Ladies and gentlemen, good day and welcome to Godawari Power & Ispat Limited Q3 FY26 Earnings Conference Call hosted by Go India Advisors LLP. As a reminder, all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference 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 over the conference to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.
Thank you, Peri. Good afternoon, everyone. It's my pleasure to welcome you on behalf of Godawari Power & Ispat Limited. Thank you for joining us today for the Q3 and 9-month FY26 earnings call. Please note that today's discussion may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. We are joined today by Mr. Abhishek Agrawal, Executive Director, Mr. Dinesh Gandhi, Executive Director, and Mr. Sanjay Bothra, Chief Financial Officer. We are now inviting Mr. Dinesh Gandhi to present the company's business outlook and performance, after which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Sana. Good afternoon, everyone. Thank you for joining us today on this call. Our financial results and earnings presentations are available on our website as well as on the stock exchange. I believe that you had a chance to review them. I will take you through the results, post which we can have a Q&A session. I am pleased to share that 9-month FY26 marked a steady performance with slight decline in revenue across operational and financial front. Revenue remained, you know, stable with slight decline. EBITDA and PAT margin is too strong at 22% and 14% respectively despite softer realization. Operating momentum remained strong in Q3 FY26 on YoY basis with iron ore mining production increasing 46%, while iron ore pellet and value-added product remained steady growth.
Pellet sales temporarily declined during Q3 FY26 on account of accident in the pellet plant at the end of September 2025, which impacted, you know, production and sales volume during Q3, whereas value-added steel product sales grew 15% YoY. Realization for YoY, you know, 9 months and quarters softened across almost all product categories except ferro alloys and galvanized products. In Q3, on year-on-year basis, EBITDA margin expanded to 20% from 17% in Q3 FY25 despite a marginal decline in realization and, you know, pellet volumes. On a quarter-on-quarter basis, sales EBITDA and PAT moderated largely due to lower pellet sales volume and softer realization for intermediate and finished product. Notwithstanding these challenges, margin remained resilient with EBITDA and PAT margin sustained at 20% and 13% respectively, reflecting company's strong operational efficiency and margin stability.
Q3, you know, during 9 months, production volume showed healthy growth with iron ore mining and pellet increasing by 27% and 10% respectively, while value-added product remained largely stable with modest 4% growth. On sales front, pellets had an increase of 17%, whereas it was a slight dip of 3% on value-added product. Coming on consolidated financial performance for 9 months, revenue dipped slightly on account of softer realization, which were to some extent offset by higher production and sales of pellet, galvanized fabricated product, and GPIL structural product. EBITDA and PAT were, you know, lower primarily due to decline in sales realization. Still, EBITDA and PAT margins remained strong at 22% and 14% respectively.
Now, coming on company's growth plan and the updates during nine months of the current financial year, I am happy to announce that GPIL has received much-awaited environment clearance from the Ministry of Environment, Forest, and Climate Change for more than doubling the iron ore mining capacity of the Arid ongri mine from 2.35 million to 6.0 million tons. The consent to operate is expected to be received in a few days, following which commercial operations of the iron ore mining and ramp-up capacity will start, hopefully, you know, during the current month itself. This marks a significant milestone in strengthening GPIL raw material security backward integration while reinforcing its long-term visibility and competitive positioning.
You know, environment clearance and consent to establish for 5.4 million ton crushing and beneficiation plant has also been received, and we expect to complete the work for beneficiation plant by the end of Q2 FY27. I am pleased to highlight that an additional 2 million ton iron ore pellet plant has commissioned and operations commenced in December 2025 with commissioning of GPIL total pellet manufacturing capacity to more than 1.7 times, 1.7 times from 2.7 million to 4.7 million tons, strengthening its integrated operation and supporting future growth. These achievements will drive volume and profitability growth in FY27. Progress on 0.7 million ton CRM complex remains on track with land acquisition completed, major equipment order finalized, and bank funding secured.
Construction will begin in April 2026. Commissioning targeted for March 2027. GPIL is also expanding its captive solar capacity by over three times from 165 MW current to 540 MW to support captive consumption across iron ore mine, integrated steel plant, and CRM operations. Land acquisition for solar expansion has been completed. Execution is currently underway, and these projects are expected to be completed in a phased manner beginning from March 2027 to March 2026 to March 2027. In order to operate these projects in a more efficient manner and save on the cost of banking, the company has recently decided to set up a battery energy storage capacity of 45 MWh in one of the solar projects to meet the power requirement of captive iron ore mine, where grid tariff is highest at about INR 11 per unit.
These equipments, which are being ordered, will be the, you know, the same composition with our BESS manufacturing facility will, you know, commence over a period of the next one year. Additionally, as you are aware, the company has decided to venture into manufacturing of a battery energy storage system with an initial capacity of 20 GW with a CapEx of INR 1,025 crore during 2026-2027, and commissioning of the BESS project is targeted for Q4 FY27. The decision to take up the BESS project with a capacity of 20 GW is driven by the availability of a single line 20 GW manufacturing line, which enables better land utilization, you know, lower structural and operating costs, improved manufacturing efficiencies, and supporting higher operating margins.
