Ladies and gentlemen, good day and welcome to the Q4 and FY 2025 conference call of Steel Authority of India, hosted by Nuvama Wealth Management Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Wealth Management Limited. Thank you, and over to you.
Thank you, Yashaswi. Good afternoon, everyone. On behalf of Nuvama Wealth Management, we welcome you all for Q4 FY 2025 post-result call of Steel Authority of India Limited. We are delighted to have Dr. Ashok Panda, Director of Finance, along with his team, who can help us in understanding the Q4 results and his view going forward. I would request Mr. Panda for his opening remarks, and then we can open the floor for Q&A. Over to you, sir.
Thank you very much, Mr. Ashish Kejriwal, and I welcome all the participants to this conference. Good afternoon, everyone. I welcome you all, investors and analysts, who are joining this results conference for this financial year SAIL's for Q4 and financial year 2024-2025. Before I present the highlighted results, I would like to briefly apprise you about the global as well as domestic economic scenario in which we have been operating of late, as this impacts the results significantly, and also will tell about the improvements that we have brought in our company at this stage. After the presentation on the economic scenario and the results, we shall take up your queries in the Q&A session. World economic scenario, about this, the rising uncertainties and volatilities due to the very poor geopolitical scenarios, etc., have led to the global GDP projections being lowered by all major agencies.
IMF, in its World Economic Outlook published during April 2025, has mentioned that owing to the high degree of financial instability across the globe, the tariff war is bound to lead to an economic slowdown. The uncertainty around the trade policy and monetary policy is another factor that could lead to economies taking a southward trend. The IMF has reduced its projections for global GDP growth rate in the current year, 2025, to 2.8% and 3% in 2026. This growth rate is, however, uneven across the regions, influenced by various other factors like trade policies, inflation rates, and geopolitical situations. Projections for emerging and developing economies stand at 3.7% and 3.9% for 2025 and 2026, respectively. On the other hand, the advanced economies stand at a much lower GDP growth rate of 1.4% and 1.5% for 2025 and 2026, respectively. That is the overall scenario of world economic situations.
Coming to global steel industry, the global steel industry is navigating a complex landscape influenced by economic trends, trade policies, and technological advancements. Global economic scenario in 2025 presents both challenges as well as opportunities for the steel industry. While certain regions may benefit from protective trade measures, the overall impact is complex, with potential for increased costs, market volatility, and shifts in global trade dynamics. Global steel production has seen a decline of around 1% in 2024. In October 2024, SRO, the World Steel Association, has forecast a demand growth of 1.2% in the year 2025. However, given the changing scenario, the projections may vary. Meanwhile, the steel industry is increasingly focusing on sustainability and technological advancements.
There is a growing emphasis on reducing carbon emissions through innovative production methods and the adoption of renewable energy sources, in which all the companies are focusing their energies towards this, so also SAIL. The integration of artificial intelligence and automation is also the key to enhance manufacturing ability, capacities, as well as reducing costs. On the pricing context, prices front, we can see that prices of coal, which is one of the important parameters in the expenditure side, as well as steel products, have remained sublime during the year 2024-2025. They have remained downward. Coming to the Indian economy scenario, the Indian economy has also been impacted on global cues with the second advance estimates for GDP growth for FY 2024-2025, 6.5%, down from the earlier revised estimate of 9.2%.
RBI has reduced its key repo rate by 25 basis points to 6% after the first rate cut of 25 basis points announced in February 2025. This decision of RBI aims to stimulate economic growth amid easing inflation, which is approaching the RBI's target of 4%. RBI anticipates a growth rate of 6.5% for this financial year 2025-2026 and 6.7% for financial year 2026-2027, which is slightly higher than 6.5% estimated for the current fiscal year. Despite the projections for GDP growth rate in the near future coming down in the range of 6.2%-6.7%, India continues to maintain its position as one of the fastest growing among major economies. Recently, we have seen that the India economy has become the fourth largest in the world. We are growing in that rate.
