Ladies and gentlemen, good day and welcome to the Steel Authority of India Q3 FY 23 earnings conference call hosted by Nuvama Institutional Equities. As a reminder, all participant lines 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Ashish Kejriwal from Nuvama Institutional Equities . Thank you, and over to you, sir.
Thanks, Hemant. Good afternoon, everyone. On behalf of Nuvama Institutional Equities, we would like to thank the management of Steel Authority of India to give us an opportunity to host this call. Today, we are happy to host Mr. Anil Tulsiani, Director Finance, along with his team. I would request the management for his opening remark, and thereafter, we'll open the floor for Q&A. Over to you, sir.
Thanks, Ashish. This is Anil Tulsiani, Director (Finance) here. Good afternoon, everyone. I welcome you all to the investor con call on the financial results for Q3 and nine-month financial year 2023 update. Financial year so far has been quite volatile with certain surprises. While the first quarter saw the coal prices at their peak, the second quarter witnessed a sharp decline in steel prices on global cues. The demand has been steady in India and has resulted in the prices again showing a rising trend and aided by the reduction of the coking coal prices. This helped the indigenous producers to stem back the strike. Before I brief you on the performance of the company in Q3, let me take you through the macroeconomic scenario which influences the steel industry in a big way. As mentioned by Ashish, we will take up your queries thereafter.
Starting with the world economy, the industries across the globe seem to have adjusted quite well to the new norm, leaving behind the effects of COVID-19. The inflationary forces which affected the major part of the year now have been slowly pointing to a recession, maybe in the near future. The slowdown in China due to the lockdown from their zero tolerance policy also affected the scenario and making some matters worse has been the fluid geopolitical situation from the prolonged Russia-Ukraine conflict. The measures taken by the economies, though necessary, are leading to slowdown in growth. Despite these headwinds, real GDP was surprisingly strong in the third quarter of 2022 in numerous economies, including the United States, the Euro areas, and the major emerging markets and developing economies, as reported by IMF in its World Economic Outlook published last month.
Another silver lining in the offing has been the recent uptick in the economic activity in China as they come out of the lockdown. This has resulted in the financial agencies being upbeat about the improved scenario in the near future. IMF, in its January 2023 World Economic Outlook, has raised the projection for global GDP to 2.9% for calendar year 2023 from the earlier 2.7%. The rate is expected to further improve to 3.1% in 2024. The major advanced economies, which include countries like U.S., Germany, Japan, U.K., France, et cetera, are seeing much slower increase in GDP growth projection for 2023, with U.K. actually projected to contract by 0.6%. The emerging economies are expected to fare much better than their advanced counterparts.
World Bank, however, is less upbeat on the global GDP growth, cutting it down to 1.7% for 2023 as the impact of central banks rate hikes intensifies, Russia's war in Ukraine continues, and the world's major economies slow down. Now coming to the Indian economy. The Indian economy, meanwhile, stands out as a silver lining with strong demand and consumption.
This call is now being recorded.
Amongst the major economies, we have placed much better and beating the growth projections even over China. India is set to grow in the range of 6%-10% over the next year in various reports like IMF World Economic Outlook, World Bank projections, Monetary Policy Committee of RBI, et cetera. As for IMF, growth in India is expected to moderate in calendar year 2023 to 6.1% from 6.8% estimated for 2022, reflecting the less favorable outlook and tighter financial conditions before climbing again higher to 6.8% in 2024. Uncertainty around the outlook, though remains high, with risks tilted to the downside. A sharp global growth slowdown in the near term would affect India through trade and financial channels.
Intensifying spillovers from the war in Ukraine can cause disruptions in the global food and energy markets with significant impact on India. The domestic industry will also have to guard themselves from the import trip. The global steel industry, which was seeing a decline in demand and corresponding realization for past few months, seems to have woken up to a new beginning in the new year, with prices in January exhibiting an improvement. With China also crawling back to life, there are expectations and hopes of the international demand picking up not only for steel, but also the raw materials that go into making it.
