Ladies and gentlemen, good day and welcome to Steel Authority of India Limited's Q4 FY 2026 earnings conference call hosted by Nuvama Institutional Equities. 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 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Institutional Equities. Thank you, and over to you, Mr. Kejriwal.
Thank you, Michelle. Good morning, everyone. On behalf of Nuvama Institutional Equities, we again welcome Dr. Panda and his team for giving an opportunity to host this conference call. We are delighted to have Dr. Ashok Panda, who has now become Chairman and Managing Director of SAIL with an additional charge of Director Finance. On behalf of investors community, we congratulate you, sir, for this. We wish that SAIL will achieve newer heights in terms of financially as well as operationally under your leadership. We would also like to mention that we are privileged to have Sri T.N. Natarajan ji, Director (Commercial), who will also be there on the call today. Without further ado, I would request Dr. Panda for his opening remarks. Then we can open the floor for Q&A. Over to you, sir.
Yeah. Thank you, Mr. Ashish Kejriwal, and everybody connected to this. Let me give my remarks first, then we can start Q&A session. Good morning once again, everybody. I welcome all our investors and analysts who are joining this result concall for the financial results of SAIL for the quarter Q4 and annual FY 2025- 2026. Before we move to Q&A session, let me brief you on the results for the period, let me go one by one regarding economic scenario. Beginning with global economic scenario, the geopolitical situation in the Middle East has set the otherwise stabilizing economic scenario again bringing uncertainties and volatilities to all of us. The economies across the globe have suffered, with most seeing the projection being reduced by almost all major financial and analytical agencies.
Accordingly, the projections for global GDP have been reduced by IMF and similar agencies for calendar year 2026. Though projections for current year 2026-2027 are at slightly higher level than the previous year, they are still below 2024-2025 levels. The projections for India also remain range bound between 6.5%-6.9% by various agencies. So far as global steel industry is concerned, the landscape for the global steel industry is influenced by economic trends, trade policies and geopolitical situations as well as technological advancements. The positive movement, which was visible during the previous quarter, may again get impacted while the production in Iran have already been impacted to push out of the top 10 countries globally. WSA has, however, not published its SRO since October 2024.
Of course, the steel industry globally is impacted and specially impacted because of this Strait of Hormuz situation in terms of fuel constraints as well as in terms of raw material movement through that port. Indian steel industry, when we talk about that, Indian steel industry continues to enjoy robust demand for steel with the consumption during FY 2025-2026, which has grown by almost 8% over the same period last year. The growth in production of crude steel has, however, been at 11%. The steel industry has grown by 8%, but growth of production is 11%. That's the reason why during last year actually export numbers were pretty high. India finishes FY 2025-2026 as a net exporter, with exports marginally higher than the imports.
The exports have grown by around 36% degrowth of imports is around 32%. In terms of absolute numbers, they're almost matching 6.5 million tonnes versus 6.6 million tonnes. It's a balancing figure. When we look at our company performance of SAIL, there is growth in crude steel production. When we talk about quarter four of this 2025- 2026, crude steel production grew by 4% to stand at 4.9 million tonnes as against 4.7 million tonnes in the previous year quarter four. Sales volume has also grown by 4% to 5.3 million tonnes in this quarter four. Sales turnover has also grown by 5% in quarter four to INR 30,541 crores. That's the thing.
Profitability has also improved by 48% in PBT and 43% in PAT terms as compared to quarter four of last year. There is a debt reduction of INR 3,200 crores alone in quarter four of 2025-2026. That is about quarter four performance. When we look at annual performance of 2025-2026 for Steel Authority of India Limited, crude steel production has grown by 1% from 19.2 million tonnes in FY 2024-2025 to 19.4 million tonnes in FY 2025-2026. Saleable steel has grown by 7% from 17.9 million tonnes in FY 2024-2025 to 19.2 million tonnes in FY 2025-2026.
Company has posted highest ever sales volume, at 19.9 million tonnes, almost like 20 million tonnes. I mean, it is close to the 20 million tonnes with a growth of 11% as compared to the previous year. The production has grown by 7%, but the sales has grown by 11%. That's a very good sign, and it has resulted in huge inventory reduction and reduction in borrowings. The sales turnover is close to INR 1,10,000 crores in this year, which has grown by 8% compared to the previous year. Stock reduction is around 0.9 million tonnes, out of which 0.4 million tonnes in saleable steel category and 0.5 million tonnes in process steel category.