Coming to the Indian steel industry, India's steel industry is experiencing significant growth driven by robust domestic demand and strategic investments. Despite all challenges, including the softening of the steel prices, the Indian steel industry has consistently been growing in terms of production as well as consumption. During fiscal 2024-2025, crude steel production has grown by more than 5% over the previous year. At the same time, finished steel production consumption has grown by more than 10% over the previous year. India has been one of the strongest drivers of demand for steel in the recent past and projected to grow at more than 8% during the next few years. Indian steel demand will continue to charge ahead, driven by continued growth in all steel using sectors and especially by continued strong growth in infrastructural investments.
The top line and bottom line for Indian producers have been impacted as the prices declined consistently. However, the prices of coal also declined. So on the whole, there was some impact on the bottom line. With the safeguard duty notification coming into picture recently, which has come into picture recently, we are hopeful that the domestic prices should stabilize and give a boost going forward. However, the ensuing monsoon season needs to be negotiated safely with hopes for better results in the coming quarters. With the plots in the index for hard coking coal of Australian origin, which is standing at around $190 per ton, the prices of imported coal seemingly have stabilized, providing relief on the cost front to the industry. Indian steel industry poised for continued growth, supported by strong domestic demand and strategic investments.
However, addressing challenges such as import competition and environmental sustainability will be crucial for maintaining this positive trajectory going forward. Next, coming to the company's performance of Steel Authority of India Limited for Q4 and annual results for FY 2024-2025. To the performance of the company during FY 2024-2025, the same stands as follows. While the production of crude steel at 19.17 million tons stood at similar levels as compared to the previous year of 19.24 million tons, sales volume has grown by around 5% to 17.9 million tons. This has resulted in reduction in the inventory of the finished goods. This is the best-ever annual sales performance by the company. With the decline in sales prices more than the reduction in the imported coal prices, the turnover as well as profitability was impacted as compared to the previous year.
However, due to sustained efforts by the management in the steel unit, we have improved our technological parameters during this year, which has resulted in around INR 6.5 billion of advantage in terms of cost. That has also gone into the bottom line of the company. The turnover stood at INR 1,020 billion approx. EBITDA, PBT, and PAT stood at INR 116.44 billion, INR 76.4 billion, INR 30.09 billion, and INR 21.48 billion, respectively. Coming to the performance of the company during Q4 2024-2025, the same stands as follows. The crude steel production during the Q4 stood at 5.09 million tons, growth of approximately 10% over the previous quarter and marginally higher than last year's Q4. The sales volume of 5.33 million tons during Q4 was the best-ever quarterly performance, going by almost 20% over previous quarter and 17% over last year's Q4.
That is why this has resulted in inventory reduction as well of finished goods. With prices also getting a marginal boost towards the end, that is, in Q4, the turnover grew by almost 20% over the previous quarter, standing at INR 29,121 crore. Profitability like EBITDA, PBT, and PAT stood at substantial growth over previous quarter to stand at INR 3,781 crore, INR 1,593 crore, and INR 1,178 crore, respectively. In fact, the net profit has grown by more than 16% over the last year, figure of INR 1,011 crore. The performance during the quarter has helped reduce the borrowings on 31st March 2025, not just for the quarter but also for the year. The borrowings stood at INR 29,811 crore as against INR 30,593 crore as in 31st March 2024, with a reduction of around INR 700 crore during the year.
The borrowings had gone up to a level of INR 35,659 crore as in 30th June 2024, before coming down to INR 33,907 crore as in 31st December 2024. Ultimately, it ended up with INR 29,811 crore as in 31st March 2025. Coming to sustenance and operational efficiencies, in the areas of operational efficiency, SAIL has showcased some of the best-ever performance in the areas of coal, coal consumption, specific energy consumption, blast furnace productivity, etc., which has led to a cost reduction of around INR 650 crore. Coke rate has reduced to 421 kg per ton of hot metal, this is 440 kg per ton of hot metal during the previous year. The annual average blast furnace productivity has gone beyond 2 tons per meter cube per day. The same stood at 2.02 as against 1.88 in the previous year. SAIL is undertaking various drives towards decarbonization in three phases.
