Ladies and gentlemen, good day, and welcome to Q2 FY 2025 Results Conference Call of Godavari Power & Ispat Limited, hosted by Emkay Global Financial Services. 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 touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Akhilesh Kumar, Emkay Global Financial Services. Thank you, and over to you.
Thanks, Shilo. Good afternoon, everyone. Thank you for joining in the Q2 FY 2025 Earnings Call of Godavari Power and Ispat. We have with us today Mr. Abhishek Agrawal, Mr. Dinesh Gandhi, and Mr. Sanjay Gupta. I now hand over the call to the management for opening remarks. Over to you, Mr. Gandhi.
Thank you, Akhilesh. Good morning, everyone. Thank you for attending the conference call of Godavari Power and Ispat Limited to discuss Q2 and H1 FY 2025 earnings of the results of the company. Our financial results press release and earnings presentation is available on the website of the Bombay Stock Exchange and the company. I believe you have had a chance to review the same. I will take you through the results post which we can have a question- and- answer session. At the outset, I'm extremely sorry for the delayed start of the call. GPIL has demonstrated consistent performance in H1 FY 2025, even during challenging times of lower realization of sponge iron and finished steel prices.
Although the quarterly performance was impacted by annual maintenance shutdown of pellet plant and fall in realization of sponge iron and finished steel products. In this backdrop, company has achieved consolidated revenue, EBITDA, and adjusted PAT excluding exceptional item for the quarter and on YoY basis to INR 1,268 crore. EBITDA of INR 247 crore and PAT of INR 158 crore. The impact of revenue, EBITDA, and PAT was to the extent of INR 65 crores on account of loss of pellet production due to shutdown. The loss of production was to the extent of 150,000 tons. INR 60 crore on account of lower realization of, you know, finished product in sponge iron.
INR 25 crore on account of additional costs incurred on maintenance of the pellet plant during shutdown period. On half yearly basis, the consolidated revenue from operations remained stable at INR 2,600 crore approx, compared to H1 FY 2024. Revenue from a higher volume of value-added product was offset with lower realization in the value-added product like sponge iron, et cetera, and lower volume from the pellet plant. Consolidated EBITDA PAT, excluding exceptional item, dropped by 2% and 5% respectively to INR 654 crore and INR 445 crore due to decrease in realization of the finished product. Despite the challenge, this EBITDA margin and PAT margin stood strong at 25% and 17% respectively.
Company has a healthy balance sheet with net cash of INR 998 crore and a strong cash flow from operations of INR 564 crore during H1. The operational numbers, you know, for Q2 and H1 are already circulated in the investors presentation. The brief highlights are the loss of pellet volume by about 1.5 lakh tons due to shutdown of 0.9 million ton pellet plant. Operating volume of value-added products like DRI, finished steel products increased substantially. Production of iron ore decreased on account of heavy rain during the quarter. On half-yearly basis, iron ore mining and pellet production remained flat. However, production of sponge iron, steel billet, HB wire, ferro alloys, and power generation increased considerably.
The sales volume for sponge iron, steel billet, wire, et cetera, increased 56%, 20%, and 39% respectively. Pellet realization increased by 5% to INR 10,569. Realization of other products dropped. Update on our CapEx plan. As you are aware, we have an aggressive CapEx plan by yearly doubling our iron ore mining and pellet capacities by setting up an intermediate stage plant with 4x capacities of the present capacity. In this backdrop, in this regard, I would like to update that the approval for increase in iron ore mining and beneficiation capacity from 2.35 million tons to 6 million tons is delayed for the reasons beyond the control of the company. We now expect the approval for increase in iron ore mining capacity by Q4 FY 2025.
Once our environmental approval is received, the crushing and beneficiation plant is expected to be commissioned within a period of six months, as we have already done some part of the work on the mines. In view of delaying approval of the mining and beneficiation capacity, the company has revised the guidance for iron ore production from 3 million ton to 2.3 million ton for FY 2025. The project for increasing pellet capacity from 2.7 million ton to 4.7 million ton is running as per schedule, and same is expected to be commissioned by June, July 2025. You know, in this regard, I would like to further inform you all that the orders for all equipment have already been placed.