In totality, it is close to 1 million tonne reduction of inventory has taken place on the back of a good amount of sales quantities. That is the reason why the borrowings have also come down by around INR 8,150 crores in FY 2025/ 2026, which has given sterling advantages in terms of finance cost to us. Even the cost of borrowings have also come down from a level of 7.3% in the previous year to 6.2% this year. This has also given rise to improvement in the interest cost for all of us. With all these, PBT, profit before tax for 2025/ 2026, there is a growth of 44%. In PAT numbers, the growth is 51%.
This is highlighting operational efficiency, liquidation of inventory, cost optimization, sales volumes, et cetera. These profit numbers are purely from the basic operations and sales of this company and good efforts made by the company. I would like to say last year actually we had rail price revision arreas into the profit, but this year there was no arreas into the profit. Still, we have exhibited more than 50% increase in PAT as compared to the previous year. That shows the potential SAIL has to take it forward. Going forward, the domestic market remains steady on both demand and price fronts. Of course, it keeps on changing from month to month, on seasonal effects and the sentiments.
With the coal price remaining in range bound, coal price is remaining on the higher side range bound actually. We hope that the margins will continue to improve further. The company will continue to take actions on efficiency improvement and cost reduction front as well. Because of this depreciation of rupee with respect to USD and international steel prices are also firming up right now. We believe the steel prices will remain at this level, and the margins will remain good during 2026/ 2027. One more important thing for all of us is that after a pretty long time, many years and decades you can probably say that the balance sheet of 2025/2026 is totally clean from the qualifications. There are no qualifications in the balance sheet after a pretty long time.
We've taken care of those qualification in terms of the developments and wherever required provisioning, et cetera. Entire balance sheet is clean from the qualifications. That's a major thing happened during this year, 2025-2026, with the efforts of the finance fraternity. With these words, I hand it back to Mr. Kejriwal, Ashish Kejriwal, for opening the Q&A session.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Chaitanya Iyer from Goldman Sachs. Please go ahead.
Hi. Am I audible?
Yes, please proceed.
Hi. Thank you so much for the opportunity, sir, and congratulations on a great set of numbers. The first question is on the lines of what would be the sales volume guidance for the next two FYs, that is FY 2027 and 2028. You know, the CapEx has picked up in FY 2026. Can you give an update on the expansion at three plants and what would be the CapEx guidance for the next two FYs?
Yeah. Thank you for your questions. Actually, sales volume last year, as I said, was around 20 million tonnes. This year we're expecting 22 million tonnes. That is the kind of target, 10% in the higher side we're keeping it, and we are geared up towards that. That is number one answer to your question. Number two is CapEx. CapEx in 2025/ 2026, we ended up, I mean, target was INR 10,000. We ended up around INR 9,100, something like that. Well, guidance for 2026/ 2027 is INR 15,000 crores. Since our expansion projects are ongoing in different plants, so in 2027, 2028, the CapEx figures will be in excess of INR 20,000 crores. That is our expectation. Far as expansions are concerned, actually, we've cleared for three plants.
One is Visakhapatnam Steel Plant, wherein major packages have already been tendered out and firmed up. Another one is Bokaro, and third one is Bhilai, which we're just clearing this now.
Mr. Sir, thank you so much. The second question was on the terms of, so as you mentioned, we saw the impact of downward revision in raw material prices. Can you please let us know if there is any further scope of such downward revision in the near future? You know, for on the Bokaro Steel Plant, can you detail out the factors which were behind the sharp recovery in EBITDA quarter-on-quarter for that plant?
I will tell you. The first question first. The first question is about rail price. Actually, during 2024/2025, we had the arrears of last previous two years. That was factored in the profitability of 2024/2025, which was to the tune of around INR 1,800 crores. In 2025/2026, there was no such a rail price revision arrears. I mean, as of now, actually, we are running with the provisional price of 2024/2025 and 2025/2026. That takes some time at government level. 2024/2025 rail price will be finalized, which will have its own effect in 2026/2027 financial year. That's about rail price. Rail prices keep changing actually, depending on the imported raw prices as well as the efficiency levels. Sometimes they go up, sometimes they go down.
In 2025/2026 and going forward in 2026/2027, the provisional prices are on the lower side. In spite of having those on the lower side in 2025/2026, still we could post a profit, which is in with a growth of 50%, on the excess of 50%. Coming to Bokaro numbers. Bokaro actually in 2025/2026, they've improved because in 2024/2025 they had a lot of breakdowns and they had a hot strip mill, which is a parent mill. It was under capital repair for one month, but it got extended by two months. In 2024/2025, that problem as well as coupled with flat steel prices downward, on the downward side. Bokaro had a negative figure in 2024/2025. These were not the cases in 2025/2026. In 2025/2026, things have improved.