However, in the wake of environment concerns, it remains to be seen how far the Chinese government will be allowing its producers to increase their production. Meanwhile, with China again starting to procure coal from Australia after a gap of nearly three years, there are concerns on coking coal prices pushing higher. The prices for hard coking coal sourced from the world's biggest suppliers are already operating in the range of $360-$370 per ton. For steel industry, the price of this fuel, pocket fuel, dictates the cost of production for major producers using year-on-year routes to a large extent. Now coming to the Indian steel industry. The impact of improvement in global markets has poured over to the Indian market as well. The prices of steel has seen an improvement during the past few weeks for both flat and long segment.
The demand projections for steel in India, however, remain upbeat, with the crude steel production in the country recording a growth of around 5% during April to December, financial year 2023 over CPLY. Meanwhile, the consumption of steel has also grown by around 12% in the country during this period. As per the World Steel Association, short range outlook has projected growth of 6.1% and 6.7% in calendar years 2022 and 2023 respectively. Coming to the performance of the company. The company has recorded its best ever nine-month production performance during April to December financial year 2023 for all the segments like hot metal, crude steel as well as saleable steel.
The crude steel production during the nine-month period stood at 13.337 million tons as against 12.770 million tons during the CPLY, which is a growth of around 4%. At the same time, the saleable steel production has grown to 12.547 million ton during nine months period financial year 2023, vis-a-vis 12.454 million ton during CPLY. The sales volume during the period has also been the highest ever nine-month performance, growing to 11.516 million ton from 11.447 million ton. The sales in the domestic market has grown from 10.314 million ton to 11.213 million ton, a growth of nearly 9%.
During the period, however, exports have been lower by around 830,000 tons. Coming to the financial performance. The financial performance during the nine months financial year has seen a growth in top line, whereas the profitability has taken a hit in line with the industry trend. The average realization during nine months remained higher than the CPLY period, coupled with higher sales volume. This has helped in revenue from operations in growing to INR 75,317 crores over the nine-month period financial year 23 from INR 72,715 crores during CPLY, a growth of 3.6%. EBITDA, EBT and tax during the nine months financial year 23 stood at INR 5,978 crores, INR 1,157 crores, and INR 854 crores respectively.
During quarter three financial year 23, the steel prices have reduced significantly and which has led to the revenue from operations showing negative growth over CPLY as well as previous quarter. With the cost coming down in quarter three, the company has posted a positive PBT and tax of INR 635 crores and INR 464 crores respectively, vis-a-vis a loss in the previous quarter. Meanwhile, EBITDA has increased by more than 87% over Q2. The increase in coking coal prices again is threatening to increase our cost of production in the current quarter. However, the simultaneous improvement in the steel prices is expected to cover up the same. With these words, I hand it back to Kejriwal, Mr. Kejriwal for opening the question and answer session. I'm sure you have a lot of queries on the performance. 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. Participants are requested to limit their questions to per participant, if time permits them to join the queue for any follow-up. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Hi. Good afternoon, everyone. Thanks for taking my question first. Congratulations on good performance. I have two questions. First one is on essentially the rail price revision that impact we saw in Q1, we saw in Q3 also. How much quantum of this is left actually for FY22, FY20, FY21, if you can mention it? That is the first question.
The rail price revision, we have got it till 2021. We have already submitted our rail price to the CA Cost Organization for 2021-2022, it's expected that we will get the benefit of this in this financial year itself. It will be for around about 1.1 million tons, there will be a revision in price.
Is it possible to quantify it at this stage?
We may not be able to quantify it because it entirely depends on the way the CA Cost calculates it. We should get a good amount.
Great. The second question is essentially on wagon wheel capacity that we have. We have been hearing that government is focusing on this. There is a plan to set up another factory. Just wanted to understand the current utilization of this wagon wheel capacity that we have and whether we would be participating in some sort of investment in that new facility.
Yeah, actually, we have also participated in the tender which has been floated by the government by the railways for this. At present, our wheel capacity, we are able to supply wheels to the extent of 40,000 wheels per year. This year planning to increase it in the next year with some modifications in our plant also.