As a part of the company's ongoing efforts to simplify and streamline group structure, the board has approved this investment of its entire 37.85% stake in Ardent Steel , which operates a merchant iron ore pellet plant. You know, this stake is being divested for an approximate value of INR 91 crore. This transaction is expected to be completed by March 26th. Coming on the ESG, you know, front, the company has completed major initiatives under its energy efficiency decarbonization project, resulting in higher average DRI production, increased daily steam generation. The company achieved a score of 76.6 from the CareEdge ESG Rating Agency , reflecting its recognition as an industry leader with strong ESG risk management and performance.
The company continues to make steady progress towards its long-term goal of achieving net zero carbon emissions by 2050. Coming on the market outlook on the international front, global iron ore prices remained range-bound, you know, during calendar 2026 at $95-$110 range and currently stood at about $102, supported in H1 by weather-related production losses. However, rising supply is likely to keep the prices going forward. China's steel consumption has officially peaked and is expected to gradually decline, although recent stimulus measures, including direct cash transfer, should provide near-term demand support. Global iron ore market is at an inflection point with a supply addition such as Simandou project commencing operation in November 2025 and expected to export 5-10 million tons in calendar 2026.
Full ramp-up will start, you know, is expected to take longer. Iron ore prices in 2026 are expected to be range-bound, averaging around $100. On the domestic front, NMDC iron ore prices have remained largely range-bound at INR 4,500-5,500, excluding seasonal fluctuations. Current prices are at INR 3,900. Reflect the revised structure with statutory levies excluded from January 2026. Pellet prices have tracked a similar trend, trading at about INR 8,500-10,000 during calendar 2026, with current prices at around INR. 10,000 a ton, which is expected to remain stable during FY26. India's steel demand is expected to grow steady through the calendar 2026, supported by infrastructure-led growth with Budget 2026 allocating INR 1,220,000 crore towards infrastructure CapEx, providing strong demand visibility. We believe that iron ore demand in India is expected to remain strong in view of demand growth from newly commissioned and ongoing projects.
With imposition of safeguard duty, the prices of finished and intermediate products across value chain have risen by 5%-10%, which is expected to support profitability in 2026 and onward. In conclusion, leveraging competitive strength of captive iron ore strengthening position and ongoing capacity expansion, the company is strongly positioned to deliver sustained growth. Value creation is underpinned by efficiency gain, solar-led cost optimization, and firm commitment to ESG. With this, we can open the floor for Q&A. 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 their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use the handset 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 Siddharth from Equirus. Please go ahead.
Hi, sir. So the first question is on the Capex. So how should one think about the Capex over the next three years? What would be the cash outflow over 2026, 2027, and 2028?
See, Siddharth, our Capex till now is finalized till the end of FY27, like the Capex in solar to reach a capacity of close to about 500 MW plus BESS in CRM. All these projects, we are expecting to commission by March 2027, and beyond which, we have not yet announced any further Capex. So our Capex in the next financial year, of course, is a heavy Capex, but with our strong balance sheet of around INR 1,000 crores of cash reserve and debt tie-up for the upcoming project except BESS, you know, we are fully tied up with the requirement of our cash flow for FY27.
What would be the total Capex for FY27?
Our FY27 CapEx will be, you know, close to about INR 2,000 crore ± 200 crore.
Answer for this year, how much have we spent till now and how much will we spend in the fourth quarter?
This year, I don't have the exact number right now, but we would have spent, you know, close to about, you know, INR 600 crore-INR 700 crore in the current financial year.
So second is on the iron ore mine. Now, given that we are expecting the CTO also coming in this month itself, how should we think about the mining volumes for FY27?
Okay. So, Siddharth, just to answer that, so the CTO, we are very much hopeful the CTO should receive very soon, maybe this week or maybe next week. So yeah, once that is received, so there will be a very slight increment in the production for this year, probably, you know, because only one month will be left for this financial year to get over. For next year, from 2.35, we're looking at a capacity of 5 million. And then the next year, which is April 2027 onwards, we're looking at a capacity of 6 million tons. So that is how we plan to, you know, ramp up our mining capacity.
Okay. Next year, we should reach around 5 million tons, irrespective of when the beneficiation facility comes online?
Yes. So I'll tell you what will happen is. So by October, November of FY20, oh, sorry, sorry, October 2026, we should be able to start producing at a rate of 6 million tons because of the delay. So we'll get only three months of dry season in this, you know, next financial year. Then monsoons will come. So eventually, by monsoons, the idea is to get the plant up and running. And from October onwards, we want to run the beneficiation at full capacity along with the mining. That is the entire planning going forward.
Oh, okay. And then last question on the pellet capacity. So even FY27, we should reach somewhere around 75% utilization?