There are issues in SMS, Steel Melting Shop, in 2024/2025. All these things have been taken care. In 2025/2026, in H2, things have improved, and they are looking up in terms of production, in terms of sales, volumes, as well as because they're in flat products, NSR is much better. That is why there is been a lot of improvement in Bokaro Steel from the EBITDA levels, and they will still do better in 2026/2027. That is our expectation.
Got it. Thank you so much, sir.
Thank you.
I'll get back in touch. Yeah.
Thank you. We'll take the next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good morning, and thanks for the chance. Congratulations on very strong performance. First question is on the prices and cost. If you guide, if you could guide what was the realization in 4 Q and, this is April and May, what is your expectation of increase in prices or NSR, in 1 Q 2027?
In quarter four, average NSR of long products was INR 53,400 and flat was INR 51,000. When we compare this with April and May, in April, NSR of long products is INR 57,600 and NSR of flat is INR 56,700. In May, mid-month, the expected May long NSR is INR 57,800, and flat also INR 56,000. That means, as we can see, there is an increase of around INR 4,000 between quarter four and April to May in the sales price.
Sir, similarly for cost also, mainly coking coal cost.
Coking coal, when we look at actually in quarter four, the coking coal average price is INR 18,200, which has gone up in April and May. April [Non-English content] average price is INR 21,000, and May average price is INR 21,800. There is an increase of around, say, INR 3,000, INR 3,400-INR 3,500 in coking coal prices.
Okay. Sir, I mean, this is a purchase, so in the results in the coming quarter, which will be on consumption, will the same increase reflect or it will reflect over next quarter?
No, it is there actually, because the April and May prices are the procurement prices, but that will get blended with the stocks that we are holding. Depending on the stock level is around 30 days stock, actually. Stock prices are less, the impact will be little less as compared to the procurement prices in this quarter.
Okay. Okay. Sir, generally, given the Middle East issue and overall inflation, any other cost item influxes or something where we are seeing inflation in cost?
See, the increase could be there in terms of, so far as SAIL is concerned, so far as Steel Authority is concerned, we'll have some impact with respect to the fluxes, limestone, et cetera, which we are buying from Dubai. There the landed cost, the CFR cost is going to go up because it was around, say, $23, $24. Now it will be around $35. Overall, overall in saleable steel, its impact will be hardly INR 100 or INR 200. It is more of a raw material security than the price increase. We are working towards tying up with the parties to get more quantities from Middle East through diverted routes.
So far as fuel is concerned, fuel concern was there in quarter four, but we have come out of it by using PNG in certain locations and creating LPG banks in other locations. That's not going to be a major challenge for us in quarter one.
Understood. My second question is on CapEx and employee cost. One is, employee count is reducing at a very good pace. If you could guide based on the superannuation, what is the outlook for 2027-2028? Given the pay commission revision also, which is coming up, how should we look at fuel cost sorry, employee cost in FY 2027 and 2028, both years?
See, two questions to this. One is employee numbers are going down. Today, we are at around 50,000 employees. Just one sec. Do you have the numbers? Just one sec, I'll give you the numbers as well. That's the reason why the employee cost is also decreasing. As in 1st April 2026, the numbers are 49,752 as compared to 53,159 opening of this year. Reduction of around 3,400 numbers. This is giving us advantage in terms of salary wages numbers. But the other things are the normal increments, then the gratuity, et cetera, ceilings have increased, that is also adding pressure to it.
If you look at the employee remuneration in the P&L account, there is a decrease of around INR 200 crores-INR 300 crores as compared to the previous year. Because of various reasons for that. One is the number issue, the other one is leave encashment. Many other things are contributing towards that. I mean, similar numbers will be reduced also in 2026-2027 and 2027-2028. Means around INR 3,400-INR 3,500 numbers will be reduced in each of the years, next two years. There will be some influx of material, I mean, influx of people actually through induction, fresh induction at lower levels. Every year there could be increase of around, say, 300, 200 numbers because we are also expanding.
On the top of that, actually, we have taken out a VRS scheme right now, which is aiming at reducing number by 500 to 1,000. That is our target. In that process also, separation will take place and numbers will come down. So far as pay revision is concerned, that will be applicable from 1st January 2027. Guideline is yet to come from government because the committees are yet to be formed. We'll see the kind of guideline which will come from there actually, then we'll have a look at that in the quarter four of this year. We are ready to absorb those costs depending on the guidelines which we'll receive from government pay commission, through pay commission.
Okay. This INR 11,400 crores, where should we see this? flattish level for 2027?