SAIL plant units have entered into a number of MOUs with renowned suppliers, technology providers, etc., towards decarbonization drive. During FY 2024-2025, the specific CO2 emission reduced by over 3% over the previous year. We are making all efforts to reduce it further. Going forward, the boost from various measures being taken by the Government of India on infra spending, notification of safeguard duties, which has happened now, etc., augurs well for steel demand in the country. Also, the recent reduction of repo, that also is a booster for the economy. We are hopeful that the margins will improve further for the company in the quarters to come as the overall outlook is quite positive for sustained growth in domestic consumption. With these few words, I hand it over to Mr. Kejriwal for opening the Q&A session, please.
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 touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Amit Lahoti from Emkay. Please go ahead.
Thanks for the opportunity and congratulations on a great set of numbers. My first question is on the expansion plans. If you could indicate a timeline when we are going to start spending CapEx. And on the same question, have you secured board and government approval for the expansion plan?
Yeah, Mr. Amit, we have got an expansion plan.
Right now, we are at around 20 million tons of capacity, and we want to go towards 35 million tons of capacity by 2030. These are focused on various units. To start with, we started doing the tendering activities in ISP, ISCO Steel Plant, followed by other plants. It will follow in other plants as well. That is the kind of plan we have. For that, we are lining up our investments, etc., for that as well. The CapEx, we are going to increase the CapEx. In stages, we'll be taking approvals. Approvals are coming from SAIL board, etc. In terms of timeline, when are we going to start the first round of CapEx? Yeah, as I said now, the CapEx will take place in stages.
Since it has already taken up in ISP, which is ISCO Steel Plant, the tendering process has started, etc., so some initial payments have been started over there. As we go ahead, once the packages are tendered out and the activities start, then the chunks of investments will come from the next year. I mean, some chunks will come in 2025-2026, from 2026-2027 onward. Major chunks will start coming in terms of CapEx. Okay. My second question again on CapEx, if you could provide a specific guidance for FY 2026 for CapEx. We have decided INR 7,500 crore CapEx for 2025-2026.
Okay. Thank you and all the best.
Thank you, Mr. Amit.
Thank you. We'll take our next question from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity.
On the volume that you did in Q4, could you help understand what was the mix of the volume in terms of finished and unfinished?
Yeah. In Q4, the Q4 total volume was 4.6. Q4, 4.72, isn't it? Total saleable steel production volume was 4.72. Out of it, finished volume was 4.09 million tons in Q4.
And in sales?
And in terms of sales?
Yeah. Sales volume, Amit.
Sales volume was much more than this, just 1.6, 5.33 million tons.
Yeah. And the breakup, Amit, I have the volume. I wanted the breakup of finished.
Just 1.6. 5.33 is total. That's total. 5.3 is total. Out of which the semi-finished would be, semi-finished is around 0.48 or 0.5, you can take.
Okay. I was just wondering, the realization for you was flat QOQ. Generally, there was an improvement in steel realization across the board in the quarter.
I was just trying to understand why the realization for you was flat. Are you talking about Q4 or you're talking about for the entire year? Q4 right now, Q4. If you could give an NSR for Q4.
Just one sec. Q4, Q3. So far as long producer is concerned, you're talking about flat producer or long producer or in totality?
Yeah. If you could give both of them.
For example, in case of long producer, actually, within Q3, Q4, there's not much of change. Because in Q3, the NSR, which is net sales realization, is around INR 52,500, which almost remained the same in Q4. While in case of flat producer, there has been improvement. In Q3, the numbers were INR 46,800, which has improved to INR 47,300 in Q4 for flat producers.
On the whole, on the average also, there is improvement of around INR 300-INR 400 per ton between Q3 and Q4.
Understood. Understood. What would be the coking coal cost in the quarter?
Coking coal cost in the quarter, if I talk about imported coal, between Q3 and Q4, there is a reduction of around INR 1,500. Because in Q3, it was average around INR 20,000 per ton, which came down to INR 18,500 in Q4.
Sure. Guidances for the same NSR and cost? It serves as a follow-up. NSR and cost, if you could give guidance on that.
Yeah. NSR, it has said actually there was a bit of improvement in NSR after post this safeguard duty and other things. Because the demand is going to grow, there will be boost in the demand.