Okay. I will take it up offline for more details. Thank you, sir, and all the best.
Thank you. The next question is from the line of Pinakin Parekh from JP Morgan. Please go ahead.
Yeah. Thank you very much, sir. My first question is, if we look at the crude steel production, 4.7 million tons is what we did in this quarter, which is higher, if you compare to the last few quarters. What is the, you know, maximum that we can do at this point of time, if demand were to be very strong, given what your all the expansions that the company did? What will it translate into saleable steel volumes on an annualized basis, if everything was maxed out at full utilization?
Yeah. Actually, this time, whatever we have done, it's more or less at our capacity. Our capacity is around about 90 million ton of crude steel. If you take a proportionate of that, we are working at 100% capacity. We can stretch out our assets more and get a better quantity maybe in this quarter. We have already the January was one of the best month ever for sale. We expect the trend will continue in the remaining two months. We feel that we should be doing more than 4.7 million ton of crude steel in the last quarter.
Understood. To that extent, while there is some scope for higher volumes, not beyond much unless we see a new round of capacity expansion at the crude steel level. My second question, sir, is on the balance sheet and the borrowings. What is the outlook for borrowings and debt for FY23 and FY24, given where the profitability and the CapEx commitments are?
We have our CapEx commitments of around about we'll be spending around about INR 5,500 crores. We have already spent around INR 3,500 crores already. We expect to end the year with a CapEx of around the INR 5,500 crores. Slightly more than that, we can say around about INR 6,500 crores-INR 7,000 crores in the coming financial year. Regarding the borrowings, yes, there was an increase in borrowings as compared to the beginning of the financial year. Now we have spent it and we had a reduction of borrowings even in the month of January. It's at around the INR 28,000 crores odd levels, and we expect it to come down by another INR 3,000 crores-INR 4,000 crores by the end of this financial year.
28 and another 3-4. We are talking about INR 25,000 crores borrowing number.
24, 25, yeah, it should be.
Okay.
Yes, unless there are some surprises somewhere and, if, otherwise we should have borrowings of INR 24-25.
Understood. Thank you very much, sir.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Just, continuing on the previous question, what is the net debt as on 31st March, 31st December, sorry?
INR 29,270 crores.
Sorry, INR 29,270 crores.
70, yeah.
Okay. Sir, what is the like, I mean, reason behind the very sharp increase over the last nine months? Is it unwinding of working capital?
Basically, what was happening was that, we had, the coal prices had increased. Because of that plus besides that the CapEx also was quite high. These were the major factors which have actually led to the increase in the borrowings. Quarter wise if you see, in the first quarter, the borrowings were to the tune of INR 9,000 higher, and which have now come down by to around about INR 2,000 crores in this particular quarter.
Okay. Sir, given that coal prices again are back to, I mean, almost approaching $400, do we expect a further build-up on the working capital side and an increase in borrowings?
Yeah, we actually, the prices of coal which has gone up. Luckily along with that some there has been some increase in the price of steel also. It is going to offset more or less neutralize the effect of the increase in coal prices.
Okay. Sir, I think neutralizing maybe on margins, but at least on the working capital side, it should increase, right, logically?
We will try to because our collections will also be going up because of this. We are trying to also reduce our receivables by something like INR 1,500-INR 2,000 crores in these remaining two months. This should surely help us in reducing our borrowings also.
My second question is with respect to our growth plans in the medium term. In between, we had articulated a plan to add almost 10 million-15 million in capacity. Now if you see, we are approaching our rated capacity as far as volumes are concerned, and we have not yet started any growth expansion. From a next 3-4 year point of view, I mean, what sort of volume or capacity addition are we looking at?
We are already on our, we have already formed up some sort of plan for expansion. There are two things what we are doing. One, whatever assets which we have now, we are trying to check them out. Means, whatever is there, we are doing some debottlenecking schemes and all that. With that, we will try to probably increase the capacity by another 3 million tons in the coming four to four years. In the meantime, we'll be going in for our expansion plan. Most probably, we'll be initially starting with the modernization, means a new expansion at our Visco Steel plant, which will be the first one, where we are planning to increase the capacity by 4.5 million tons.