Construction activities to the extent of more than 50% has already been completed, and the shipment of equipment are going to start within a month from various vendors. As regards greenfield integrated steel plant of 2 million tons, public hearing has been completed, you know, earlier. During the quarter, the presentation to the MoEF has been completed, and the approval is expected to be received by December 2024. The construction activity of the project shall start only after regulatory approvals are in place for mining and for integrated steel plant. Coming on update on the solar project, a total of 165 MW solar power plants have been commissioned till date, and now operational and are contributing to the cost saving. GPIL has planned an additional 70 MW solar power plant, for which preliminary study is in process.
This project is to meet the requirement for upcoming 2 million ton pellet plant, for which a 70 MW solar power plant is supposed to be set up. We firmly focus on reducing carbon emission and establishing a clear objective of achieving net zero by 2050. Apart from setting solar power plants, the company initiated various energy efficient and decarbonization projects. The capital expenditure for the initiative first stage is INR 75 crores, which will generate an additional 9 MW of power without any extra fuel. The project period for the same is about 3 years.
Working with Thermax, GPIL is developing the waste heat recovery-based power plant, harnessing heat from the company's existing ferroalloy furnaces and pellet plant cooler exhaust to generate additional power of 7 MW of clean energy, which will reduce carbon emission by 50,000 tons annually. This is being done with collaboration with Thermax at a cost of INR 73 crore to be funded from company's internal accrual. This project is expected to be completed within a period of 18 months. GPIL has further simplified the group structure. Consequent upon the buyback of shares conducted by Alok Ferro Alloys, Alok has become 100% subsidiary, and stake in HFAL has increased to 96%. The coal mining has also completed partial buyback of shares, and therefore, the stake in the company is reduced. Coming to the market outlook.
On international front, global iron ore prices dropped below $90 from high of $144 in February 2024, on concerns of China slowdown. The recent excitement around China's demand pushed prices back to $115, but it was short-lived. Prices are now back to below $100. The development of a large mine in Guinea will add to the supply from 2027 and might push prices down. However, in the interim, housing demand in China is expected to recover and has potential to push the iron ore prices back to $110-$115. On domestic front, iron ore prices and NMDC has largely followed global trend. However, auction prices of, you know, mining can be reduction in supply from August has put the floor on domestic iron ore prices.
India remains one of the brightest spots globally for steel demand. World Steel Association has forecasted the steel demand to grow by 8% in FY 2024 and 5% in calendar 2025, to 143 million and 153 million tons respectively. To conclude, I would like to mention that as we transition into second half of FY 2025, we are optimistic about getting our iron ore mining and pellet production and sales back on the track. Our solid cash flow position, coupled with strategic CapEx plan and significantly expanding our capacity in iron ore mining, pellet integrated and steel, sets a strong foundation for growth. Enhanced operational efficiencies and cost savings from our solar power plant will further enhance the profitability of the company.
Additionally, the advantage of our captive iron ore mine and production of high-grade pellet, along with unwavering support from stakeholder, position us for an exceptionally performing years to come. With this, I would now like to open the floor for question and answers.
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 their touchtone phone. 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 will wait for a moment while the question queue assembles. The first question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital. Please go ahead.
Yes, good afternoon, sir, and best wishes for Diwali season, and also good to see that.
Please increase your voice, please.
Yeah, just one second. Is this audible?
Yes.
Yes, sir, please go ahead.
Yeah, thank you for the opportunity and best wishes for Diwali season. Also, good to see Godavari maintaining its numbers despite the challenging situation. Firstly, wanted to understand, sir, there were fall in pellet prices also during Q2. I believe that we have a one to two months contract. So, just wanted to understand how the prices have not corrected much, and what will be the trajectory for pellet prices? Will the corrected prices come with a lag in Q3?
Hi, morning. So you see, the pellet prices
have resumed on a positive territory, and the numbers are currently at about INR 10,000 ex-plant.
Yes, that's correct. I understand, but so are we looking at a lower number, directionally for Q3 or I just wanted to understand how the contracts are working out?
No, for Q3, the number will be on the higher side.
Okay, okay. That's very good to understand. Were there any kind of iron ore purchases done in Q2 or were we largely able to manage from our own mines?
No. So usually, we are buying about 28% of the iron ore from the market, and that will continue till our mine expansion comes. So we'll continue to buy 28% of the iron from the market and, till we get the new EC for the mines, and that is about continuing for another six months.
Got it. Got it, got it. And, thirdly, just wanted to understand, with this new 7 MW waste heat recovery power plant, I mean, would that be excess power, for us, whenever it gets commissioned, or would that be, still a required thing for the self-sufficiency when it comes to power?