We believe there will be improvement in the NSR, maybe after monsoon or something like that. Regarding imported coal, even regarding imported coal price, right now, it is almost kind of a stable kind of a thing. It will continue at that level or maybe it will increase a little bit, if not more.
That's all. Thank you so much.
Thank you very much.
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Good afternoon, sir. Sir, just continuing on the previous question.
My first question is, if you could share April, May average, what is the NSR for flat and longs? We have four quarters. For the first two months, if you could share that. Also, on the coking coal front, what is the cost expectation for Q1 or for the first two months, whatever we have seen?
Right. The answer to your question is that taking NSR, first of all, net sales price. For the long producers, the NSR in April and May are almost like INR 55,000 per ton. For flat, there is improvement in the flat products post this safeguard duty, which is around INR 50,500-INR 50,700 like that. That's about the NSR front. In the imported coal prices, as you've asked, the coal prices are almost hovering around INR 17,000-INR 17,500 per ton.
Okay. From fourth quarter, we are seeing almost in flat INR 3,000 and in long INR 4,000 increase. In coking coal, we are seeing around INR 1,500 reduction. Is that the right calculation?
I mean, as you said, in the imported coal side, there has been a reduction of around, say, INR 1,000. In the NSR front, it is not INR 3,000, INR 4,000 actually. As compared to Q4, in the long, there is around INR 2,000, INR 1,700 increase. In the flat, it is around, say, INR 2,500 or INR 3,000, yes. It ranges between INR 1,500-INR 3,000 between long and flat.
Okay. Sir, one question on employee cost. If you could guide, what is our expectation? Last two, three years, it has been very stagnant. What is our expectation for 2026-2027?
Yeah.
As we have been telling that, actually, our employee cost is coming down over the years because of the natural separations. You can see on the absolute figure, the employee cost has come down in 2024-2025 as compared to the previous year. We are expecting further reduction in the coming financial year, which is 2025-2026, by at least 400-500. Yeah, this is our expectation.
Okay. Just one accounting clarification, sir. For the full year, there was the railway provision for previous years of around INR 687 crore. Then in the second quarter, we had shared some INR 1,600-INR 1,400 crore of rail price revision provision for FY 2023. I just want to understand, for the full year 2025, is this INR 650 inclusive of that, or do we have to add the INR 1,600 crore of the second quarter as well?
For the entire year, it will be 625 is the figure for Q4. The net figure is INR 625 crore. INR 685- some other adjustment of INR 51 crore is INR 625 crore for Q4. That is a part of the total figure of INR 2,200 crore for the entire year.
Understood, sir. Thank you so much, sir, and all the best.
Thank you.
We'll take our next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hello. Am I audible?
Yes. Please go ahead.
Yeah. Good afternoon, sir. My first question pertains to that incentive, railway price revision, which you mentioned as a footnote. The contract numbers are any contract numbers. What does that cumulative and the YTD numbers mean? Because they do not add up.
If you do the YTD numbers when you report in Q4 or in Q3, and the four quarters, the provisional numbers which you report separately, they do not add up. Also, what is this cumulative number which you report? If you could explain to me.
This is regarding which figure, if you can clarify. Actually, can you give the numbers?
The railway price, the supply to railway government entities, for Q4, you mentioned INR 2,073 crore. If I look at the YTD number in March, that is INR 9,496 crore. If I add up the four quarterly numbers, they total up to a much higher number of more than INR 10,000 crore, almost INR 11,000 crore, while the reported number is INR 9,500 crore for the full year.
Actually, just to clarify. Can you see? Just to clarify. Can you hear me? Just to clarify.
Yeah, yeah.
This includes railways as well as other than railways like defense and others. The figures will not exactly add up. These figures may not exactly add up to that number. This includes railways.
I'm seeing that the number which you report as a Q4 number and as a YTD number, and similarly for even the preceding previous press releases, those numbers, the YTD number does not match with some of the two-quarter numbers or three-quarter numbers.
Okay. What we can do is we can take this question and clarify for you. Okay?
Okay. What do you mean by cumulative number?
Cumulative for the year. Cumulative is not for the year. Till date. Cumulative is till date, actually. Till date.