Staggering the other expansions also, which will take place subsequently to probably we are going for a 12-13 million ton expansion by 2030, 2031.
Okay. This, 4.5 million ton, when should we expect the CapEx to start? Because FY 2024 your.
Uh-
Yeah.
CapEx should start from the year 2024, 2025. We'll have to firstly finalize the DPR and then going for the tendon process. The entire process should take around about one and a half to two years.
Okay, got it. Just one last question? If you could just guide on the NSR realization and coal cost movement, which we are expecting in the fourth quarter versus third quarter?
Fourth quarter so far so good. The like, we got some improvements in NSR in the month of January. February now there are again some tremors which are coming up, like, there has been some stabilization and maybe some cooling off of the, in NSR. March, we cannot predict anything now. It's too early to predict for the March.
sir, coal cost?
Coal cost, it should, for January and February, the coal cost, whatever we'll be having, will be more or less in line with the December cost, maybe INR 1,000 or INR 2,000, or INR 1,000 or INR 1,500 extra. March we can have an increase of around about INR 4,000 in the cost of coal.
Understood. All right, thank you, sir, and all the best.
Thank you. The next question is from the line of Akash Goyal from Tara Capital Partners. Please go ahead.
Hi, sir. Sir, I just want to get an idea on the employee costs, because when I'm looking at it, I see there has been a significant reduction from both on a YOY basis and on a quarterly basis. If you can give me some insights on what was the reason for the coal cost reduction as such.
Yes. The employee cost has been gradually reducing. That is basically because the senior level people who are in the age category of 60, around 3,000 have left the company now. The recruitment has not been that much. It has been very less. We are trying to reduce the recruitment to the extent possible. There is a gradual decrease of around about, you can say, in a quarter, around about INR 50-100 crore reduction is there in every quarter. I think probably this trend should continue on for the future also, because retirements are there in the near future also of, you can say in a year around 3 to 3,500 people will be retiring.
That benefit we'll get in the employee cost coming down.
Going forward, we can expect the trend to continue.
surely. It will continue because whatever recruitment we'll be doing also that will be at the lowest of the scale. I mean, at the lowest of the grade. Their salary is quite low as compared to the people who are retiring now.
Understood, man. Thank you so much and all the best, sir.
Thank you.
Thank you. The next question is from the line of Rahul Jain from Systematics. Please go ahead.
Coming again on the debt question. If you see on March, we were at about INR 13,000 crore, and now we have reached this massive number of INR 29,000 crore. I'm wondering, what gives you the confidence to go ahead for this another big round of CapEx? Earlier, you know, because I remember in, say, 10 years ago when we started this CapEx round, we were net cash. We had INR 10,000 crore cash, and after that we pursued this massive expansion, and there we are today, you know, at whatever 20 million ton production. I'm just wondering, what is giving you the kind of confidence to, you know, despite sitting on such a huge debt number to go ahead with this CapEx?
Basically the past gives us the confidence for the future. As on June 20th, we had a total borrowings of nearly INR 52,000 crores, which in a matter of less than two years, we could bring it down to around about INR 13,386 crores. Now, yes, it has inched up. It has gone up basically because of the coal prices being extremely high and the steel pricing not been commensurate to that. I think the industry is not going to last just with very high coal prices and low NSR. The time has now more or less come where it is stabilized, you know.
If the coal prices are also at a level where we can sustain our steel production. With higher volumes coming up, the benefits of higher volumes and lower fixed costs will surely help us. We are very optimistic that by this year end, though we had at one point of time nearly at least more than INR 29,000 crore, that by this year end we should be at around about INR 25,000 crore level.
Right. Okay. Secondly, only we had this huge revaluation which we had done for iron ore, and, you know, we had plans of, you know, selling good quantities, firing or any major progress over there in the annual I think Jharkhand did not get approved anything like that.