No. As the generation increases, we will use our coal, fossil fuel burn, and we'll reduce the carbon emission. That's the whole idea.
Okay. This will be, I mean, this will be more of it. It will be all self-consumed, right? I mean, there'll be no required, I mean, there'll be no external changes, right?
No. So we still don't buy anything from the grid, and we don't import grid power, and this will further strengthen our generation in terms of carbon emission.
Got it. Just one last question, if you can comment on the overall demand. I mean, we've seen prices rebound post monsoon also, but the economic activity was also a little subdued in Q2. So how are you seeing demand on ground in Q3?
Usually Q2 is always a lean season for steel. Q3, post Diwali, we hope the demand to come back and the prices to, you know, probably, I would say, demand should come back and the prices should, you know, further go up. That's the whole idea.
Okay. Okay. Thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of Manav Gogia, from YES Securities (India) Limited. Please go ahead.
Hello?
Yes, Manav, go ahead.
Yes. Good afternoon, thank you for the opportunity. So one question on the cost front. Could you let me know what was the blended, you know, landed coal cost for the quarter?
We only imported, you know, Adani coal for our DRI, and the blended cost for the coal was about INR 12,000.
Okay, and the last quarter it was about INR 11,500 , right? If I'm not wrong.
Yeah, yeah. Yeah, exactly.
Okay. And, are we sourcing any raw coals, you know, domestically for our power plant requirements? Could you be able to give me a split between the coal source domestically versus the imports?
We do source. We have linkage from Coal India for our power plant and as well as the requirements. So, Q2 was about INR 4,000, and Q3 remaining the same, because domestic coal is very much due to good supply from Coal India and the linkage we have is for five years. So the price for the incoming coal for a power plant about is the same, INR 3,000- INR 4,000.
Okay. So just following up on the question, you know, asked by the previous participant, you're saying that current prices for Q3 are expected to be a little up as compared to Q2. Could you, like, be able to quantify the same?
It's Q2, the average was about INR 10,000, and the prices did come down end of Q2. But then due to sudden rise in the iron ore price, you know, in the auction, the Q3 should be at the same level as compared to Q2, because it's going to be average.
Okay, okay. Sure, sure. So just if I could squeeze one more question, and in terms of the EC, you know, getting delayed for the, I don't know, mining expansion. Wanted to know since now the EC are expected to be received in the last quarter, by when are the mines, you know, expected to be operational? I think in your opening remarks, you could say six months from Q4. Is that right?
Yes. No, no, six months is for beneficiation plant commissioning.
Okay. So mines will be starting from Q4 itself, by the end of Q4. Is that a realistic target?
You can assume to Q1, Q1 FY 2026.
Okay, okay. So right when the pellet plant comes into the picture.
Yeah.
Right. And how much of a benefit do we see on the landed cost per ton, or should we expect it to remain in the same trajectory of INR 2,800-INR 2,900 a ton?
See, mine cost would be more or less the same, probably, you know, INR 100 here and there. But if you compare to the current market, we are buying fines about 20% on the market, which is about INR 6,610. So if you place the iron ore mining, it's a substantial effect.
Okay, okay. Thank you so much for your answer, sir. All, all the very best.
Thank you.
Thank you. Participants may press star and one to ask a question. The next question is from the line of Aditya Welekar from Axis Securities. Please go ahead.
Yeah, good afternoon. Thanks for the opportunity, sir. So just, clarification from Manav's question previously. So, what I understand is that this pellet plant crushing and beneficiation and iron ore mining, all will start in tandem from Q1 FY 2026, right?
Correct.
Okay. And is there any ramp-up time for that? Means how much incremental volumes can we expect from FY 2026?
See, once we get the approval, we'll start running on the mining production, and hopefully by, I think, end of Q1 or Q2, we should be able to mine, you know, the desired streaming then. That's the whole idea.
Okay. Full INR 6 million .
Yeah, yeah.
Okay. So next question is on iron ore. I mean, on one of the slides, there is one of the mines in Africa coming online in Guinea, and because of that, iron ore prices may fall in future. So what will be its impact on our pellet prices or our pellet prices will remain largely stable given the domestic situation? I want to understand what are the factors which decide pellet price volatility?
To be honest, with the current increasing production in India for, you know, for steel, the iron ore prices have been strong and, irrespective of, you know, how the international prices play, the pellet prices should be on the same levels. So we don't expect, you know, any change in the domestic pricing when it comes to, you know, iron ore.