No. See, before the new plant was commissioned, we were operating close to 90% capacity. Our plant has been running well for the last two months. For next financial year, we will operate at more than 90% capacity.
For the entire capacity?
Yes. So we should be able to produce more than 4.2 million tons from next year onwards.
Okay. Lastly on the steel plant, any thoughts on the steel plant, or we will take it up somewhere next year only now?
No. See, so as we, you know, we had said earlier as well, we were waiting for the mining EC to get received because we didn't want to, you know, overcommit on the CapEx side. Now, since mining has been received by EC, so the team is working on the last-minute details. Hopefully, if, you know, we will discuss internally, I mean, if we want to go ahead with the steel plant, I think the proposal would be taken in the next board meeting.
Oh, okay, sir. Got it. But this will be a 1 million ton steel plant only that we will be?
Yes, yes. It will be a new location, 1 million blast furnace steel plant, primarily.
Okay. Thank you, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. I repeat, participants who wish to ask a question may press star and one at this time. The next question is from the line of Vikas Singh from ICICI Securities Limited. Please go ahead.
Good afternoon, sir. My first question pertains to Dinesh's remark on the iron ore supply scenario. One of our competitors, like Lloyds, has also come up with a large supply. Are we going to see some excess supply in the iron ore space in the domestic market as well for the next six to 12 months perspective? And is that our assumption? And would that impact our overall performance?
See, so I would like to break this question into parts. In terms of volume supply from Lloyds, definitely, there will be an additional supply coming in from Lloyds. Apart from our new pellet plant, then there's one more person who has commissioned the pellet plant in this area. But at the same time, the domestic demand has gone up because people are still, you know, commissioning their new DRI kilns. So volumes will definitely go up in terms of supply from the market, depending, NMDC is also coming with a 2 million pellet plant, which will start in Q1. So there might be some volume pressure. But because of our quality, you know, because of our mining capacity and the beneficiation going up, the quality we make, you know, we have a different end buyer. You know, our target audience is totally different.
So we don't see a challenge in terms of our performance. In terms of volume, there might be pressure. You know, over 12 months, there might be some lean period. But on the overall performance of the company, I don't see a challenge because of the quality we make. Because we'll be producing high-grade in two plants and a commercial grade in one of the plants. So because of high-grade, we will always demand a higher premium that will keep our margin intact. And our customer audience will be totally different than other players in the market.
Noted. Sir, after recent INR depreciation, has the exports been now profitable, or it is still not? And what is the difference at which we would start exporting?
Today, see, today, they are selling everything domestically. There are no intentions of entering the export market at the moment because the difference is almost, the delta is very huge. The delta is more than, you know, $15-$17 at the moment. Domestic demand is quite strong because in the last few weeks, the entire supply chain of domestic has gone up, right from, you know, DRI to billet to steelmaking. There has been an upsurge in the finished demand from the market. So at the moment, we have no plans of, you know, exporting any pellets. We have very strong demand. And sitting in February, we are almost booked till, you know, end of this quarter.
Noted. Sir, my second question pertains to our capital allocation. Since now our cash inflow is going to go up significantly, we have invested in Jammu Pigments, then we are doing batteries, and at the same time, steel. So going forward, how should we look at our capital allocation in terms of, because Jammu Pigments hasn't done anything yet. So if after batteries, our whole and sole focus would be on the steel only, and/or we will still take up those small pockets of CapExes because we are kind of a little bit reluctant to do a large CapEx on a single segment. So how should we look at our capital allocation?
See, Jammu Pigments, whatever money we've invested, we always have the option of, you know, increasing our stake. That we can do anytime. But at the moment, we have no plans to invest any more money in Jammu Pigments. Jammu Pigments will run independently. Whatever cash generation happens from the operations, based on that only, they will look to expand further. We have no intention of investing any further money in Jammu Pigments, just to make it very clear. On the allocation side, and Mr. Dinesh Ji mentioned, so our CRM are solar and a BESS.
So the outflow in this year should be close to about INR 2,000 crore-INR 2,500 crore with a strong cash reserve, with the mining capacity coming up, and EBITDA going, you know, our cash reserve going plus from the current financial year. I think we are well versed to, you know, meet all the capital allocation requirements. We don't see a challenge.
Noted. And sir, I just seen in our presentation, our carbon intensity remains very high despite using some of the solar. So after assimilating all the solar power projects, basically, what is the final carbon estimation?
See, we're currently at 2.4, 2.4 levels, 2.45 levels. So to reduce the carbon density, our new pellet plant, we have switched from coal gas to natural gas. That is one of the initiatives with solar capacity adding for captive consumption. That will further reduce my intensity. And we are also working on one of the carbon capture projects with IIT Bombay. It's an R&D project for 5-10 capture per day. If that is successful, then I think we have a clear path to move forward. But you need to understand, for the entire steel cycle, today, the major crux where carbon emission is happening is the DRI. Out of 2.4, 2.45, 1.8, 1.85 is a contribution only from DRI. So that is the area where we really need to attack if we want to bring down our carbon levels. On the power front, we have taken care.