See, there is not much of a progress during to mention here. Basically, because the price which we expect from that, until unless we don't get a good price, we are not going to sell it. Because it's an asset for us, so if we get a good price for it, we are probably going to sell it. If there is something like in case of, we have got a major resource at in Jharkhand mine. Once we get the clearances from Jharkhand state government, the sale of fines from there will go up.
Right. Lastly on this revaluation exercise which we have every year, you think this is going to be a feature which is going to remain with us or are we working to, you know, have a more streamlined, you know, method that we have a correct accounting picture, right? Because from railway, like you said, you are going to get money from 2022, right? For this year you will get probably next year. What I can understand, the adjustment would be at least more than INR 5,000 a ton, right? It can be. It's really has a lot of, you know, mismatch in our accounting reporting.
Are you talking about the fines part of it?
No, no. I'm talking about the railway sales. You know, 1 million ton sales which we are having.
Yeah, yeah.
There is a huge timing difference, right? I mean, last year's sales difference you will get this year, right?
Actually, what has happened is that the cost of input costs have gone up tremendously. What happened was railways also realized that if there was a point at one point of time where the cost was high and even the NSR for structures, it was higher than that of the rail products. The railways immediately realized this, and they gave us a INR 5,000 hike in our in the price for the rails. That is also not substantial for the costs which we are which are there for 2021-2022, and now on 2022-2023 also. We have already given our pricing for coal to the CA Cost, and they are evaluating it. We will... we should get a benefit on that account.
How much benefit have we been asking and, what
We cannot disclose that at this point of time because.
I see.
Yeah. The first it will get public.
When will you submit the revision for this year, that is FY 23?
FY23 will be done only after the AGM. We actually normally take the annual report and based on that only they do the workings. It will probably you can say in the month of September or October when we'll have to submit for financial year 23.
The ad hoc payments are made based on the pricing which was prevailing in FY 2022. Is that the right way to look at it?
Yeah, yeah. That is it.
Okay.
Now what is happening is if FY 2022 gets revised, then it goes on a higher side, then we'll probably revise the ad hoc price for 2023 also.
Right. Okay. Okay. Thank you so much.
Thank you.
Thank you. The next question is on the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, two questions. One is I just wanted to understand how much of our total iron ore production, out of that, how much comes from Odisha? Specifically with respect to the Odisha iron ore, how should one understand the royalty aspect? The reason I ask this is we understand that the Odisha state government has been very aggressive in giving out demand notices pertaining to the revised IBM notified rates. Is there any impact that we have over here?
The iron ore prices, basically it is characterized the IBM rates for royalty. Okay. What has happened is this time, on the contrary, I would just like to tell you that Odisha government earlier, they were charging us the royalty on fines at the highest rates for lumps. Okay. In this particular financial year, they have changed it for the royalty being charged to us is the highest rate for fines instead of royalty for lumps. That has given us some benefits in this particular financial year. It's not basically a benefit. What they should have done it years ago, they have done it correctly for this financial year. The rates of royalty in Odisha are basically the IBM rates, we don't have much of a thing in that.
I don't think the Odisha government has got anything in any role to play in this.
Sir, what % of our production comes from Odisha?
I'll just give you the figure. It's.
Sir, my second question.
Can I give it to you offline?
Yes, sir. That should be fine. Sir, my second question was if you could please help us with what is the current prevailing rate for long product prices and flat product prices, and the average for the quarter gone past?
For January, the long product prices are hovering in the range of, you can say INR 56,000. The flat product prices are in the range of INR 54,000. When we come to the previous quarter, the long product prices were in the range of INR 54,500, and so were the flat products have ranged between INR 54,000-INR 54,500.
Right. Sir, just one question. Sir, you indicated that the coking coal prices are going up very sharply, what we see for the month of March. Sir, are we confident of increasing the steel prices, in a similar range? Are we confident of demand and our ability to increase the steel prices?
That is purely on demand and supply. Demand and supply. We cannot decide. The market only basically decides. Yes, there's just one thing which we all should always bear in mind that this increase in coal prices is basically for the entire industry. It doesn't impact only steel. The industry will surely try to push up the prices.