Okay. Thanks. Thanks. That's all from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Akhilesh Kumar from Emkay Global Financial Services. Please go ahead.
Good afternoon, everyone. Thanks for the opportunity. I have couple of questions. So first, coming on the CapEx intensity. So, sir, for a solar plant, generally it takes INR 50 million-INR 55 million per MW to set up one megawatts of solar capacity. Our GPIL is targeting to achieve 70 MW of solar capacity with an investment of around INR 35 million-INR 36 million per MW. So could you please walk me through the difference w hy is it lower for GPIL?
See, the module prices have drastically reduced compared to previous years. Earlier, the module pricing was about, you know, INR 2 crores, INR 2.5 crores per MW, but today the price is about INR 1.5 crore MW. So this is that, we have already finalized the PPA contract. So, you know, for our 70 MW, we are confident about, you know, INR 205 crores should be enough for setting up 70 MW.
Okay. Thank you for that, sir. And second question, is on the guidance. So, you have trimmed iron ore guidance for FY 2025. So is there a possibility that there could be a scale back in the targeted capacity to reach six MTPA in FY 2026?
No. Hopefully, you know, we should be able to get the approval, and once we get the approval, there should not be any issue in, you know, reaching the rate capacity.
Okay. And if I can pitch in one more question. So you have about one crore, INR 1,000 crore CapEx of balance CapEx to be incurred apart from steel. So could you please guide us how much of it will be done in the FY 2025 and in FY 2026?
See, all of it will be done in FY 2027, 2026, because the construction is scheduled for the pellet plant. And once we receive the mining approval, we'll start the construction of the pellet plant. So all of it will be consumed and, you know, to be incurred in 2027, 2026.
So can we assume that 50/50 is split between the two years?
See, majorly, pellet plant is already consuming, and once we get the mining approval, so remaining will be done in FY 2026.
Okay. Okay. Makes sense, sir. Thank you so much.
Yeah. Thank you.
Thank you. The next question is from the line of Jatin Damania from SVAN Investments. Please go ahead.
Good afternoon, and thank you for the opportunity. So just want to understand, because last time when we indicated that there was a decline in the pellet prices compared to the first quarter, but now when we look at our realization, we have seen a significant sequential improvement. So can you help us in understanding the total grade or the product grade mix in the pellet that we have sold during the quarter?
See, we have been maintaining the. So, it's 50% of high grade, which is 66, and 50% of normal commercial grade, 63, and that will continue to happen.
So that will continue to remain at 50/50 only, right?
Yes, yes, yes.
Until a new pellet plant is commissioned.
Yeah, and that the new pellet plant is probably coming the first quarter of FY 2026, if I'm not wrong.
Correct. Very correct.
Now, and-
Production will come in Q2, but it is.
Yeah.
Production will come in Q2, right? Q2. Yeah, yeah.
Yeah, yeah, yeah.
In the opening remarks that you indicated that there is a delay in getting an approval from the mining and the state government for the expansion in the mining activities. So suppose if we don't get an approval in months since till December, the Q4 of FY 2025, so is it safe to assume that the currently what we are buying 20%-25% iron ore from the market, that proportion will go to almost 30%-35% since our pellet will come into operation?
Yeah, if we don't get the approval, that will surely happen, but we are confident that we will get the approval because we have developed plant.
And no, so I mean, is there anything which is there an issue, why we are, why there's a delay in terms of getting an approval or sort of thing?
It's not an issue, but, you know, the process is such, so it usually takes time, but with the state government, it's taking a little more time, but we are confident we should get the approval before the new (inaudible) starts.
In terms of our beneficiation, now, since you've already started the activity on the ground, so what is the capital that you have already spent for the beneficiation?
That we gave you the presentation, I think. The numbers are there.
Okay. Okay. And in terms of the numbers, as definitely we have seen the downward revision in the overall iron ore mining guidance. So now, for the month of October, is your pellet plant fully operational?
Yes, entirely fully operational. There was a shutdown, annual shutdown for the smaller one, but since September, both plants are fully operational, and we are confident we'll achieve the guidance given by us at the start of the year.
Okay.
Yeah.
Thank you, Abhishek, and best wishes for the festive season.
Thank you.
Thank you.
Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Rakesh Roy from Omkara Capital. Please go ahead.
Yeah, sir, so one question regarding the margin part. The margin has declined drastically compared to last year, same quarter, from 20% to 20.20%. Any reason except from the rain or climate?