Which date? Because cumulative for March quarter is.
March 25. Since all these years.
Since all these years?
Since all these years, till March 25.
For this year?
We can take this specific question and give you the answer for better qualities.
Okay. Secondly, you've mentioned that you're looking to reduce your employee cost. In Q4, there is a sharp jump in employee cost number on a Q1, Q2, which is almost 20%. What does this pertain to? You mentioned that you're looking to reduce by INR 400 crore-INR 500 crore in FY 2026.
Right. Let me answer this question. Q4, there has been a jump of around INR 500 crore-INR 600 crore if I believe, as compared to the previous. The reasons are because of two, three aspects. One is reduction in the discounting factor from 7.29%- 6.7%. That has got an impact. The final pension provision, which was earlier 3%, has been increased to 7.5% or something. That has got an impact.
Looking at the profitability, the incremental PRP, which has been provided for the entire year, has been provided in Q4. Basically, pension, PRP, and then discounting factor, these are the three reasons for increase in salary revision in Q4. These are accounting adjustments in Q4 compared to previous quarter.
Just to clarify, this INR 3,300 crore, is this only pertaining to all the adjustments pertaining to only Q4, or it is like full year adjustments later in the March quarter?
It is the full year adjustment, which has been done in the March quarter, Q4.
Okay. The average number of around INR 2,900 crore is one should look at.
Yeah. On a quarterly basis.
On a quarterly basis. Lastly, could you share your thoughts on volume? I'll just complete my question and move out. Guidance on the volume trends for FY 2026? Thank you.
Yeah.
In FY 2026, we are looking forward to having more volume as compared to the previous year. If you are looking at the good steel numbers, good steel numbers were 19 million tons in 2024-2025. We are looking at a number of around 20 or beyond. Yeah. Good numbers.
Okay. Thank you, sir. I'll come back to you.
Thank you.
Thank you. We'll take our next question from the line of Vikash Singh from Phillip Capital. Please go ahead.
G ood afternoon, sir. And thank you for the opportunity. Sir, just wanted to understand that our previous sales at almost 14% still stays very high. So is there any chance that in the next year, we could come down this and out of the 19million tons-20 million tons of total production, what is your own sales target, sir?
Out of 19 million tons of crude steel production, our saleable steel production is actually 18.4 million tons, 18.5 million tons, or you can say 18.5 million tons. Out of that, the semis will be around, just one sec, around 2.75 million tons, which is roughly 15%. My question was that next year, when we are targeting 20 million tons of crude steel production, what would be our sales target, and can we bring down this 14, 15% of semis, or will it remain at that level? Coming back to the question, actually, when we are targeting 20 million tons of crude steel, the saleable steel will be around 19.2 million tons, 19.3 million tons. We are targeting sales of more than that. Within that, we are targeting semis of less than 14%. That means around 10-12% we are targeting.
Because we are taking various other steps for that. Going forward, actually, the semis will further come down because we are going to put up a new TMT bar mill at Durgapur Steel Plant, which will come after two and a half years. At that time, the semis will be almost kind of zero, so very, very less, negligible.
Understood. Sir, my second question pertains to this INR 7,500 crore CapEx plan. How much is towards the RM, especially the palletization plant, if you could clarify that? What is the stage of our pallet plants in terms of construction?
Yeah. Coming back to the question, actually, INR 7,500 crore does not include the pallet plant because pallet plants are coming in the on BOO basis. The CapEx will be done by the BOO operator, so we will be incurring only O&M cost after it is set up.
That is the answer to that question. Coming back to when they are going to come, they will be coming in stages. At the Bhilai mines, it is going to start after a month, this month, May end or June, sometime like that. The other ones, like in Rourkela and Durgapur, they are at the tendering stage, so it will take some time. It will take around up to three years' time. There are other pallet plants also in the pipeline for which we will increase the go ahead signal for tendering.
Noted, sir. Sir, jargon inventory can be used in this pallet plant, or those low-grade inventory would remain idle?
Yeah.
Coming to jargon inventory of low-grade, I can say, actually, we are planning a 4 million tons pallet plant at Goa itself, which will be consuming these low-grade as well as trace fines in the ratio of 50%. So that pallet plant is geared up towards this.