Sure. This is very helpful, sir. Thank you so much.
Thank you. The next question is from the line of Prashanth Kumar Kota from NK Global. Please go ahead.
Sir, good afternoon, thanks for the opportunity and also guiding us on the net debt part that we are almost reaching over here and things like that. Next, you have alluded to this point on coking coal. If you see, next year, we may be buying about 15 million tons or 13 million tons of coking coal. At the current price, close to $400, just SAIL will be spending $5 billion-$6 billion. India as a whole will be spending $20 billion-$25 billion. It's, I think probably the second-largest import item for a country, now that we are the world's largest coking coal importer, et cetera.
Sir, the thing is, Something doesn't seem right over here, rather after doing everything correct, not just SAIL or in Indian industry as a whole, if still we are sub-optimal profitability just because of one reason, one external force, then there is something not right. Probably, there's also this, various managements have indicated that the Platts index, you know, where which is a reference index, has to be, you know, more transparent, et cetera. Those things are there. What should we be doing so that we move to something like a more neg- And India as a country, more negotiated deals?
For example, the thermal coal, Japan fixes the price and with large miners and these smaller miners benchmark their grades with these negotiated prices and for a quarter, for a month, those prices prevail. That's a function of what, at the end of the day, we are buying coal to produce steel and doing business out of it. This is completely isolated. They are just living in isolation there. Sir, the impact, the one, there's also a reference with iron ore prices because of the impact on steel is one, but in the case of coking coal, the various parts of the world has different sources, different mix, different their own unique domestic sources, as gas-based steel, et cetera. One is one, sir.
We, there, in this country, India tends to bear the brunt more than others, the pricing is global anyway. What is this long-term solution, apart from India developing its own resources, which will take 5 to 10 years maybe, or... Apart from that, what can we do on the negotiations as a country? Can we take the help of our leadership as in the Indian leadership? How do we go?
I'll just tell you one thing. Actually, this Indian Steel Association is basically looking into these aspects. Wherever high coal pricing is concerned or wherever these the import of steel is concerned, they are basically looking at it. Where all of us are involved with SAIL, Tata Steel and all. Yes. This is there. Besides that, there's just one thing that It's just that the index is like that, but we are getting some discount from that when we are purchasing from the, from the parties. We also have our own now SAIL has got a this thing. A company has a joint venture in the name of ICVL which has got its own mines at Mozambique.
Though the coal quality is slightly not as good as Australian or U.S. coal, we are getting it at a comparatively lower price. We have also forayed into Russian coal also. There also we are getting a quite a lot of discount. I think, you know, the more we find avenues to with other suppliers of coal, this will put pressures on the regular suppliers and who are playing a part in the Platts index and all, Argus and Platts index. It will put pressures on them to, you know, also, you know, bring down the prices to some extent. Yes, at this moment, a price of $380 which is hovering at this point of time, it is really very difficult to absorb it.
I think this industry has seen a time when we were having the index at more than $650 also. We are just keeping our fingers crossed that this sudden hike which has started taking place from middle of January, I think, is should now start showing a downward trend.
Okay, sir. Hope things are getting resolved and wish you all the best.
Thank you.
Thank you. The next question is from the line of Siddharth Gadekar from Equirus. Please go ahead.
Hi, sir. Just one question in terms of volume. Like, we have almost have, I think the 1.6 to 1.7 million tons of inventory. In terms of our 4Q guidance, what kind of sales volume can we expect in 4Q?
The inventory is actually 1.2 million tons. If you see at the beginning of the year, we had around about 6 lakh tons of inventory. Our targets are to bring it down maybe to less than 1 million tons in this financial year.
what sales volume can we expect in the fourth quarter for the current run rate that we are looking at?
4.8. Around INR 4.8 million.
Okay, sir. Got it. Thank you.
Thank you. The next question is from the line of c . Please go ahead.
Thanks for the opportunity, sir. A couple of clarifications. One on the coking coal, you did mention from December levels, there is a 1,000 INR per ton increase. Can you just help us with what was the carrying cost last quarter, for coking coal?
