupta who is speaking, he was a very senior executive director with NTPC. So the team is we have a very strong team in place. Strong team.
And the mineral fiber, sir, is there a yearly kind of turnover expectation?
Sir, right now, it will be very too early to speak about that. But I said, it's a new product that for us, we have introduced in the market. Initial response we have got is positive. But you give us a quarter or two before we can put numbers to it.
Acha, acha.
Acha. [Foreign language] , sir, mineral fiber?
Energy conservation.
Oh, is it kind of slag wool?
[Foreign language] .
[Foreign langugae] , sir. Thank you, sir. Thank you very much. This was the last question from my side. Thank you, sir. Thank you very much.
Thank you. Ladies and gentlemen, in the interest of time, we conclude this call, and I hand the conference over to the management for closing comments.
The year gone by is a breakthrough year for the company, and current year is more exciting. The diversification strategy of the company into energy and minerals has paid off well. The operating performance of IPP has shown consistent improvement. The company has been reinvesting surplus funds in a number of diverse projects for long-term sustainable growth. Currently, our performance will have incremental benefit of full year operations of the IPP, increased production, and commissioning of three new projects. That is 25 MW run-of-the-river hydro power project in Chhattisgarh, the mineral wool project in Visakhapatnam, and 50 megawatt solar power project in Chhattisgarh. Please feel free to reach out to us or our IR team for any further questions. Thank you all.
Thank you. On behalf of Sarda Energy & Minerals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.