Ladies and gentlemen, good day and welcome to Q2 FY 2027 earnings conference call of Steel Authority of India Limited, hosted by Nuvama Wealth Management. As a reminder, all participants' line 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Wealth Management. Thank you and over to you.
Thank you, Iqra. Good morning, everyone. On behalf of Nuvama Wealth Management, we again welcome you for Q2 FY 2027 conference call of Steel Authority of India. We are privileged to have with us Dr. Ashok Panda, our Chairman and Managing Director. We also have Director Commercial with us, along with his team. I would request Mr. Panda for his opening remark, and after that we can open the floor for Q&A. Over to you, sir.
Thank you very much, Mr. Ashish Kejriwal. Very good morning, everybody. I welcome all our investors and analysts who are joining this results concall for the financial results of SAIL for the quarter Q2 and H1 FY 2027. Before we move to a Q&A session, let me briefly run through the presentation on the results. Before that, let's have a look at the economic scenario. Starting with the economic scenario which had been prevalent during the period of the results, the resilience shown by the global economy has been much higher than the expectations, despite effects of Middle East situation and trade tensions.
However, as we know, there are pressures globally regarding increase in the Fed rate and then repo rate in our country. That is again because of the inflationary pressures all over. The investment drive is being run by AI technology areas, and that is going to be the future. Projections have accordingly improved for calendar year 2026. The overall projections for calendar year 2027 are better than that of calendar year 2026, driven by growth in emerging and developing economies, as advanced economies are expected to shrink.
For Indian economy, the story has been brighter. The GDP estimates for Q1 FY 2027 for India were significantly higher than the expected numbers. Accordingly, the projections for India have been revised upwards by almost all major agencies. The projections are in excess of 7% by the agencies like IMF, World Bank, RBI, et c. Coming to global and Indian steel scenario, the growth factors for steel are closely linked to the economic performance. In fact, it is observed that the GDP growth rate bears direct correlation to the steel consumption.
Accordingly, as an expected line, this short-range outlook, SRO, published by WSA during October 2026, has projected a stable demand for steel in current year 2026, followed by an increase of almost 1.7% in calendar year 2027. Production and consumption continue to decline consistently in China. The current year up to August has already seen the production dip by around 3% in China over CPLY. Despite the above, China continues to dominate the world production with a share of more than 53%. SRO projects that the demand to shrink by 2% and 1% during calendar year 2026 and calendar 2027, respectively in China.
Excluding China, the world is expected to see the steel demand grow by 1.5% and 4% in calendar year 2026 and calendar year 2027, respectively. Indian steel industry outsizes the global counterparts in this area as well. Production in India during the current year up to August has shown a growth of 6% over CPLY as per WSA data. However, JPC data FY 2026-2027, the production during H1 has grown by 3% over CPLY, while the consumption has got a robust growth of 8% during the same period. As per SRO, the growth in consumption is expected to be 8% for calendar year 2026 and calendar year 2027 as well, respectively.
Meanwhile, India continues to be a net importer of steel during H1 FY 2027, and net import of around 0.6 million tons. Coming to our performance, company performance for Q2 and H1 FY 2026-2027. The highlights are as follows for Q2. Crude steel production in Q2 is 4.85 million tons with a growth of 2% over Q1 and 4% over Q2 last year. Sales volume of 5.2 million tons improved by 5% and 24% over CPLY and previous quarter, respectively. On the back of higher volumes, despite fall in realizations, sales turnover at INR 31,766 crore in Q2 by SAIL increased by 20% over CPLY and 22% over previous quarter.
As the prices of input, especially the imported coking coal increased during Q2, the EBITDA margins suffered. However, boosted by volume, as I have described already, EBITDA improved to stand at INR 4,561 crore during Q2 of this year. Coming to PBT and PAT. PBT and PAT stood at INR 2,356 crore and INR 1,774 crore in Q2, respectively, as against INR 553 crore and INR 427 crore during CPLY, and INR 2,159 crore and INR 1,636 crore during quarter one of this year.