No, the major reason was the plant. It was on a shutdown, annual shutdown for almost fifty days, because of which we lost the major volume. No, apart from that, no other reason.
Okay. So, sir, yeah, this plant shutdown 50 days, so every year or just for this year we have exception?
No, no, no. Last time, because the annual shutdown was almost ten years back, so that is how the plant works. So going forward, it will happen every year.
Okay. I check. So this is impact on the, this one, margin front one. So are we hopefully from Q3 margin will be normalized?
Okay, from Q3 onwards, the proportion guidance will be normalized, and depending on the market, the margins will remain intact.
Okay. So my next question, sir, if you look your sponge iron realization, just recently one company in North China declare results. Their sponge realization is higher or lower. Any reason behind that?
No, I think due to what has happened is, you know, we have produced the sponge iron as per the capacity, and there was surplus that we sold in the market. But going forward, we'll only sell sponge iron based on, you know, our internal requirement. We only sell surplus, in accordance with our steel production.
Okay, so for Q3 sponge iron, realization will increase compared to Q2, if I understand, yeah?
In Q3, the sponge iron sales will be less compared to Q2.
Okay. Okay. Right, sir. Okay. Sir, and last question, sir, you mentioned, I think, your core costing, you were saying INR 12,000 per ton.
Yes, for DRI. Yes, correct.
For DRI. So, sir, generally for DRI, we import it for, sir?
We import coal for DRI.
Okay. Right, sir. Right, sir. Thank you, sir.
Thank you.
Thank you. Participants, you may press star and hne to ask your questions. The next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Good afternoon, sir, and thank you for the opportunity. Sir, I just wanted to understand one thing. Since the iron ore prices have again started to inch up, have you given any thought about restarting of the Boria Tibbu Mine, because that low grade was previously not feasible at the low price?
See, for Boria Tibbu, we have started filing the papers for beneficiation. So Boria Tibbu mine will only start once we install the beneficiation plant, because the grade is on the lower side, and it's only feasible in the long term once we start beneficiating and then bring the high grade to the market to the plant. So Boria Tibbu will come online only after, you know, say, two to three years, not before that.
Sir, just follow up. What is the average grade, what you think, the Boria Tibbu will give you right now? And post-beneficiation, what is the grade we are looking at?
See, the average is about 50%-52%, and post-beneficiation is about 60%-65%, so we have started working on filing the EC for Boria Tibbu, and once we get the EC desired approvals, we'll install the plant, and we'll only start the mines when the plant, the beneficiation plant is started.
Understood. Sir, my second question pertains to our pellet exports market. Usually, we have seen in the past that, closer to October end or November, when China's inventory starts gradually depleting, there's a lot of booking happens from India. So have you seen some inquiries, and at current prices, is it feasible for us to export? Just wanted your views on that.
You see, we haven't been exporting for almost last 10 months, and we don't think, you know, exports will happen at least for Godavari, because the domestic demand is quite strong, and the prices in the domestic are much better than the export prices. Though, pellet plant in India, which are port-based, you know, in Orissa or say, Vizag, they are exporting some volumes. But apart from that, not much export is happening from India. Where the domestic demand is quite strong.
Understood. But even then, that helps us, right? Some domestic material will go out in the export to-
Of course, of course. Because in India, the pellet portion is on the higher side compared to the demand. So any volume in northern India, you know, helps to balance the demand and supply.
Understood. Sir, just one last question. I'm sorry if this would have been asked previously, because my call dropped.
No problem.
I think the realization for the pellet has improved even on sequential basis, sir, while the iron ore prices have been lower. So just wanted to understand, whether the larger part of this dip, now we will experience in 3Q, or on a blended basis, our 3Q would still be higher, than the 2Q, which is there?
Q3 should be better. Yeah, Q3 should be better, correct. Yeah.
Sorry, sir, I missed your comment.
Q3 should be better than Q2, the realization.
Okay. So somehow this sharp fall has been managed, in 2Q. We were expecting some fall in the 2Q realization as well.
See, the volumes were lower, so, you know, we were able to maintain the pricing in Q2. But Q3, given the demand and supply, should be better than Q2.
Sir, if I may ask, how is the spot prices in Q3 as of now?
See, for the fines grade, it's about INR 10,000, and for the high grade, about INR 11,500 at the moment.
Understood, sir. Thank you. That's all for my side, and all the best for future, and Happy Diwali to you, sir.