No, it is going to go down. Actually, this year, how much is it? INR 11,589 crores, I think so, in 2025, 2026. There will be further reduction of manpower. I think this number will further come down this year. Of course, we have VRS, will have VRS, because of VRS there could be some impact. On the overall, you can see, you can think that either it will come down a little bit. In 2025- 2026, it is actually INR 11,392 crores. It has come down. I'm expecting that it will further come down in 2026, 2027, despite having VRS impact also. The overall strength will come down by 3,000 odd.
Got it. Sir, in this year's volume, what is the NSL volume in fourth quarter and full year, if you could just share?
NSL volume in totality is 1.12 million tonnes. Fourth quarter actually, it is pretty less, maybe around 0.1 million tonnes or something like that. Because we have kind of discontinued their product selling because they are on their own right now. We've started selling based on the request from RINL, so we have started selling RINL products. NSL fourth quarter is 0.48 million tonnes?
RINL is 0.48 million tonnes. Right. So that's what it is actually. Most of this sales of NSL was in nine monthly, and, only bit of quantity in January. That's all. Right now, NSL, they are selling on their own.
third party, RINL, NSL put together, fourth quarter is 500,000 tonnes?
fourth quarter numbers are only 48,000- 50,000 tonnes. That's all.
Okay.
Because RINL was started in the month of February after doing the agreement, et cetera. Now it is picking up.
Okay. Sir, for 2027 also it will be at a very low level.
2026-2027 ? You're talking about 2026-20 27?
Yes.
In 2026- 2027, RINL products will be sold to the tune of around 0.6 million tonnes or 0.7 million tonnes. It will increase for RINL.
Okay. Okay. All right. sir, if you adjust this, our volumes are close to 19 million tonnes. This 19 million tonnes, which is our own volumes, that we are expecting to go to 22 million tonnes? Is that the right way to understand?
Yeah. Last year we sold around 19.9 million tonnes, which is around 20 million tonnes. If you take out 1 million tonne, it is 19 million tonnes for us. The 19 million tonnes, we're targeting to go to 22 million tonnes in this year, in 2026- 2027.
Okay. Just one last question, if I can. The CapEx is almost doubling this year. Are we in a position to disburse so much from say INR 8,000 crores- INR 15,000 crores in FY 2027?
Yeah. Last year, our CapEx was around INR 9,100 crores, and this year we are expecting INR 15,000 crores and we'll be disbursing. This will partly for the debottlenecking projects, partly for the AMR projects, as well as partly for the expansion projects of IISCO Steel Plant. We are ready for that. That is what is required.
All right, sir. Thank you so much and all the best.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to only two per participant. Should you have a follow-up question, please rejoin the queue. We'll take the next question from the line of Prateek Singh from IIFL Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. The first question, just a clarification. In 4Q, when you said RINL, it's 0.48 million tonnes or 48,000 tonnes?
48. 48,000 tonnes.
Okay. The 0.6 million- 0.7 million tonnes guidance for RINL in FY 2027, that is on top of 22 million tonnes that we are seeing right now. Is that correct?
No, it is within that. It is within that.
22 million tonnes includes 0.6 million- 0.7 million tonnes?
Correct.
Okay. Sir, just to get a sense as to what's our crude steel capacity right now? I mean, we used to think that it's around 20 million-21 million tonnes, but now we are talking about selling more than that. As we speak right now, what's our crude steel capacity, and how do we see it going in 2027 and 2028?
Yeah, actually, last year we produced around 19.43 million tonness of crude steel. Our capacity is 21 million tonnes, and we are targeting to produce 22 million tonnes. In excess of, I think it is 22.5 million tonnes so far as our target is concerned for 2026/2027.
This is without any capacity addition, just from debottlenecking we think we'll be able to.
Yeah, this is through debottlenecking and making 100% capacity from the facilities that we have.
When will the new capacity be coming online, sir, for any further growth?
Yeah, new capacity will start coming after three years from now. Means from 2030-2 031.
We can assume that the 2027 volume number will largely remain same in 2028- 2029 as well.
I mean, actually, what is happening is, through debottling, not exactly debottling, through operational efficiencies, we are trying to stretch beyond the capacities. When we are looking at 22.5 million tonnes this year, this can again increase to 23 million tonnes going forward. We have our own efficiency levels through which we have more flexibility than efficiency levels through which we can stretch beyond our capacities. That happens with all the facilities which are stabilized.
would you adopt-
Mr. Singh, I would request you to kindly rejoin the queue for follow-ups, please.
Yes, please.
Okay. Thanks.