With effective treasury management, the borrowings reduced further to INR 20,583 crore as against INR 21,729 crore as in June 30th, 2026, with a reduction of INR 1,146 crore in quarter two and with a reduction of INR 1,080 crore in H1. As a result of this, the debt-to-equity ratio further improved to stand at 0.34x on actual basis at the end of Q2 FY 2026-2027. Coming to the performance of the company during H1 of FY 2026-2027, the highlights are as follows. Crude steel production is at 9.61 million tons, while sales volume stood at 9.33 million tons. Better realizations helped the sales turnover grow by 11% over CPLY to stand at INR 57,776 crore.
In the production also, there's a growth of around 2% over CPLY. EBITDA, PBT and PAT figures for H1 stand at INR 8,917 crore, INR 4,515 crore, and INR 3,410 crore respectively, as against INR 5,754 crore, INR 1,443 crore and INR 1,112 crore during CPLY. Registering a hefty growth, robust growth of 55% in EBITDA, 213% in PBT, and 207% in PAT, respectively. With effective treasury management, the borrowings reduced to INR 20,583 crore as against INR 21,666 crore as in March 31st, with a reduction of INR 1,080 crore.
The finance cost has also come down, and cost of borrowings is also at 6.34%, which is better than last year as well. With the repo rate going up, probably it is going to increase in the next quarters. Going forward, quarter three and quarter four are traditionally the strongest quarters for steel industry and for the steel companies as well. With realizations already showing improving signs and actions being taken on efficiency improvement and cost reduction front, we are hopeful of even more robust performance during H2 2026-2027.
During H1 2026-2027, other good things which happened for this company are, as I told you, increase in sales, reduction in inventory, increase in high-end production and dispatches, and more importantly, almost 167% increase in sale of iron ore fines by Steel Authority of India Limited. We have sold around 2.5 million tons of iron ore fines in H1 as compared to 0.9 million tons last year, and our target is around 7 million-8 million tons for this year. We are going towards that, even if there are challenges going forward. These are the points which I wanted to make before we start Q&A. With these words, I hand it back to Mr. Kejriwal for opening the Q&A session, please.
Thank you very much. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Lahoti from Aditya Birla Institutional Equities. Please go ahead.
Thanks for the chance. It is good to see debt coming down in H1. Sir, my question is on the expansion plan and the FPO that we are planning to do. Given that the CapEx that we are planning would be spent over the next four to five years, do we really need to load equity capital upfront? Our worry is that it would put pressure on return ratios, which are already in single digit percentage, and then it seems to have created overhang for the stock in the near term with the news of FPO that has come out. Can we not wait for a better time, perhaps two years from now, when we reach peak CapEx cycle to do this capital raise?
Yeah. Thank you very much, Mr. Amit. Good suggestion. Point noted actually, and we are also on that line. That even if we have plan for FPO, but the timing will decide when to go for that. Right now it is a growth phase, and we are trying in various ways to improve profitability. So that is where the investor confidence is going to rejuvenate, and we will see the appropriate time for that FPO.
Coming to expansion plan, as I have already told, that actually we are on course for an expansion from 20 million tons- 35 million tons spread over four units. That is IISCO, Bokaro Steel Plant, Bhilai, and probably Rourkela, where we are looking at. So we are actively pursuing those things, and these are at different stages of tendering and in-principle approval stages.
Sure. My second question is on sales volume guidance for FY 2027. Do we still maintain 22 million tons?
Maybe around 21 million tons, because in H1 we achieved nine point—
9.33 million tons.
9.33 million tons, and generally quarter three and quarter four become very good months in terms of production as well as sales. So we expect that it will be somewhere around 21 million tons.
And in the 21 million tons, does this include RINL and NMDC volumes as well?
NMDC we are not selling right now. As you can see in this year, we are only selling to some extent RINL depending on availability from their side. Yes, some quantities will be there from RINL as well.
So that is included in 21 million tons?
That is included.
All right. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Parthiv Jhonsa from Anand Rathi Share and Stock Brokers. Please go ahead.
Good morning, sir. Thank you so much for the opportunity. My first question is pertaining to the raw material. I believe in the last call you had indicated that the coal cost is expected to go down by INR 1,000 in August and further INR 1,000 in the month of September. Just wanted to know how the quarter went by and what is your guidance on coal cost going forward for quarter three, and if possible for FY 2027 also.