On the pellet side, we have taken care. Now, the main challenge remains the DRI, where we have tied up with IIT Bombay. We are working on an R&D project of 5-10 tons per day. That project should be up and about by coming Diwali, which is 10 months from now on. And the results are good. Then we have a clear path how to move forward to reduce our carbon density.
Noted. Sir, just one last question, if I may squeeze in. Sir, coal cost-wise, next quarter, what are our expectations? I believe we import most of the coal. So INR depreciation has hit them, as well as there are talks about Indonesia's supply getting hampered. So your thoughts on INR?
See, Indonesia's coals are mainly used for power plants. They're not used for DRI. But definitely, it will have a certain impact on the southern prices as well because there will be a glut in the system. So there will be some transfer of, you know, a new buyer and new market seller, right? Our current cost in the Q4 quarter, absolute value is about INR 11,000 of import. Our DRI contribution is INR 8,000. In Q1, because we do forward buying, so Q1, the cost will vary maximum is about 5%-7%. They've ensured that. So any substantial impact, if it has to happen, will probably happen, you know, from Q2 onwards, which is almost six months from now on. So no point commenting about that.
Noted, sir. That's all from me, sir. Then all the best for future.
Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. I repeat, participants who wish to ask a question may press star and one at this time. The next question is from the line of Manav from Yes Securities. Please go ahead.
Yeah, hi. Very good afternoon. Thank you for the opportunity. Sir, first question is, you know, in the presentation, we have mentioned that roughly 452 acres of land acquisition has been done for the integrated steel plant and for the CRM Complex. So what would be the Capex outlay of the 452 acres, if you could give me the number?
To acquire the land?
Yes.
I think it's about INR 32 crore. Am I correct, Bothra Ji?
Yes, sir.
Yeah. It's about INR 32 crores. We have signed a 99-year lease agreement with the State Industry Department. The total outflow has been about INR 32 crores to acquire the land.
Okay. Got it. And sir, for the CapEx that you mentioned for, you know, INR 2,000 crore to earlier question by Siddharth Ji, just wanted to know, it doesn't include any steel CapExes which are, you know, probably going to?
No, no, no, no. Steel CapEx is not involved. For steel, we will first have to, you know, internally discuss, get it approved by the board. So whatever CapExes we'll be doing right now, it has nothing to do with the new steel plant. It's CRM, about INR 11 crore, the battery storage, and the additional solar capacity. These are the three major CapExes which will, you know, happen in FY27.
Got it, got it, sir. Sir, just, you know, on the pricing front, can you, you know, give us some sense on how Q4 is shaping up versus Q3?
See, on the mining side? Sorry, can you come again? On the mining side?
Market side.
Okay, sorry. See, yeah, so see, on the market side, fortunately, there has been quite an upsurge, you know, in terms of prices. Pellet is up almost 10%-12%. DRI is up by 20%. Semi-finished and finished is almost up by 12%-13%. The demand is quite strong. You know, so the change we have realized, you know, in the last couple of years is, you know, usually, we should think that Q4 and Q1 are the best quarters for steel. But what we got, sorry, earlier was Q1 and Q2 for best quarters for steel. But now, what we have realized is there's a change in terms of, you know, demand and supply. Now, Q4 and Q1 are supposed to be the best quarters before the monsoon arrives. So if you see, Q2 was dull. Q3 was also very dull.
This was the trend last year as well. Q4, the demand is very good. We're expecting the demand to continue at least for Q1 as well before the monsoon arrives.
Got it, sir. That is quite helpful. Sir, on the imported coal, would it be possible to give what the current mix is for us right now, you know, imported versus the domestic coal usage?
See, for our DRI, we 100% completely import RB1 coal. So that's about 0.5 million-0.6 million tons annually. And for our coal gas operation for pellet plant and for our power plant, we do about 0.4 million tons of domestic coal. So the ratio is about, you know, 55 or 60, 40. 50% is imported, and 40% is domestic.
Got it.
We need about 1 million tons annually to run the entire operation.
Okay. That is quite helpful. Sir, just if I'll squeeze in one more question, just wanted to know, you know, the company has acquired 4 wagons, basically, for logistics purposes. So what sort of cost savings are we expecting, you know, from this acquisition versus what the current mode is?
So, see, there are two—basically, two purposes to, you know, buy four wagons under the railway scheme. One is, with the new pellet capacity, we do realize that we want to also sell pellets outside the Raipur market, for which the railway is the cheapest mode. So to ensure the rake availability and timely movement of our rake, we have acquired this acquisition, where one wagon—one wagon—the entire rake will cost us about, I think, about INR 24 crore-INR 25 crore. Secondly, the scheme under which we have acquired, so there is a flat 10% discount on freight for a period of 15 years. That is the scheme railway has designed. So a 10% saving will be there on the railway freight for 15 years. Plus, the most important point is the timely evacuation of our pellet volumes via rake mode.