Thank you. Request to all the participants to kindly limit their questions to only two. Should you have a follow-up question, please rejoin the queue. The next question is from Pinakin Parekh from HSBC. Please go ahead.
Yeah, thank you very much. My first question is, if you can give us the likely medium-term CapEx outlook. You said this year is INR 15,000 crore. It will step up further. Over the next three to four years, what is the CapEx that SAIL plans to spend, and how will this ramp up?
Yeah, this CapEx for 2026-2027 is INR 15,000 crore, which is going to go up as we progress in our expansion. As I told clearly, our expansion in IISCO is in the advanced stages. They have been formed up, and so the groundwork is going to start over there. As the groundwork starts over there, the expenditures will be done, and the expenditures will start increasing from 2027- 2028 onwards. A bit of that will come in quarter four of 2026-2027. Followed by that, the Bokaro and then the Bhilai is going to join. There the expenditures, majority of the expenditures will come maybe from 2028- 2029. This is what I'm guessing. That means actually in 2026- 2027 we'll spend around INR 15,000 crores. In 2027- 2028 it can be around INR 18,000 crores-INR 19,000 crores.
After that, this will go towards every year almost INR 20,000 crores-INR 25,000 crores when expansion in these three plants will have its own effect. We will manage through our fund management activities.
Got it, sir. My second question is that the employee cost guidance that you have given, this would not include any provisions you will be making in Q4 for the wage revision, right? Historically, wage revision has been around 15% odd or so. That will be over and above, whatever guidance you're giving.
As I told clearly, actually government notification, etc., will come regarding pay revision, and after that we'll make a provision in quarter four of next year, 2026-2027. Those figures will be known only when we get the guidelines, and that will be over and above the figure that we are talking about now.
Got it, sir. Thank you very much.
Thank you.
Thank you. The next question is from the line of Darshan Mehta from Dolat Capital. Please go ahead.
Hello. Yes, thanks for giving the opportunity. Sir, my first question was, if I see the PPT, I can see that our coke rate has basically improved by almost 20 kg in last two years. I understand that part of it could be due to high PCI, but is there any other thing which I am missing? Like have we improved on grades or something, or can you explain the reason?
Yeah, the reason is actually reduction in coke rate is because of increase in PCI as well as by increasing oxygen enrichment in the blast furnaces. These are the two devices we are using, whereby we are trying to reduce the coke rate. Even if the coke rate has come down by 20 kg, et cetera, over the years, we are still not satisfied with that. We need to reduce further by 20 kg in 2026-2027.
In 2026-2027, you are saying I Your goal is to reduce this by more 20 kg, you are saying?
Yes. Yes, yes.
Okay, okay. In terms of, just continuing on that, even in terms of BF productivity, I think it has improved considerably over last two years. What has been the reason for the same?
The reason is because of the operational efficiency in the furnaces, as well as by closing down the inefficient furnaces and ramping up production from the bigger furnaces. These are the two reasons.
Okay. You're saying, basically the smaller furnaces, you are producing more from the bigger furnaces. Is that what you are saying?
We have closed down. We have closed down the smaller furnaces and started ramping up from the bigger furnaces. These are the reasons.
Okay. Okay, sir.
Mr. Mehta, I'm sorry to interrupt you, sir.
Sorry.
Please rejoin the queue for follow-up.
Sure, sure. Thank you.
Thank you. We'll take the next question from the line of Raashi from Citigroup. Please go ahead.
Thank you. Just to understand a little bit on the volume side, what is your current capacity utilization?
Volume side, as I told you actually, our capacity is 21 million tonnes of crude steel, but our target is 22.5 million tonnes of crude steel for 2026-2027.
To understand this correctly, in the 22 million tonnes, you have 0.6 millions tonnes from RINL.
Rashmi, I'm sorry to interrupt you. Your voice is not clear. I would request you to kindly use your handset.
Yeah, in 22.5 million tonnes, that includes 0.6 million tonnes of RINL as well.
On a like-to-like basis, purely volumes from sale, if I just remove RINL and NMDC volume this year, you are at about 18.8 million tonnes of sales, and you're essentially saying that pure sale volumes will go from 18.8 million tonnes to upwards of 21 million tonnes in this year. Is that?
Yeah. Rather, I'm saying that it will go from 18.8 million tonnes or close to 19 million tonnes. From 19 million tonnes to 22 million tonnes. That is our target. Excluding NMDC, NSL and RINL.
22 million tonnes does not include RINL?
No, 22 million tonnes does include RINL.
Okay.
22 million tonnes includes RINL.