Yes, good question. If you look at the coal prices, quarter one imported coal price was INR 21,300 per ton. Last year, N1 was how much? Just one minute. In quarter to, actually it has increased to INR 22,930 per ton, which is INR 1,700 per ton because of the geopolitical situations and other demand-supply situations and the problem which happened in China. Because of that, there is a spot in the price of imported coal index. Imported coal index, Platts August index had gone up to $290 per ton, which has now stabilized at $266- $267 per ton.
So it kind of stabilized right now at the current levels. So that is the situation, that the coal price is remaining on the higher side, but stable right now. Maybe going forward, if situation improves in China, maybe it will come down. I think in quarter three and quarter four, there could be a bit of reduction. Bit of reduction, but we cannot exactly say that whether the reduction will be sharp or not because the peak rate of consumption rate of coal is going to come in October and November.
As I said, in quarter two, imported coal rate average consumption rate was INR 22,930, means INR 23,000. In October, it is INR 24,100, and November also it is going to remain at the same level. After that, the consumption rate will little stabilize. Maybe in Q3, the imported coal rate could be hovering around INR 23,500 something. In Q4, it could be back to around INR 22,000. So it will be hovering around INR 22,000, INR 23,000 bracket. This is what I guess at this point of time for imported coal rate.
Okay. Thank you for the answer, sir. Just continuing to that question, I believe if you see the techno-economic parameters on one of the slide, I think slide number 17, the coke rate has actually gone up. If the overall function gives from the pricing or also the overall productivity or the coke rate is not in your favor, which also might cause some issue going forward.
Yeah. All that I can say actually, this is a typical situation during rainy season which happens with the plants. Because the plants suffer in terms of wet coal, wet raw material, and productivity issues with the blast furnaces. So that is over by September, and from October onwards, all our blast furnaces are doing good. So the techno-economic parameters in the month of October have shown good improvement over Q2. So in Q3 and Q4, generally, we improve our techno-economic parameters, and we are working towards that to improve it further so that overall for the year, there should be better improvement in techno-economic parameters. We are seized of the matter and we are working towards that in quarter three and quarter four.
Sure. Thank you for the answer, sir. My second question is on the inventory. Can you let us know what is your inventory on books? And out of that 21 million tons, what will be the share of inventory liquidation, what are you expecting in the sales?
See, as I tell you, our effort has been continuously since last year on inventory reduction and increasing sales and inventory reduction in borrowings. By September 30th, total steel inventory stands at 1.59 million tons, which includes 0.86 million tons of saleable steel and 0.73 million tons of in-process steel. Put together, total steel inventory is 1.59 million tons, which was 1.8 million tons as in March 31st, 2026. And it was 2.15 million tons as in June 30th, 2026. As compared to March 31st, there is a reduction of around 0.2 million tons in the steel inventory. And as compared to quarter one, there is a reduction of around 0.55 million tons.
And as in today, we are standing at 15 days of inventory, which was around 17.5 days of inventory as in March 31st, 2026. Generally, we aim towards having around two weeks of inventory. That is the kind of thing, and we'll try to maintain this kind of inventory. And if it is possible, we can reduce a little bit. Efforts are still on to reduce the inventory. And because in quarter three, quarter four, the production is going to go up. Increasing sales is very important for us, and we are focusing on those aspects.
Is it fair to assume, because you said two weeks of inventory and assuming your production will go up slight, so this 1.59 million tons, considering of saleable and in-process steel, can this go down to say about 1.2 million tons, 1.3 million tons or even say 1 million tons level? Is it fair to assume?
Something like that. We are looking at around 1.2 million tons, 1.3 million tons. It is going to be difficult because we have 35 stockyards in so many plant locations. They have to maintain some kind of stock with them. Nonetheless, our target is actually for 1.2 million tons, 1.3 million tons by the year end.
Thank you so much. Thank you, sir, and best of luck. I will just join back in the queue.
Sir, thank you.
Thank you. The next question is from the line of Pinakin Parekh from HSBC. Please go ahead.
Yeah. Thank you very much, sir. My first question is, can you give us more color on the CapEx ramp-up? While we have been talking about a CapEx increase, we have not seen that flow through to numbers. When do we see big projects actually seeing outflow of cash?
Yeah. CapEx ramp-up is going to take place from this year itself. This year, our guidance is for INR 15,000 crore. Next year's guidance is in excess of INR 20,000 crore. Our projects in IISCO Steel Plant are the ones where the cash flows are going to increase immediately. That means next year, the majority of the numbers will be from IISCO Steel Plant, apart from normal CapEx from other steel plants. From the next year onwards, next to next year onwards, it will be Bokaro, followed by Bhilai Steel Plant. Next three, four years, the CapEx is going to go up.