Okay. We can lease this out as well, right, during the load-on period?
Yes. So if we feel our rake are not getting fully utilized, we can always lease out on rental basis to other companies and earn extra income from that.
Okay, okay. So, okay.
Yes.
It wouldn't be a separate business line operation that you are?
No, no, no, no. This is just a part of infrastructure where we want to, you know, move for a timely movement of our pellet volumes outside the Raipur market. And given the situation, if the rakes are not being fully utilized, we can always, you know, rent it out to other buyers, other players who want it for better movement.
Okay. In fact, in our disclosure, we have clearly mentioned that we don't want to enter into the logistics business. It is for the captive requirement. In the ideal case, only it will be leased out.
Okay, okay.
Yeah, we have clearly mentioned in our disclosure as well.
Got it, Dinesh Ji. Thank you so much. Sir, just one last question. I wanted to, you know, get a fair bit of understanding on the other expenses going down by roughly 11% Q-on-Q. So could you give the reasons behind the same, please?
Can you please come again? Other expenses?
Going down, you know, on a quarterly basis. So.
No, see, if you see, sir, one was because our pellet volumes are quite low. Our pellet plant, due to that unfortunate accident, was almost shut for, you know, a span of 40 days. So entire October, our pellet plant was not running. So there might be some contribution based on that as well because there was no fuel burn. There was no, you know, other items purchased. So that can be one of the reasons. Plus, what has happened is the domestic coal for power plant is towards almost rock bottom due to better availability post-monsoon. So that can also contribute on the other, you know, other operating costs going down.
Got it, got it. So primarily because of the lower pellet volumes?
Yes, exactly, exactly. Yeah, mainly pellet volumes, yes.
Sure. That's all. Thank you so much, sir. I'm all the very best.
Thank you.
Thank you. Participants who wish to ask a question may 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 Sahil Sanghvi from Monarch Networth Capital. Please go ahead.
Yeah, good afternoon. Thank you for the opportunity. My first question is, despite 600,000 tons of pellet production, the sales that we've done seem to be pretty low. I mean, I understand some part of the pellet goes into forward integration. But still, I believe, as compared to the previous few quarters, we've not sold enough. So any particular reason you want to flag off on this?
Yeah, there are two primary reasons, sir. One was there was additional capacity of—so our pellet plant, there was a couple of people who also commissioned the pellet plant in the same period. So suddenly, there was an oversupply of pellet in the domestic market. The steel market was very lull. There was absolutely very less demand. The spot prices were, you know, towards rock bottom since COVID, about INR 20,000. So there was a phase in December where the demand of pellet was quite low. That is why the inventory has gone up. But since then, all inventory will be cleared in Q4 because of demand being back on the higher side. So just a quarter-on-quarter analysis, at today's position, our entire inventory, which is piled up in December, has been already cleared out.
Right. Good to hear that. So we're still targeting a 3 million tons of production this year?
Yes, yes. We are very, very, we might not be able to reach probably exact shift, but ±5%, we should be there. So our production volume guidance, starting of the year, we are very much on track to achieve that.
Got it, got it. Secondly, just the first year of operations for BESS, would it be safe to assume a 40%-45% utilization, or should we assume a little lower?
No. So just to be on a very conservative side, because it's a new vertical, totally a new field. Even we have considered a 40%-50%, you know, plant load for the first year. So April 2027 to March 2028, we consider a production capacity of, say, 8-10 GW only against 20 GW line.
Right. Margins could be around 6%?
Yeah. So for our modeling, we have considered a margin of about 7%.
Got it, got it, got it.
The reason I'll tell you why is we have considered a slightly higher margin compared to our peers is because we have chosen a new technology cell, which is a 620 cell against a 314 cell, which others are doing. So because of that, our operating cost will be slightly on the lower side. And that is why the hence improved margins.
Right, right, right.
Our first line will be 100% based on 620 cell.
Got it, got it. Thank you. Thank you so much.
Thank you.
Thank you. A reminder to all participants: to ask a question, please press star and one on their touchtone telephone. To ask a question, please press star and one now. The next question is from the line of Vineet Thakur from Plus91 AMC. Please go ahead.
Yeah, hi. Good afternoon, sir. Thank you for the opportunity. I would like to know, what is our revenue and EBITDA guidance once the entire CapEx is done? What is the level of debt that we are expecting to have in the books for the CapEx?
You talking about next year or once all the new capacities are running into production?
Next year, and once the capacities are all done, are live.
See, so from current operations, once—so next year, once our mining will be at full capacity, our pellet will be at full capacity, we're looking at a revenue of close to about INR 6,500-7,000 crore from the steel complex. On the battery storage side, if you consider the capacity of 8 GW, so you can consider a revenue of INR 5,000 crore. And from the CRM, again, you consider 50% capacity, which is 3-3.5 lakh tons. So you can consider a volume of close to about INR 2,000 crore. So put together, anything between INR 12,000-15,000 crore will be the turnover from FY28.