Understood. Got it. Okay. You gave the NSR for longs and flats separately. What was the blended NSR for the quarter?
Blended NSR for the quarter four is INR 52,000 per tonne. In April it is around INR 57,000 per tonne. April and May.
April and May it's INR 47,000 Okay. Just one last question for me. On the CapEx you mentioned, IISCO, Bokaro and Bhilai. What is the CapEx for each of these projects? Like if you had to break it down, IISCO, Bokaro and Bhilai.
CapEx of IISCO is around INR 36,000 crores, maybe INR 35,000 crores. Bhilai, which is yet to be announced, is around INR 30,000 crores. Bokaro is somewhere around INR 18,000 crores, something like that.
What will be the corresponding capacities?
Corresponding capacity in IISCO is around 4.5 million tonnes. At Bhilai it will be around 3.5 million tonnes. Bokaro also will be around 3 million tonnes.
Understood. Thank you.
Thank you.
Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good morning, sir. Congratulations on a good set of numbers. Just on, I think in the EBITDA bridge, in the presentation, I think there is some raw material saving also, you know, between the third and fourth quarter. Could you just, you know, quantify how, you know, I guess it's primarily from coking coal cost. Could you just, you know, quantify what was the coking coal consumption cost in Q3 and Q4?
Between Q3 and Q4, raw material, you mean to say what? Input price, it is negative actually. In Q4, the prices of coal was more as compared to quarter three, and it had an impact of INR 272 crores. So far as raw material usage is concerned, because of better usage in quarter four, we've gained around INR 429 crores. It has offset the impact of input price increase.
Okay. This is because of, higher PCI and more oxygen.
More oxygen, higher PCI and better usage of iron ore, et cetera. Quarter four being a dry month and production remaining pretty high, all equipments are good in quarter four after capital repair. Performance has been better. Operational efficiency you can say because of that reason.
Sure, sir. Also, you know, in terms of our iron ore mine, so, you know, is there any risk to our mines expiring in 2030 or, you know, we need, we will not face that problem of the different, lease periods for our mines?
We don't have major problems lease to our mines. The productions are going to go up because last year we produced 38 million tonnes, while this year we have kept a target of 56 million tonnes, out of which some quantity will be sold. Going forward, we are trying to ramp up to 80 million tonnes. Major issues are not there. There are stray cases, stray issues, those we are taking up. Far as renewals are concerned, major renewals, no issues, except the Chiria thing, which everybody knows about it. In Chiria mines, we are looking at getting that mining lease. It's not a renewal actually, it's a mine, new mining lease. That would enhance our capacity.
Notwithstanding that, today whatever mining capacity we have, we are going to ramp up, and our mines are quite good enough and there are no renewal issues in that. No major renewal issues in those.
Sure, sir. Yeah. Thank you.
Thank you.
Thank you. We'll take the next question from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, I have three questions. Sir, first question is there a way in which a government can allocate a iron ore lease to any company? This is given post MMDR auctions is a way. Is it possible, say, if there is some backward district, government can allocate a iron ore mine to a company?
Government can allocate a mine through auction process to any private company through NPP process. There is a set procedure for that. They can do that. Far as allocation to public sector is concerned, it forms a different way. The methodology is different, everything is different.
Right. sir, I didn't understand. You said for private sector allocation is possible?
For private sector allocation is possible through auction route.
Through auction route only. Okay, fine.
Yeah, yeah.
Okay.
Only through auction.
That's great. Yeah. Sir, my second question is, sir, you indicated on rail price revision with the benefit likely to come in FY 2027. If you had to look at, say, spot prices or look at the average pricing, is there a number that you would like to give out, how much could be the benefit because of rail price revision in FY 2027?
Say that, actually. What I said is that in 2024- 2025, we had rail price revision area of INR 1,800 crores, which had gone into the P&L account of 2024- 2025. In 2025- 2026, there is no rail price revision area. In spite of not having INR 1,800 crores advantage in 2025- 2026, still we posted 50% additional profit as compared to 2024- 2025. Far as 2026- 2027 is concerned, we can't say anything about whether we'll get an advantage from rail price revision or we'll get a negative on rail price revision. Things are not very clear at this point of time.
Perfect. Sir, just last question, you indicated flats and longs prices at INR 51,000 and INR 53,400 for Q4. Just wanted to understand how much was the price increases that were taken in the month of March?
The month of March, in the month of March, long price prices were INR 55,500, and flat was INR 52,778.
Sir, sir.
Yeah.
Sir, I'm asking, the price increase which happened from first of March to, say, 31st of March, because there might be the benefit which will come into, Q1.
it is around INR 1,400 per tonne.