This year, as I told you, guidance is for INR 15,000 crore and H1 figure is INR 5,500 crore, which is almost at the same level as that of the target. Q3 and Q4 put together, the CapEx could be somewhere around INR 9,000-INR 10,000 crore. Next year it will be in excess of INR 20,000, and next to next year it will be INR 25,000, like that actually. In four years, we have to spend around INR 120,000 crore on CapEx.
Just to clarify, you said in four years you have to spend INR 120,000 crore. This is between FY 2027- 2030 or FY 2028- 2031?
FY 2026-2027 to 2030-2031.
Okay. So INR 120,000 crore, which means that after. So you could see the annual CapEx eventually go above INR 25,000 crore in the last two years. It could be well above INR 30,000-INR 35,000 crore?
Yes, it is correct.
Okay, got it. My second question is, what is the price increases you are seeing? Because what we understand is there was spot price hikes in August, September, then there has been some pullback in October. So where do prices across flats and longs stand currently versus the second quarter average for the company?
Yeah, second quarter average for the company long is INR 54,400 and flat is INR 57,000, average INR 55,500. That is the situation in quarter two. So far as October is concerned, in the month of October, the long NSR is INR 58,700, flat is INR 61,700. It means around INR 4,000 increase over Q2. The demand is robust right now. The price levels, I believe, are going to continue. Maybe there could be some upward as well as movement because of the demand picking up going forward. Of course, the coal prices remaining very high.
Got it. Sir, lastly, any guidance on employee wage cost provisions that you will start building from the January-March quarter? Because that is when it will start becoming due.
We are planning for that. We have not yet calculated anything about it. We have started the thought process on this. Let us see.
Got it. Thank you very much.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, you indicated 2.5 million tons of iron ore sales in first half. Possible for you to quantify how much was it in Q2 and what was the contribution at EBITDA level or the pricing at which we sold it?
All I can say actually is that prices keep on varying. It is a dynamic market situation. Having sold around 2.5 million tons, the profit out of this is INR 388 crore, and the profit out of sales last year, CPLY was INR 124 crore. There is incremental profit INR 265 crore in this H1 compared to last year H1. Your next question was how much was in Q2. Q1 figure do we have. H1 figure is 2.46 million tons. Q1 figure, I just need to find out actually. It could be somewhere around 1 million ton, 1 million tons or 1.1 million tons, rough guess from my side. In quarter one also—
Right.
—we had a good sales. Almost kind of 1.1 million tons or 1.2 million tons would be quarter one. This is my guesswork. Because in this year, we have been focusing on it and quarter three, quarter four, we are planning to have major jump in sales. We have issues with respect to that, anyway, we are trying to tackle those issues.
Right. Sir, what is the target number for this year on iron ore sales, and sir, what are the issues that we are facing right now? Is it evacuation or approvals?
The target is basically, MoU target is 7 million tons.
Yes Sir.
MoU target is 7 million tons. Our internal target was 10 million tons, but I believe we will be able to achieve either 7 million tons or 8 million tons the way it is going on. There are issues, not in Odisha group of mines, issues in Jharkhand group of mines because of on the price front as well as approval fronts. Permit fronts, not approval exactly, permit fronts.
We are planning to sell from Chhattisgarh group of mines where we have already started from the old mines that is Dalli-Rajhara, and we are planning to see whether we can sell something from Rowghat mines. Major chunk is going to come from the new mines, which is Rowghat. Because it is a new operating mine, there are ground-level challenges, but we are trying to tackle those.
All right. Sir, just last question. In the notes to accounts you have indicated we are looking to also utilize low-grade iron ore and put on certain plants to process it. Sir, is it possible to process this low-grade ore if it is 48%, 50% Fe? Do we have the technology for that? If we have the technology for it, how much will be the costing be at versus the current costing for normal open cast iron ore mining?