Happy Diwali. Thank you.
Thank you. The next question is from the line of Aman from Augmenta Asset Managers LLP. Please go ahead.
Yeah, hi. Hi, Abhishek. Thanks for the opportunity. Abhishek, I just had a basic question. So, correct me if I'm wrong, so for time being, for FY 2025 as a whole, we would be buying close to, 60,000 tons of, iron ore from outside, right? For our internal operations.
Yeah. We buy, we buy about 60,000 tons of iron ore from the market at the moment.
Okay. And also, can you highlight some bit on the iron ore? Because, for example, over the last 20 days, NMDC has increased prices by 2x , by approximately INR 1,000 per ton. And when we listen to the management commentary on the sale, so the company is expecting a robust iron ore market, and the excess section is also going to be good. So what's your sense on the domestic iron ore market as a whole, if you go ahead?
See, domestic iron ore market is. It's quite strong. Recently committed OMC auction, the prices are about INR 1,000. You know, this is which increasing the prices, so going forward with the robust steel demand and, you know, with the monsoon over, we expect the iron ore prices should be at the elevated levels.
Okay. Okay. And also, if you could throw some things on the ferro alloys market, what is happening currently?
See, the ferro alloy market is quite stagnant. The good thing is, the raw material price has come down in the national market. What are actually happening due to, because of certain production being out in the national market, and China's weak demand, the manganese prices have come down, and the current silico manganese prices in the domestic market is more or less stable.
Okay. Okay, that's all. Thank you. Thank you so much.
Thank you.
Thank you. The next question is from the line of Tushar Chaudhari from Prabhudas Lilladher Pvt Ltd. Please go ahead.
Thanks a lot, sir, for the opportunity. Sir, I just wanted to understand regarding the current demand situation for galvanized fabricated products. Over the last two quarters, the run rate is falling, is it? I mean, but I think we plan to increase the capacity also over here, over the period. So can you throw some light? Also, the margin is under pressure because of higher zinc prices, or how is it going as of now?
In Q2, the volumes were lower because, you know, our zinc bath was under maintenance. There was a major repair that happened in the zinc bath. That is why the volume is lower. But in terms of demand, the demand is quite strong, and we have also commissioned a new rolling mill. So that will support the possibility. So in Q3 and Q4, we hope the demand will remain intact, and you can see the better volumes in Q3 and Q4 going forward.
Because 1 Q also, that volumes were lower actually.
Q1 is still okay, but Q2, there was a major repair in the zinc bath. But Q3 and Q4 onwards, you can see a major uptick in the volumes.
And margins?
Margins will remain intact because, you know, this is more of a, you know, PSU work, you know, with transmission towers, railway and all that. So demand is quite robust, and we are quite confident once we achieve the higher volumes, the profitability will remain intact.
Okay, thanks a lot, sir, and Happy Diwali!
Thank you. Thank you. Happy Diwali.
Thank you. The next question is from the line of Pradeep Rawal from Yogya Capital. Please go ahead.
Yeah, good afternoon, and thank you for the opportunity. So my first question is regarding the buyback of Alok Ferro Alloys. So, what was the consideration at which we bought back the share from our promoters?
The buyback was done, you know, at about INR 10 per share.
Okay. And
Yeah.
Yeah, and both of our Ferro Alloy subsidiary are doing quite badly. So can you throw some light on that? Why are they doing so badly in operations?
So you see the numbers for Q2, and they are doing much better than the, you know, same quarter last year.
Yeah. So I was much more asking about yearly performance.
So last year's performance was slightly subdued, because there was an, you know, modification in one of the plants. There was a shutdown in the power plant in Alok Ferro Alloys. Both these plants are operating fully, and volumes have considerably increased during the current financial year, and operating metrics have increased.
Okay.
This is expected to sustain over the period of time.
Yeah. So what kind of EBITDA margins are we expecting from ferro alloy unit?
See, it is about INR 8,000-INR 10,000 a ton on an average. Last year EBITDA, I think for ferro alloy business, is closer to about INR 40 crore-INR 45 crore.
Okay. And my last question is regarding the cost per ton for converting mined iron ore into iron ore pellets.
It is about INR 1,800 a ton.
Sorry, what was the number?
INR 1,800 per ton.
INR 1,800, so our cost of mining iron ore is close to INR 3,000 per ton, and from mining to pellet, it's INR 1,800.
Yes.