Okay, sir. Sir, what is the level of debt that we are expecting to have in the books for the CapEx?
Dinesh Ji?
Debt will be close to about, say, peak debt at FY27 as of the CapEx, which has been announced till date, will be in the range of, net debt will be lower, but on the growth side, it will be in the range of about INR 1,500 crores. With the minus cash balance, will be the net debt. You know, that depends on the cash flow generation in the next financial year. What we have done is we have tied up a debt of INR 1,500 crores for all these CapEx to keep the cash on the balance sheet for our future expansions.
The way we have negotiated with the banks is, you know, depending on our cash flows for the next year?
Yeah, always have a choice to prepay.
Exactly. We have a choice of prepay, and also we will only draw when there is a requirement. So we have also kept the both options open of prepayment and draw the money as it may be required.
Okay, sir. Sir, I would like to know, what was the impact of the new labor laws on GPIL? Are employee expenses or anything has increased drastically because of that?
See, so there will be, of course, there will be because now with the new employee code coming in effectively, so now you have to treat your contract laborers as the same category of your employees. So there will be a very marginal impact, probably, I think, hardly about INR 7-8 crore on annual basis. It's not a very huge impact. Now, the law says that even your third-party employees or contractor employees have to be treated in the same way as you treat your own company employees. That's the major difference. So there is a change of law, the change of salary structure, which will be complied with from next financial year. The impact is very minimal. You can say about INR 70-80 lakh a month. That's it. Not very major.
Sir, how much free cash flow are we expecting three years down the line?
It's very difficult because, see, if we don't go ahead with the steel plant, then probably from FY28, once all our Capexes are done and the new production capacity comes up, there will be close to about INR 2,500 crore or INR 2,000 crore of free cash every year. But if the steel plant is shaping up and we do decide to go ahead, then for the next three years, all our free money will be invested in the new steel plant. So it's difficult to comment at the moment. It all depends on what Capex we plan going forward.
Sir, since you've mentioned the steel plant, is there any clarity on when will we take a decision if we want to do it or not to do it?
In the best possible scenario, I think by end of so which will be the annual board meeting, which will happen in April and May, we will have full clarity on that. So either we are going ahead or we will drop it. That's very clear. Because we were waiting for the mining EC to come. Now, since that has come, we are working on the last fine-tuned details. And I think by next board meeting, either we'll take it up or we'll drop it. That's for sure.
Sir, what's the expected CapEx for the steel plant if we do go ahead? What will be the capacity for it, you're thinking?
Capacity will be 1 million. The CapEx, we and envisage, should be somewhere about INR 5,000 crore.
Okay, sir. Thank you, sir.
Yes.
Thank you.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Participants who wish to ask a question, please press star and one at this time. The next question is from the line of Aryan Bhatia from InvAsset. Please go ahead.
Thank you for the opportunity, sir. My question is on the incremental sales volume. So please correct me if I'm wrong. So the incremental sales volume once both iron ore mining and pellets come will be 2.7 from the pellet plant and 0.5 from the beneficiation plant. Is my understanding correct?
No. Firstly, we will not be selling anything out of a beneficiation plant. The beneficiation plant is being put up to enhance the quality of concentrate, which will feed to our pellet plant. There will be nothing sold out of the beneficiation plant. It's part of our internal process. On the pellet side, if you do a volume of, say, 4 million, so out of which about 1 million will be for captive consumption and 3 million will be for merchant sales.
Okay. So out of the 4 million, 1 million for captive consumption and 3 million for?
Yes, whatever. So we produce 4, we produce 4.2, 4.5. Whatever we produce over 1 million, that will be for completely merchant sales.
Okay, okay. And sir, my second question is regarding our margin on the CRM Complex. So what is the EBITDA margin we are expecting because we will be buying HR coil from outside and?
Yeah, see, so it's more of a, exactly, it's more of a conversion business to make value-added steel. We have also filed for two PLI schemes under the new scheme by Steel Ministry. So on a year-round basis, I see a EBITDA operating margin level at about 8%-10% on the maximum side, 8%-10%.
I just wanted clarity on this margin because if I look at the HR coil prices, it's around INR 52,000, and CR coil is around INR 57,000. Shouldn't the gross margin be 10% as compared to EBITDA margin?
See, on papers, you are very correct. But we are getting into value-added steel. A lot of branding, a lot of marketing will be required. We have to educate our customers because we will be competing against all established players like the JSW, Tata, and all that. So that's why, to be very conservative for the initial couple of years, to establish ourselves as one of the leading players with the desired quality, we have considered the margin on the slower side. Once you establish, you can definitely consider 8%-10% on the gross profit margin side, definitely.
Okay, got it. And, sir, last question is on our BESS project spec. Give the unit economics for the BESS, like per gigawatt of revenue we can get?