Low-grade iron ore, which are available in all the mines. Let me take you mines wise. In Chhattisgarh group of mines, we have low-grade iron ore which is getting beneficiated there itself. That is called silica reduction plant and SBP beneficiation plant. They have been doing it and will increase that quantity. Coming to Odisha group of mines and Jharkhand group of mines, we have low-grade iron ore fines in terms of SGF dump as well as tailings. Much of this we are trying to sell actually. Right now we have other issues like permit-related issues and pricing-related issues.
We are trying to have a breakthrough in that, after which we will be selling. Even from Odisha group of mines, we are selling some tailings over there. It is a hybrid mode. In certain cases, we are beneficiating and consuming. In certain other cases, we are selling it outright. Going forward, in future, we will have beneficiation plants which will be coming up at Gua mines in future, so that much of this sub-grade fines can be beneficiated at Gua mines and then pelletized and pellets can be consumed. These are our future plans.
Sure, sir. I will join back the queue. Thank you.
Thank you. The next question is from the line of Shiv Kumar Prajapati from Mirae Asset. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. My first question is on Tasra coking coal mines. Are we on track to start this mines by Q4 FY 2027, and by when can we see the savings reflecting in our numbers?
Yeah. Thank you for this question. This is what we are also looking at, and Tasra is on track, and it is going to start, probably is going to start production from January 2027 itself. That means in quarter four, we will be able to take the benefit out of that. So that is going to give us lot of savings in terms of cost of coal.
Okay. My next question is on this iron ore mines, basically Rowghat mines, where our EC for 6 MTPA is due, I mean it is remaining. By when it is expected to come? Next on this Gua ore mine, where we have plans to expand it by 2.5x, I mean, basically taking the capacity up to 10 MTPA. If you could help us with the timelines. Third one on this is our 2 MTPA pellet plant at RSP. Is it on track?
Yeah, let me answer your questions one by one. You started about iron ore mines, Rowghat. The MDO has already started working over there. Right now they are doing the interim mining, and in the interim mining, we have taken EC clearance of, I believe, 3 million tons, and we are almost hitting those levels. But going forward, when the main mining is going to start by the MDO, which will take maybe another one year or more than one year, then the ramp-up is going to start. 3 million tons by row. I mean, right now, 3 million tons.
After that, ultimately, this will go towards 14 million tons in three, four years' time. So it will go in a phase manner. Right now, 2 million tons, and after that it is going to be 3 million tons, then 4 million tons, then 6 million tons, then 9 million tons, then 14 million tons. This is the kind of trajectory on which it will be traveling. As of now, things are on track, and we are critically monitoring the progress at Rowghat iron ore mines.
That is about Rowghat. Regarding Gua, we have a plan to increase the production from 4 million tons- 10 million tons by appointing an MDO. That is going to take a little more time because of the clearance and other things. Regarding the pellet plant, RSP, which is 2 MTPA, that is on course, and it is going to start as per the set target lines. It is in the advanced stages.
Okay, sir. One last question. Our aspiration is to reach 100 MTPA of iron ore production by FY 2030, FY 2031. Last year, we did around 38 MTPA, 39 MTPA, and H1 of this year we are close to 19 MTPA, 20 MTPA. What is our guidance over here for FY 2027? If you can help me understand the bridge between our current 40 MTPA versus 100 MTPA of aspiration, and does this also include any contribution from Chiria mines?
Let me answer this question. Actually, last year we received around 38 million tons, as you said, correct. This year our target itself is 56 million tons, but I think we will be achieving somewhere around 48 million tons or 50 million tons. H1, as you said, is 19.5 million tons, means around 20 million tons. H1 is 20 million tons, means in the dry season it will be much more than 20 million tons. That is why I told probably we will go towards 48 million tons or 50 million tons on the optimistic lines. That is going to happen. Regarding 100 million tons, that is an ambitious target by us for the 2030-2031 or 2031-2032.
A lot depends on Rowghat, a lot depends on Gua, and of course, we are going to start increasing our production from Bolani in Odisha and Kalta from Odisha, and Taldih is going to come on course. With all these things, we are expecting 100 million tons, which is an ambitious target, but if not 100, then at least we will be able to achieve 80 million tons, 85 million tons, something like that.
As I told you clearly, one is Rowghat, the other one is Bolani, Kalta, Taldih. Taldih already MDO is working over there. Then another one is Gua here. While considering 100 million tons, it doesn't consider anything from Chiria. Chiria is in a different state altogether, clearances and other problems are there in that. It doesn't include Chiria. Without including Chiria, we have an ambitious plan of 100 million tons by 2030-2031 or mid-2031-2032.