Sir, that is for longs and for flats, sir?
For flat it is INR 1,400.
For longs?
INR 1,500 .
Okay, fine. Thank you so much for the answer, sir. Thank you.
Thank you. The next question is from the line of Parthiv Jhonsa from Anand Rathi. Please go ahead.
Hi. Good morning, sir. Thank you for the opportunity. My first question is pertaining to your debt levels. Considering that, you know, you are in one of the best state of balance sheet after many, many years, and, you know, you just indicated that, you know, next year in 2027 your CapEx was INR 15,000 and eventually going to INR 20,000 crores-INR 22,000 crores over next couple of years. Considering, you know, your cash flows are at similar levels, would it mean that you'll be funding a lot of these CapEx, you know, apart from internal accrual, majority of the CapEx would come in through debt basically over next couple of years?
Let me tell you that actually. We're trying to ramp up our steel production as well as the sales. On the face of a good market, we will try to improve our profitability. We'll have focus on cost reduction as well. Going forward in 2026- 2027, the CapEx guidance is INR 15,000 crores. Suppose it happens, INR 14,000 or INR 15,000 crores. We will see how to meet it from the internal accruals, because that is our personal target. That means, in other words, actually, we'll try to improve our profitability to a level in which the cash flows will be better. Means the profitability plus depreciation will give us a cash flow, which probably will be able to take care of this year's CapEx to a large extent.
Going forward, the same level of profitability we are trying to maintain, and beyond that, the incremental will come from the long-term loans borrowings.
Okay. You're considering the cash flows, considering the cash flows sustained at the current level with the same kind of steel prices, right? By any chance the steel prices go down, maybe in next, you know, couple of quarters or couple of years down the line, You might have to borrow higher quantum, right? At the end of the day.
That's what I'm telling you, actually. We are trying to increase our profitability on an average over the years, because during the year, in different quarters, steel prices travel differently. It is not only a journey of steel price, it is a journey of steel price as well as coal price. On the top of that, our own operational efficiencies. We'll be focusing more on the operational efficiency as well as on the special steel component, so that we will ramp up our kind of profitability as well. This profitability on an average over the year, over various quarters in the year, should remain at a high level by which we can fund our CapEx through internal accruals. This is our expectation in this year, and we are working towards that.
Okay. My second question is pertaining to your guidance what you have basically given at 22.5 million tonne. Theoretically speaking, you know, you are at a 21.5 million tonne kind of, you know, installed capacity. Even if, you know, you take a, you know, 2 million tonnes of debottlenecking, you know, the capacity utilization will be over 90-95%, which is practically unheard of in the industry. You know, how do you know, basically justify that, you know, at 21.5 million tonnes or maybe 22.5 million tonnes, you're going to do over a 100% kind of a utilization when theoretically it's not possible?
See, actually in steelmaking and ironmaking, actually, theoretical calculations do not hold good. This is what we have experienced over a period of time. By giving better enablers and raw materials, the BF productivity, blast furnace productivity levels, they go much beyond their DPR capacities. If DPR said it is 2.3 million tonnes, they can easily go to 3.3 million tonnes productivity. This is what is happening with us, with JSW, with Tata Steel and everybody. There is per se no theoretical capacity for a blast furnace or steel melt shop. It is only enablers and the raw material and the practices which we improve, by which we can easily go beyond 100%. We have already seen in the past, and more of such things will be exhibited going forward in the future.
Okay, sir. Any threshold limit for the net debt to equity or leverage, if you can give?
Our net debt is to equity right now is around point.
0.37x.
Right now it is 0.37x. As you said, in this year we're trying to improve our profitability by various actions and debt level should not increase in this year. This is what we are looking at. If that is so, then 0.37x will further come down in 2026-2027, if that happens.
That it will give a good room for huge CapEx going forward.
Oh, that's quite helpful, sir. Thank you so much and best of luck, sir.
Thank you.
Yeah.
Thank you. The next question is from the line of Rajesh Majumdar from 360 ONE. Please go ahead.
Yeah, good morning, sir. Thanks for the opportunity. Sir, my first question was on the sharp reduction in debt in this quarter. It has been achieved on account of some liquidation of inventories. Looking at the sharp rise in steel prices and the forthcoming monsoon season, do we anticipate that there will be some inventory buildup now which will lead to, again, working capital rising a little bit in the coming months?