Noted, sir. Thank you. That's all from me.
Thank you very much.
Thank you. We'll take our next question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good afternoon, sir. First question was on the volumes. This quarter, you've probably liquidated some inventory. I also want to check that NMDC had mentioned that NMDC Steel is also having a marketing arrangement with SAIL. Any of this quarter's volumes include some steel from NMDC Steel?
Yeah. It includes steel from NMDC Steel Limited, to the tune of around 3.6 lakh tons.
This 5.33 includes about 0.36 million tons of NMDC Steel. Is that correct, sir?
Yes. Yes.
Okay. That would be mostly trading sales.
That is kind of actually trading on some arrangement, actually. Their stock is happening in our books. We have been taking from them. There is some arrangement for that, some arrangement for that.
Sure.
This year, did you have any sale of iron ore fines you were planning to sell from Odisha and Jharkhand? Have you seen any sales happening this year?
We have sold some quantities from Bolani mines only in Odisha Group of Mines. Going forward, we are planning more sales from Bolani and also in Satishgad going forward because after improving mining over there only, then we will be able to sell something from Satishgad as well from Rowghat Mines.
Presently, we are selling from Bolani, and that will continue.
Nothing from Jharkhand? I think we were waiting for some.
Nothing from Jharkhand because we are still waiting for the permission from the State Government, which is not yet available.
Sure, sir. Okay. Thank you.
Thank you very much.
Thank you. We'll take our next question from the line of Prateek Singh from DAM Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. The first question is just to get a sense on the INR 686 crore or INR 625 crore provision or kind of a runoff from the prior period that we're talking about. That comes into revenue also, right? Or does it lower your expenses? The reason I'm asking is if I adjust for it, your NSR kind of fell on a Q2 basis.
Maybe I have to adjust for volumes also from NMDC Steel, but on a top-line basis, it seems your NSR fell if I adjust for these revenue. Is that the right understanding?
Yeah. Yeah. Let me try to explain this particular number, actually. INR 625 crore is not INR 686 crore-INR 618625. This INR 625 crore is coming on the top line, which is the turnover, but it is not a part of the NSR. NSR is not including these area figures. So far as prior to Q4 numbers are concerned, because Q4 numbers are INR 85 crore. INR 625 crore- INR 85 crore, INR 540 crores, which is the figure which is prior to Q4 numbers, which is there in the top line of Q4.
Okay. Sir, NSR fell on a Q2 basis because of this? We have to remove this number from.
No, no, no.
It is not to be reduced from the NSR numbers because NSR numbers are rupees per ton, and that does not include these area numbers. The NSR numbers that we discussed sometime back remain as it is without getting impacted by these INR crore numbers.
Okay. My second question is just extending the discussion on employee cost. Two things, sir. One, when is the pay commission impact would come in once the Federal Government finalizes it for us? Second, given that we are doing a lot of brownfield expansion going ahead, is it safe to assume that the bulk of the employees who are already working in those sites would be shared with the new capacity coming in, and hence the cost structure of the new capacity would be significantly better than what we are seeing right now?
Because employee cost has been kind of an Achilles heel for us. Safe to assume that the new capacity will be more efficient from an employee cost perspective?
Y ou are absolutely correct, actually, because we are planning right now for brownfield expansion, which are going to come in the next three, four, five years. During that time, the employee cost would have come down significantly to normal separation and a little bit of induction of fresh blood. At that point of time, we'll find that all these new facilities, they will be having less manning and more automation and AI-related applications. They'll be very, very efficient in terms of manpower cost. Today, we can see our new plant, which is East Coast Steel Plant, where the manpower cost is pretty less as compared to the rest of the other legacy plants.
Going forward, all these major facilities which will be coming in, all the units, they will have more efficient manpower cost structure in those facilities.
On the pay revision timeline, sir?
Pay revision, as you know, actually, it happens every 10 years. Next is due in 2027. We will look into that whenever it comes, any guidance, etc.
CY 2027, right? Or FY?
I mean, that is slated for 2027, CY 2027. Then only we will come to know about it.