Okay, sir. Thanks.
Thank you. The next question is from the line of Vikash Singh from ICICI Securities Limited. Please go ahead.
Good morning, sir, and thank you for the opportunity. Sir, just wanted to understand that you said that you would have to spend INR 1 lakh crore in CapEx in the four years. If I remember our previous instance was that we will go into the CapEx on a step-by basis so that the overall debt should not inflate. Just two questions related to this. Firstly, in terms of this INR 1 lakh crore, which are the plants where we have the full land available, free of any encroachment, and the CapEx for particularly those plants, how much that would be? Secondly, what happened to the step-down, what kind of the debt, incremental debt addition you could see from this?
Yeah. We are planning to increase capacity from 20 million tons- 35 million tons in four plants in next four years' time. That is the narrative, and we are working towards that. So far as land is concerned, all these four plants where we are undertaking the expansion projects, there is no encroached land. At RSP there was, but now it is already cleared up. A bit of the patch is still there, and that is getting cleared up right now with the help of state government support. That is happening. It is encroachment-free land where we are going to start our expansion. We are doing it systematically.
The first one is IISCO, and the other one where tendering process is going on is Bokaro, and third is Bhilai, where the tendering process is going to start, and fourth is maybe Rourkela, and if that is so, then the approval is going to take place. It is in the advanced stage for giving the approval. That is the kind of thing, it is in a staggered manner. As far as debt is concerned, let me tell you, to fund this INR 120,000 crore, the internal accruals will also be there in four years to the tune of around INR 50,000 crore or something like that.
We are trying to improve our profitability, as we have been already seeing about it. The rest will come through debt, and debt will come based on the incremental requirements and based on the progress of execution level on the site. Of course, it is clear that towards the end of this expansion, it will be getting bunched, the CapEx will be getting bunched, and that is the time when the debts will be there, and before that it will be proceeding from FPO may be there.
We will do that in a proper way so that it doesn't impact our balance sheet and the ratios very much adversely. We are trying to actually increase our internal accruals through improved profitability, through efforts in top line as well as cost reductions, so that the dependence on the loan or the borrowings will be less. That will be our effort.
Sir, just to understand from the Board approval to placing the packages, usually how much time does it take for you? Because IISCO, I think we started one and a half year back, and we still yet to place the orders for the equipments as of date. If you could clarify the timelines, how much?
Generally, it is around six months, general wise, because of the systems and procedures. But in case of IISCO, actually, major orders have already been placed and work is already started on the ground.
Noted, sir. Sir, my second question pertains to our labor code related expenses, which was INR 198 crore this quarter and overall INR 350 crore. Any other provisions are left in this labor code? We have already taken care of everything. This INR 190 crore is added above EBITDA in which line items?
It is there under repair and maintenance actually in the line item, which is a part of the other expenses in the accounts. That is number one. Number two, these are based on the best estimate basis because the final figures are not yet ascertained, since the gazette notification doesn't have a final rate for industrial rate. We have taken the infrastructure related rate, then we have made a provision in the books of accounts.
As of now, as per your estimates, the full provision has been made, right?
To our best understanding, yes. But of course, there will be some incremental plus or minus that will be adjusted whenever the actual figures come.
Noted, sir. That is all from my side, and all the best for the future.
Thank you very much.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good morning. Thanks for the chance. Sir, first question is, I do not know if I missed RINL sales volume in 2Q, which is accounted in our overall volumes. Also in the 21 million ton target, what are we estimating for this third party RINL sales?
Let me give the figure actually. RINL Q2 figure is 184,000 tons.
It is H1, sir. Q2-
H1 is 184,000 tons, Q2 is 88,000 tons. For the year maximum 500,000 tons?
Yeah.
Because Q3 to Q4 there could be increase. For the year it will be 500,000 tons.
Nil for NSL, right?
NSL is kind of nil actually. We are not doing anything for NSL.
Okay. Sir, I just want to understand how do we account it in the revenue? Is the full sales steel price 50, 60 or 1,000 is accounted in the revenue or it is only the marketing margin or something?
We take it as a purchase as well as turnover, so in the expenditure side also it is there, and in the income side also the full figure is there. So gross figures are available on both the sides.