Yeah. What we're looking at actually, we are personally looking at no increase in inventory during quarter 1, but that is a wish list. It again depends on the market conditions and geopolitical situations. We are looking at zero zero in quarter one. I mean, let's look at that. Let's see how it works out. Quarter one, after quarter one, quarter two becomes a little sluggish, and again it will start picking up from quarter three onwards. Quarter three and quarter four will have good amount of inventory reduction. Quarter two will be quite challenging as compared to quarter one.
We are making our strategies towards that, to see how less increase of inventory can take place during quarter one and mostly in quarter two, so that all of that can be taken care of in quarter three and quarter four, and we will attempt at further reduction in inventory.
Great, sir. Sir, my second question is on the stainless steel setup we have. They are still bleeding and we don't have any plans of expansion. Do we have any plans on Salem? What do you want to do with this asset?
Yeah. Far as Salem is concerned, they are bleeding, as you're correct, but We have got a plan to reduce their bleeding and improve the EBITDA levels over there. There the main concern is the operational efficiency in the CR mill. In CR mill, where the yield right now is only 84%, 83%, we are trying to increase it to 90%. We have taken a couple of other actions like, replacing LPG with PNG, which has given quite good benefit. We are trying to take, replace costlier power with cheaper sources also. That is number three. Thereby the cost of production will go down. Number four is we are trying to ramp up the production of the mills because the mills have the spare capacities.
CR mill and HR mill, they have got the spare capacity as compared to SMS. We'll be feeding stainless steel slabs from imported sources to increase their production. The management guidance is to increase the production from Salem Steel Plant, whereby the losses will come down and more availability of stainless steel will be there in the market. Once that happens, then we'll have a look at further expansion over there if it is feasible.
BISL?
BISL, right now it is in that list of disinvestment. We are looking at, getting a comfort from the government. After that, we'll have some plan for specialty steel.
Okay. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference over back to Mr. Ashish Kejriwal for his closing comments. Thank you and over to you.
Thank you, Michelle. Thank you everyone. Sir, quickly last question from me. Two things. Because the kind of price increase which we have seen in till April, and you mentioned that, you know, May was more or less, I can say rollover from April. By looking at the current prices, do you think that there is a possibility of some kind of demand slowdown or buyers are resisting the price hikes as well as, the way our government CapEx is, government CapEx has been there in fourth quarter. Do you think that there could be a possibility of some slowdown in that, especially in the environment on the back of this Middle East crisis? That's one.
Secondly, on in terms of cost, you have mentioned about the cost increase of coking coal in first quarter. Overall cost guidance, if you can help us, you know, what kind of cost increase you are witnessing in first quarter versus fourth quarter, that will be helpful. Thank you.
Let me give my explanations for the first one is demand. Generally demand remains muted in quarter one, quarter two, as all of us have seen, because on the back of more sales in quarter four. There are events of destocking in quarter one, which is taking place, and this time also it is there. Price levels are almost the same level because internationally the prices are going up. Dollar versus rupee also it is rupee is depreciating, so landed cost is remaining pretty on the higher side. So far as flat products are concerned, we have a safeguard duty in place also. That is why landed cost of imported goods is less. That's the reason why imports are not taking place in that great number. But demand is little muted.
It remains in those ranges in Q1 and Q2, but after that again it starts picking up. That is about on the demand front. On the cost front, as we have told, that the imported coal rates have increased. In April around say how much, average of Q4 is somewhere around INR 19,500, and right now it is INR 21,500. You can say around INR 2,000 increase in Q1 as compared to Q4. When it is INR 2,000 increase, that means its impact on the cost of production will be somewhere around INR 1,400-INR 1,500 if you look at coal to hot metal ratio and they blend with indigenous coal, et cetera, put together.
You can see, say that the cost impact will be around INR 1,400- INR 1, 500 per tonne. That will be the impact in quarter one from there. The NSR, the sales price levels are supporting this. On the top of that, we'll have to increase our sales volumes so that inventory reduction will be there and it will give us working capital comfort.
Great, sir. Thank you so much. I would request you for a closing remark then.
Yeah. Thank you very much. Thank you for your patient hearing as well as Q&A sessions. The domestic market have remained fairly stable despite challenging scenario outside. As the company continues to take actions on efficiency improvement and cost reduction front, we are hopeful of delivering even better results and value addition for all our stakeholders going forward. Also, the company remains committed towards sustainable performance, including emphasis on decarbonization, improving capacity utilization, value addition, and achieving cost competitiveness in this year and in future. I thank all our investors for their reposing faith in us, and I'm hopeful that the same shall continue in future as well. Thank you very much.
Thank you, sir. Thank you, members of the management. On behalf of Nuvama Institutional Equities, that concludes this conference. We thank you for joining us, and you may disconnect your lines now. Thank you.