Okay. Thank you. That's all from my side, and Happy Diwali.
Thank you.
Happy Diwali.
Happy Diwali to you.
Thank you. Before we take the next question, we would like to remind our participants that you may press star and one on your touchtone phone to ask your questions. The next question is from the line of Wayne Demello from Badrinath Holdings. Please go ahead.
Hi, am I audible?
Yes, please tell me.
Yes. Hi, thanks for taking my question. So I recently saw Abhishek, your interview with Vijay on CNBC, so I just want to get these numbers confirmed. So of the two million tons in the new pellet capacity in FY 2026, am I right in understanding that in the first year, that is FY 2026, we'll be doing like a 50% here, so one million tons will be added to our current production in FY 2026?
Uh, correct.
Yeah, and then the other one million ton, we can expect the, like, the whole two million tons, we can expect in FY 2027.
Uh, right.
Oh, okay. And our captive consumption of our pellets will remain at point nine. So in FY 2027, then our sales volumes will go up directly by the whole 2 million tons, correct?
So yeah, in FY 2026, the volume should go up by one million, in FY 2027, whole volume of two million should go up. Yes.
Yeah, but our captive consumption of the pellets will remain the same throughout.
Exactly. So, right now it's also 0.9 million ton, and going forward, as we start increasing the production, the sales value will go up.
Okay, great. And the iron ore, we don't plan on selling it. Even once the mining, because of the additional royalties that we have to pay, even once the mining ramps up, there'll be no situation where we'll be selling our iron ore to the market, right?
No, we have no intention of selling the iron ore in the market. So whatever we mine will be consumed in the pellet plant.
Okay, thanks. And the last question is: Where do you see the high grade mix for our pellets between the Fe 63% and 66% in FY 2027? Will it be one third of low grade and two thirds of high grade?
See, currently it's 50/50, and once we start the new plant, then I should be producing high grade. So yeah, you are very correct. Once we start the new plant production, high grade will be two-thirds and the normal grade will be one-third.
Okay. Yeah. Thank you so much.
Yeah.
All the best.
Thank you.
Thank you. The next question is from the line of Vaibhav Dubey from BigMint Technologies Private Limited. Please go ahead.
Good afternoon, everyone.
Good afternoon.
I wanted to ask, sir, how has been the share of domestic versus exports in last quarter, and what is your outlook for quarter three?
See, we haven't been exporting any pellets from last 10 months. We have been selling everything domestically, and looking at the current domestic demand and the prices, we will continue to sell in domestic. Export will be zero. Even for Q3, and with current prices, hopefully Q4 should all be also zero. So we will keep selling everything domestically.
Okay. Noted, sir. Sir, my second question is on, CCU unit, which you have mentioned in your press release investor presentation.
Yeah.
What are your plans on achieving this net zero emissions, if you can share more details?
See, like, we have given a target of 2050. We are working with IIT Bombay on the CCU. They get a pilot setup in the lab, and a bigger version will be installed in Bhubaneswar. Once everything, you know, is successful in terms of operational and in terms of, you know, capturing carbon, we'll go to bigger model. So it's at a very early stage, and hopefully everything works out, we can start investing on a bigger model. That's the whole idea.
Okay. Okay, sir. Thank you so much, sir, and Happy Diwali in advance.
Happy Diwali. Thank you.
Thank you. The next question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital. Please go ahead.
Yeah. Thank you for the opportunity again. Am I audible?
Yes, please.
Yes. So I just wanted to understand, so there is this gap between the net cash number that you calculated and what is directly available on the face of the balance sheet. I think you account for the loans in the net cash number. So just wanted to understand the loans are to whom and at what interest rate?
Sorry, Sahil, come again, please.
Yeah. So, sir, I mean, you have a net cash number of roughly INR 970-INR 990 crores in your presentation. So there is roughly, I think, INR 170-INR 180 crores of loans that you are probably accounting as cash and cash equivalent. Just if you can explain what are these loans given to, and what interest rate, and if you can give some details on that.
Gupta ji, you'll take this question?
Yes. The interest is largely between 12%-16%, and these loans are repayable on demand.
Yeah, but-
That's why it is taken as cash and cash equivalents.
But to whom is this given?
So GMR is one party, and there are some other corporates also.
GMR?
Yes. GMR Enterprises.
Okay, fine. That's all. Thank you.
Thank you. The next question is from the line of Manav Gogia from YES Securities (India) Limited. Please go ahead.