Last quarter it was in the range of around about INR 25,500 per ton, the imported coal.
Got it. The second one, the debt number that you referred to with the INR 4,000 crore reduction, that is by which financial year?
This is by the end of this financial year.
FY 23.
Yeah, FY23.
Got it. One question on the industry trends. You did say that, you know, February you are seeing a bit of softening in NSR. How do you see domestic demand? That's one. Second, given that international prices have gone up for the industry, is export becoming a viable option now? Also, we are seeing that rebar is at a premium to HRC. I mean, what is the driver there?
Actually, there is a very good demand for steel in India. There is absolutely, whatever we are producing, we are able to sell. Rebar prices which were higher, now they have slightly come down in the month of February also. HRC followed one month only. The monotypes, you can say they are at par.
The question on the export options for the industry, given that, you know, Europe prices-.
Export March. Exports up to March, everybody is booked. JAYLE is less on exports and concentrating more on the domestic market. The others, what we have come to know they are booked up to the March.
Are we seeing any import pressures in recent months at the industry level?
It was there, now it is not there. At one point of time it was there, but now it is not there.
Thank you. Next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you. Thank you, sir, for giving this opportunity. It's good to see regularly the steel plant coming up at the full capacity now. I just wanted to understand the opportunity available in improving the product mix based on the existing plant configuration. In this regard, I want to understand, is there a possibility to reduce ferrous further below 9% at which we are operating? Second related part was what is the utilization level in Universal Section Mill as well as Medium Section Mill, and what sort of the improvements we can achieve there? The third related part was, are there any other products where we are operating at a lower utilization and where we can upgrade the product mix further?
As you have rightly said, the component of ferrous is gradually coming down in sales. Yes, we have got two new mills. If you see the RINL in Visakhapatnam and the medium structural mill in Durgapur. Medium structural mill has now stabilized, and we are getting orders even to the extent of around about 50,000 tons per month. The RINL has also picked up from levels of say 15,000-20,000, which was there last year, and now it is at 35,000. We continue to get orders. Once the RINL stabilizes, which will have a capacity around about 840,000, it can be 70,000 per month. I think this ferrous components will further come down.
Apart from these 2 mills, are there any other products where there is a possibility to increase the production level?
In the flat product range, there's not much except we have got this hot strip mill too. Hot strip mill too, this is a new plant. We will try to ramp up that further. That is also. There's one good advantage that the product is very good of that and we'll get a higher NSR for that also.
Thank you. The next question is from the line of Falguni-
Let this be the last question, please.
Yes, sir. It's from the line of Falguni Datta from Geojit Financial Services. Please go ahead.
Yeah. Good afternoon, sir. Thank you for allowing me. Sir, I had just one question. We have seen a price increase of INR 6,000 per ton in the secondary markets, HRC, Mumbai, from mid-December to now, a INR 6,000 per ton increase. If steel prices were to remain where they are now, should we see this kind of an increase translating into our numbers in Q1 FY24?
Basically, it, we are not too sure how it will happen or what is going to happen in Q1 2024, because this, increase of coal prices which are there, that is not having an impact in Q1 also. That will have a major impact in Q1.
Sir, I just wanted to know. Sorry for interrupting. Just assuming coking coal prices remain where they are and steel prices remain where they are, how do you see Q1 margins directionally, better than Q4 or flat?
Maybe flat.
Okay.
Maybe flat.
Thank you, sir. That's all from my side.
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for the closing remarks. Thank you, and over to you.
Yeah. Thank you, Ajayji. We hope to do well in the, in this quarter. We are starting this quarter on a good note. We are continuously getting support. We have got a good support from the government in the form of the budget, where a lot of investments are being made in, means, investments have been made in infrastructure, which will also help us to a large extent in marketing our products. We hope that this quarter and the year to come also will be good for us as well as the steel industry. Thank you very much.
Thank you very much. Ladies and gentlemen, on behalf of Nuvama Institutional Equities, that concludes today's call. Thank you all for joining us. You may now disconnect your lines. Thank you.