Understood, sir. Thanks for answering my question.
Thank you. We will take our next question from the line of Parthiv Jonza from Anand Rathi. Please go ahead.
Hi. Thank you for the opportunity.
Just to take my point on CapEx, actually, in starting, we said that you'll be doing about INR 7,500 crore of CapEx, and thereafter, the CapEx would increase from 2027 onwards when your facilities come on stream and you do more CapEx. Just wanted to get your view on the debt. How is debt going to play out over the next two to three years?
Yeah. Today, the debt is around INR 26,800-INR 27,000, something like that, and we were planning to reduce it further in this current year. Last year also, we reduced by around INR 750 crore, and now we are planning to reduce month and month. Going forward, when the CapEx will be increasing, we'll have two-pronged approach. Number one, we'll try to increase our profitability.
From internal actual, we'll be able to components that are part of the requirement, and the rest part will line up for other instruments available for getting this fund, etc. Debt ticket ratio is good enough to take care of these two aspects going forward.
All right. Sir, in the opening demos, you mentioned that because of some techno parameters, we were able to save towards INR 650 crore. The service directly had flown down to your bottom line. Just wanted to know that there is a possibility to better this going forward, or we can take this number as a standard number going forward?
No, surely. Our target is much more than that, actually. That is what happened last year while our target was more. In this year, again, we are aiming at more figures compared to that number. We are targeting much more cost reduction.
That is a continuous process, actually. And there has been improvement in all these physical parameters over the years. Specifically, in 2024-2025, over 2023-2024, there has been good improvement, and we are looking forward to better improvement in 2025-2026. The numbers should be better than this. This is our target.
Okay. Thank you so much, sir.
Thank you very much.
Thank you. We'll take our next question from the line of [Ajit Devegar] from Axis Securities. Please go ahead.
Yeah. Thanks for the opportunity. Sir, my question is with respect to the capacity expansion, which we are targeting up to 35 million tons. So can you break it down? By FY 2028, do we expect any incremental capacity to come on stream? And if you can further break it down in terms of plants, which capacities will come first? Slightly more detailed answer on that.
I'll try to give you as much as possible, not entirely as you want. The question is that I have told you, actually, 35 million tons from current 20 million tons, increased of 15 million tons, increased brownfield as well as greenfield. In the brownfield, there are deep bottlenecking efforts as well as setting up of new facilities. These are the two things which are happening. In that process of deep bottlenecking, by 2028, we are expecting to increase it by maybe around 2-3 million tons, something like that, around 3 million tons, something like that by then. Because deep bottlenecking projects will come quickly. As far as brownfield and greenfield projects are concerned, they take their own timeline of around three years, something like that, after they start doing the execution activities. Those will happen subsequently.
Now, as you said about the plants, the first plant that we started doing this is ISP, which is IISCO Steel Plant for the brownfield project, as well as a bit of for the greenfield project, as well as a bit of brownfield out there. In the brownfield, maybe around 500,000 tons will come in ISP by 2027 or 2028. The entire 7 million ton ultimate capacity will come by 2029. That is for ISP. Similarly, brownfield and the debottlenecking activities are going on in Durgapur Steel Plant as well as Bhilai Steel Plant as well as Rourkela Steel Plant. These will also add capacities of 1 million tons-1.5 million tons by 2028. So far as the greenfield projects are concerned, they are taking steps in these plants.
All of these are geared up towards giving benefits by 2030.
Okay. What will be the peak CapEx? You mentioned you have given guidance on 2026 CapEx, but you said that in 2027, the CapEx will peak. What quantum will be there?
No, in 2027, it may not be peak actually. Let me try to, because this year, we have given a CapEx of INR 7,500 crore. Slowly and slowly, as the projects take up, the payments will start. Based on the milestone payments, the CapEx is going to increase. This peak level of this CapEx may happen sometime around, maybe just one sec, could be somewhere around 2028-2029 like that.
What will be that, if you can quantify that?
That we have to see, actually. I mean, anybody can guess the number with respect to capacity. It will increase quite a lot.