See, today, if you see today, per megawatt-hour of the entire setup to deliver at site for usage by a buyer, it's about INR 80 lakh per megawatt-hour. So it makes one container at about INR 4 crore. So at the first year of 8 GW, you can easily multiply 8 GW into 80 lakh. So it becomes close to about INR 6,000 crore of revenue with an operating margin of about 7%-8%.
Got it, got it. Thank you for your understanding.
On a INR 6,000 crore, 8% comes to about INR 450-INR 500 crores.
Got it, got it. Thank you for that.
Thank you.
Thank you. A reminder to all participants: if you wish to ask a question, please press star and one on your touch-tone telephone. To ask a question, please press star and one now. The next question is from the line of Siddharth from Equirus. Please go ahead. Mr. Siddharth, please proceed.
You can take the next question. I think it's not there in the call.
The next question is from the line of Abhishek from Siddhi Technology. Please go ahead.
Yeah, I have one question. What is the difference between BF pellets and DR pellets? And what is the mix? Yeah.
Yeah, please submit your question. So sorry.
What is your mix in producing BF pellets and DR pellets? As you said in one of your remarks that you have higher quality of higher grade. Does it mean that you have higher DR pellets mix in your production?
Okay, so to clarify technically first, basically, there are two DR pellets. One is the coal-based DRI sponge, which we operate, and one is the gas-based DRI, which is being operated by mostly Middle East and a few European countries. Even Essar Hazira, Arcelor Hazira, doing the same thing. So to make a DR gas-based pellet, the major difference comes in the physical parameters, which is one is the sizing. So for a BF pellet or a coal-based DRI pellet, the size you produce is 5-18, whereas for DR pellet, you need a size of 9-18. That is a major change. Secondly, the strength of BF pellet, there's a parameter called CCS, which is a cold-crushing strength. So for BF, 220+ is more than enough. But for gas-based DR pellets, you need a minimum of 270-280.
So that is where the challenge comes to maintain that physical parameters. And that's the reason you get a substantially higher premium in the export market compared to a BF pellet. So, for example, today, a BF pellet premium for a 65% Fe pellet is hardly about $13, whereas for a DR pellet, the premium is as high as about $28. So that is where the difference is technically between a BF pellet and DR pellet. In our case, since there is a strong demand from the domestic market, so we have no intentions of making the DR pellets and exporting to the Middle East. We are always of the option to doing that. But at the moment, looking at the current domestic demand, we will keep making BF pellets, which are equally suitable for DRI sponge iron.
Okay, okay. Yeah, that worked.
Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Participants who wish to ask a question may press star and one now. The next question is from the line of Manav from YES Securities Limited. Please go ahead.
Yeah, hi. Thank you once again. So, my question is pertaining to the BESS. So you just mentioned that for the first year, we would be running at a 45%-50% utilization level. I wanted to talk about the second phase of BESS. Will we take the expansion post the first year of running and seeing how things are going on, or will it be being done simultaneously?
No, no, no, no, no, no, no. We got to be a little cautious because it's totally a different field. There will be huge competition. So we will only invest into the second phase once we are able to stabilize the line for the first phase.
Got it. And what would be the timeline that I think for the downstream expansion now, it would be a lesser period, right, which would be taken up?
Yes. Probably just to commission the second phase, we'll take about maximum about 8-10 months. That's it.
Got it, got it. And sir, second question is, could you just give me how the ferro alloy market is shaping up in terms of pricing? I think the prices have been quite steady over the last six months. How do we see it going?
Yeah. So ferro alloy's price has been hovering INR 70,000 ±5% benchmark. On the lowest side, it went to INR 68,000 when the market was low in Q3. And today, when the market is good, the prices have moved up to about INR 74,000. So ferro alloy for the entire year has been operating at INR 70,000 ±5% range. And I feel this will continue. So since the market is good right now, I feel the prices should be about INR 74,000-INR 75,000 for a few months going forward.
Okay. That is quite helpful. So one last question. I wanted to know, there have been discussions about expanding the Boria Tibu mines. So what's the management's view on?
No, we have full plans to expand the Boria Tibu mines. As we have commented earlier as well, the mines being low-grade, so we have to put up a beneficiation plant inside the mines for which a substantial area would be required. So we have already started the process of preparing the TOR to file for the new EC along with the beneficiation plant. So we see that plant up and running in, say, FY 2030, which is three years from now on, bare minimum.
Got it. And have you applied for the documents?
No. So no, the documents are under preparation. We have finalized how we want to run that mine along with beneficiation. The TOR will be filed in Q1 of next financial year for the new EC. You can consider about 12-15 months of EC period and then another 15-20 months of plant erection, three years from now on.
Okay, got it. And this would come regardless whether we proceed ahead with the steel plant or no, right?
Yeah, definitely. Because today, my pellet requirement for my pellet to feed my pellet plant, I need about 5 million tons of concentrate. So it's always nice to have a backup of 1 million tons of same grade from a different mine. So if you don't put up the steel plant, this will be an alternative source. So if there are some challenges because of a public storm, monsoon, or something, we can always feed the mines to the pellet plant.