Yes. Thank you, sir, again, for the opportunity. So in the last call, we had guided that, you know, the CapEx for this particular year would be in the range of around about INR 800 crores, and next year should be about INR 1,000 crores. Are the numbers still intact?
Yes, it is intact.
Yes. And, could you give me the total CapEx spent until the first half of this financial year?
The numbers are there in the presentation.
Oh, okay. Okay. I might have missed it. So second question coming up, you know, on the other expenses, which have jumped roughly 14% on the quarter-over-quarter basis. Could you just underline the factors that contributed to the same?
No, as I said in my opening remarks, INR 25 crore is a one-time cost, especially for the you know, shutdown of the pellet plant and the cost incurred toward that. So that INR 25 crore is you know, additional cost incurred in this quarter.
Okay. Okay.
It will not be repeated.
Sure, sure, sure. Thank you so much for the clarification, sir. That's all from my side. Wish you all a very Happy Diwali. Thank you.
Happy Diwali!
Thank you. Before we take the next question, we would like to remind the participants that you may press star and one to ask a question. The next question is from the line of Jinesh Shah from HNI Investments. Please go ahead.
Thank you for the opportunity. My question is, in last Q1 PPT, we have mentioned that the iron ore beneficiation plant will take fifteen months from the date of environmental clearance or environmental approval. In this Q2 presentation, we are mentioning six months from the environmental clearance. So what has happened in last three months that the timeline has been changed?
See, we have already got approval for from the government, so majority of work, you know, has been completed. And once we get the mining approval for the second time, we will spend, and, you know, create additional volume and start the beneficiation. So that's type of eighteen months, we have come up to six months. So major work has already happened. Once we get the mining approval for the second time, we will spend additional amount on the, on the beneficiation, and we start the beneficiation, that's the whole idea.
Okay. And, our mining application with the environmental clearance is continuously getting delayed. I mean, while we have initiated this project in terms of iron ore expansion, mining expansion, as well as the pellet production, the idea was the mining capacity will be available well in advance. But now, since we are talking in this call that if environmental clearance is getting delayed, then we may have to procure the iron ore from outside to maintain our pellet plant capacity, which we are commissioning in Q1 next year. So why the management and our environmental team is not putting adequate efforts to ensure that the environmental clearance should not get delayed further?
No. So, I would say the environment team is, you know, putting the required effort. You know, it would be wrong to say we did not put any effort. Because the process is, you know, taking, you know, much more time than we expected, but we are confident by end of financial year, we should be able to get the mining permission.
Okay. And you have also mentioned that some state government approval is pending other than this environment clearance for this new iron, for the expansion of iron ore plant. So which are those state government approval is still pending other than the environment clearance for this?
No, see, for the current mining expansion, as per the law and then when we are asked, we are supposed to get approval from state government. So, whatever approvals are required, with the state government, not with the central government. So it's taking time. We do understand, but then, things are in place, and hopefully by end of financial year, we should get the approvals.
So what I understood from the PPT, we have mentioned the revised TOR, right? So when we are going to submit the response against this TOR?
We have already submitted response against TOR, and now publishing has to happen, and further we'll show, yeah. So things are in process, but are taking a little time, but we are confident that by end of this year, we should get the approval.
So the public hearing is applicable for our iron ore expansion project?
Yeah, it is applicable, but it has to happen at the state government level, not the central government level.
And by when this public hearing is going to happen? Because if the public hearing is still pending, then I am really, I am not sure how we'll be getting all the approval in next six months' time.
No, see, we are at the last stage of getting the approval, I mean, the permission approved, so once that stage is, you know, achieved, public hearing will happen, so fully by November end, we should get the approval, and then in December, we are confident the public hearing will happen.
Thank you, Abhishek. Thank you.
Thank you.
Please remember, we'll wait for a moment while the management gets reconnected. Thank you. Thank you. The management is-
Hello.
Yes. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Hello?
Yes, sir, you're on the line. Please go ahead.
Yeah.
Mr. Dinesh, please go ahead with your closing comments.
Yeah. We once again sincerely thank you all for your participation and ongoing support. We are confident that we have adequately addressed all your queries. Wishing you all seasonal greeting and happy Diwali to you and all your family. Should you have any further questions or need any additional information, please feel free to get in touch with our investor relation team at Go India Advisors. Thank you very much. Thank you all.
Thank you.
Thank you.
Thank you, sir. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.