If it is INR 7,500 crore today, it may increase by around INR 10,000 crore-INR 15,000 crore, something like that at that point of time. We need to quantify because these are very dynamic kind of thing. Depending on how the projects take off and the kind of milestones they have, based on that, the CapEx plans are done.
Okay, sir. That's it from my side.
Thank you.
Thank you, sir.
Thank you. We'll take our next question from the line of Nirbhay Mahawar from N Square Capital. Please go ahead.
Ladadi, good afternoon, sir. Good afternoon, sir. Just a follow-up on the cost-side savings. Is it more driven by the better utilization of plant?
Can you please come back once again on your question?
You have seen substantial improvement in your techno-economic parameters.
Just wanted to understand, is it because of better utilization of our plants, and this is going to continue in future also?
Yeah. Let me answer this question. The question is major steps that we've taken in 2024, 2025 are that we have stopped some of the inefficient old blast furnaces. Three blast furnaces stopped in Bhilai and Rourkela at different points of time. Then we increased production from the other bigger blast furnaces. Because bigger blast furnaces, when you increase production, you can concentrate on reducing, bettering the techno-economic parameters. That is how exactly it has happened. If you see, actually, blast furnace productivity on an average for the entire year for SAIL has been more than two in spite of the fact that these three blast furnaces have stopped in between. This year round, the blast furnace productivity is going to go beyond two.
There's no doubt about it. Production ramp-up is taking place from other blast furnaces which are operating, other larger blast furnaces which are operating. We are getting a bunch of cost reduction over there. That is why we are targeting better cost reduction as compared to previous year as well.
Sir, another thing on the market side, is the rate for long products much better than flat right now? How is the outlook for the future?
See, what's happening is between LP and FP, although last year, LP was doing good, FP was subdued. After the subdued, etc., and some international dynamics, there has been a lookup in the FP prices. It is cyclical as well. As the economy is going to improve right now, as we are expecting, we hope that FP market is going to improve going forward.
LP also will improve because of the infrastructural sector boom. Both the things should remain good in 2025, 2026. That is our expectation.
Are our higher share of long product overall helping us in overall operating performance vis-à-vis peers?
In case of SAIL, actually, we are maintaining a balance of almost 50/50 between LP and FP. During the cyclicity of any of the sides, the other side gives us the benefit.
Thanks.
Thank you.
Thank you very much.
Thank you. Ladies and gentlemen, due to time constraints, we'll take that as the last question for today. I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Wealth Management for closing comments. Over to you.
Yeah. Thank you, everyone, for attending the call. On behalf of Nuvama, we really thank the management to give us the opportunity to hold this call.
Sir, lastly, if I can sum up what we have discussed in this call, is it safe to assume that we are expecting something like INR 3,000 price increase in quarter one, FY 2026, over FY 2024, along with INR 7,800 decline in coking coal cost and lower employee cost also, which was somewhat higher this quarter?
Let me sum up and tell you, actually. So far, as imported coal price is concerned, we expect that it is almost kind of stable. So that reduction may continue, number one. Number two, so far, as sales price is concerned, although it appears to be INR 3,000 or INR 2,000 as compared to quarter four, but it is market-driven. It is market-driven. It will be up and down as compared to that. Most of it is monsoon is going to come. During that time, it will remain a little subdued.
After that, we expect better improvement in that. The third question was about employee cost. Yeah. Employee cost, as I told you, sir, since that because of the network separations, that is going to come down.
That's great, sir. Thank you so much. All the best in the future, sir. Any closing remarks, sir?
Yeah. Let me tell you. Thank you very much, Mr. Ashish. The forecast for Indian economy by various agencies has been quite encouraging, and the support by the government is strengthening. They believe that the economy will continue to do well. Steel demand also continues to prosper, and we are hopeful that the prices will maintain and momentum that has become visible recently may continue going forward.
Apart from the improvement in operational performance, the company also remains committed towards sustainable performance, including more emphasis on decarbonization, improving capacity utilization, value addition, and achieving cost competitiveness. At the end, I thank all our investors for their reposing faith in us, and I'm hopeful that the same will continue in future as well. Thank you, everybody, and thanks a lot.
Thank you, sir. On behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.