Okay. And what capacity expansion are we planning from 0.7 to what number?
4 million.
4 million.
4 million, 100% 4 million beneficiation. The output of concentrate will be close to about 1.5 million tons and 40% recovery.
Got it, got it. Yes. That was quite helpful. Yeah. Thank you so much.
Thank you.
Thank you. A reminder to all participants that you may press star and one to ask a question. I repeat, to ask a question, please press star and one now. The next question is from the line of Shikhar Mundra from Vivog Commercial Limited. Please go ahead.
Hi. So for the expanded pellet capacity of 4.7 million tons, what is the corresponding iron ore which we require?
Sorry, come again. You were not clear.
For the expanded capacity of 4.7 million tons of pellet, what is the iron ore which is required to make that?
Okay. On an actual table basis, we need about 5 million tons of iron ore. To make that 5 million tons, we will have to beneficiate the 6 million. Out of 6 million, about 15%-20%, there will be yield losses to upgrade the quality of iron ore. From 6 million, we'll do about 4.75 tons of concentrate, which should be sufficient enough to feed my entire pellet plant.
Okay. So the entire 6 million tons of iron ore capacity will be used. I mean, what do you have to sell?
100%.
Okay.
No, we have no, no, no, no. Rather than selling, we would like to apply for a mining lease. We have no intention of because I'll tell you another reason. Because if we happen to sell in the market as per the new MMDR Act, because our mines were allotted in the captive category, we are allowed to sell 50% apart from our consumption. But then we have to pay additional royalty. So the royalty amount will be INR 1,000 plus. So does it make sense to sell? But better to reserve and you extend a mining lease or have a buffer stock if something goes haywire in the mines because of excessive monsoon or it can be anything.
Got it, got it. And post this expansion letter on 4.7 million tons, what will be the split between high-grade pellets and low-grade pellets?
On the split, about 70% will be high-grade, 30% will be low-grade.
What is the current split?
Current split, again, it's the same. So current split is about 65% high-grade, 35% low-grade. So one plant will continue to remain like that. The two bigger plants will keep producing—sorry, the ratio will change to 80%. So 80% will be high-grade, 20% will be low-grade. My apologies.
Okay, okay. We are expecting our margins to slightly improve.
Exactly. So whatever challenges we want to face from the supply side because of Lloyds and other competitors, we will very much negate that with our quality and higher premiums.
Got it, got it. Thank you. Thank you and all the best.
Thank you so much.
Thank you. The next question is from the line of Devesh Shah from Shree Polymers. Please go ahead. Mr. Devesh, please proceed with your questions. As there is no response, sir, can we move to the next question? The next question is from the line of Siddharth from Equirus. Please proceed.
Hi, sir. First, on the mining side, now with the expanded capacity and ramping of the mines, will there be some change in the cost structure given the operating leverage that would be coming in? How should we see the mining cost moving over the next two years?
See, the mining cost should remain on the similar levels. Primarily, there are two reasons. One is because of additional mining, our mining cost will slightly go up because the way our mine sits, it's not a very open-cast flatland. We are going well below the sea level. So currently, we're mining at about 100 meters. And to reach 6 million, we have to probably reach about 140-150 meters. So our mining cost will go up. That will be compensated by the volume, the solar plant we have established, the new battery storage, as well as the beneficiation. So we still expect the mining cost to be at INR 3,000 levels in the longer term, which is currently right now.
Okay. Secondly, with all the power projects coming online in the next two years, what kind of cost savings would we have on the energy side?
See, on mining side, today, the grid tariff is about INR 11, which will be replaced by a power of, say, INR 3. So on the plant side, the grid tariff is about INR 7, which will be raised up by INR 3. So on total put together, our annual average cost of generation, which is currently about INR 3.75, should be well below INR 3.
So the payback should be less than two years for the entire solar plant?
No, no. So for mining, the payback is about three years. But for my plant side, the payback is about 4.5-5 years because the tariff is on the lower side.
Oh, okay. Got it. Thank you so much.
Thank you.
Thank you. The next question is from the line of Devesh Shah from Shree Polymers. Please go ahead.
Yeah, ma'am. After all expenses, what could be total turnover of the company in 2020, 2030?
2030, sir?
2030.
Yeah, 2030.
Total turnover of the company, right? Yeah. Expected I mean.
Yeah, of course, of course. I do understand that. So the total turnover of the company, so I'll tell you. Roughly at about INR 25,000 crore.
Okay, sir. Okay. Thank you.
Yeah. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand over the conference to management for closing comments. Over to you, sir.
Thank you, ladies and gentlemen, for joining us on this call. We hope we have been able to answer all your questions. In case you have any further questions, please get in touch with us or to our investor relation team. Thank you very much. Thank you. With this, we conclude this call. Thank you very much.
Thank you.
Vikas, Sandeep, bye. Thank you.
Thank you. On behalf of Go India Advisors LLP, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.