Okay. At the EBITDA level it is nominal, right?
No, the EBITDA getting figure is there. Only the margin which is coming into picture at EBITDA level.
Yeah. So what is the margin?
That is very less actually. I mean, should not say, but it is not much.
Understood. My second question is on the employee number of count. We have been doing an impressive job in reduction. What is the trajectory for this year and over next three, four years? Where do you see it going from somewhere close to 50,000 last year?
Today, by the end of this, we are at 48,000. Q2 end is 48,000 and year ending it is expected around 46,000. By 2031, we are expecting to come down to 26,000 numbers.
20, sorry, what?
26,000. 26,000. It will come down to 26,000 by end of 2031.
Okay. That is a very sharp reduction from almost 50,000 to half of it.
That is because of the superannuation taking place right now. And of course, the VRS.
Understood. This will be gradual or it is, I mean, in one or two years it will be substantial or it is going to be gradual over.
I mean, people are aging actually. Every year, the normal separation is around 3,000- 4,000. Plus, on top of that, whenever we are giving VRS, through VRS another 1,000. We can say it will vary between 3,000- 5,000 every year. Normal separation plus VRS.
Understood.
Sir, one last question on coal. Sir, last quarter in August, you guided that coal cost will be down INR 1,000- INR 2,000 based on whatever visibility you had of inventory of August, September. This quarter, when you updated, it has been an increase of almost INR 1,700. We just want to understand what changed. Was there any revaluation of the inventory or something?
No, let me tell you, sir, the imported coal prices increased in Q2 and now it is stabilized. It is because of the geopolitical situations, number one. Number two, because of the problem that was there in China. That is the reason why the demand suddenly increased, spiked internationally, and which increased the coal prices. But now the coal price has stabilized. Now the coal price has stabilized, and your next question is about? What did you ask?
No, sir. Of course, this increase is in line with the international prices. I just wanted to understand in the previous call, when the international prices were increasing, you had guided that we will see a reduction of INR 1,000- INR 2,000. Our increase has been in line with international prices. So I just wanted to understand, was there any change in method of accounting or?
There is no change in method of accounting. Only thing is that actually by quarter one end, we were thinking that probably the price will come down because there was a rise in quarter one. But because of the international situations, it started increasing. It started increasing, but that is also reflected in the steel prices, so we did not have much of an impact on our profitability at that point of time. It is good that the imported coal prices are stabilizing right now. So far as accounting is concerned, there is no change in accounting. We are following a consistent accounting policy.
Sure. Generally, sir, how many months of inventory do we have?
We keep around 30 to 35 days of inventory.
Okay.
In total, plant and ports put together.
Understood. Okay. Thank you and all the best, sir.
Thank you.
Thank you. The next question is from the line of Siddharth Gadekar from Equirus Securities. Please go ahead.
Hi, sir. Good morning. The first question is on the external iron ore sales. Is there a difference in royalty that we pay on captive consumption and external iron ore sales? What is the current royalty rate of our iron ore?
Royalty for us, whenever we are consuming, if the mines is renewed, then Schedule V is imposed, which is 150% of the normal royalty rate.
Okay.
Schedule V is not imposed in Odisha group of mines because those are due for renewal in 2030. Schedule V is imposed in Chhattisgarh old mines, not in Rowghat. Rowghat is a new concession, and it is imposed in Dalli-Rajhara mines of Chhattisgarh, and is also imposed in Jharkhand group of mines in Jharkhand. That is where the mines are already renewed. When it comes to sales, no matter whether it is renewed or not, Schedule C is also impacted. Schedule C is also imposed over there. That means in case of sales, there is Schedule V if the mines is renewed, and Schedule C is there in any case.
Schedule C is basically 150% the normal royalty rate for fines and 250% for lump normal royalty rate. That is how it goes. Whenever we are selling from OGOM, means Odisha Group of Mines, Schedule V is not there, Schedule C is only imposed. Whenever we are selling from Jharkhand, which we have not yet started, we are going to start.
And whenever we are selling from Chhattisgarh from Dalli-Rajhara, then Schedule V, which is 150% of normal royalty rate, as well as Schedule C, which is another 150% of the normal royalty rate of 15%. Normal royalty rate is 15%, basically. That will be there. Whenever we will be selling on Rowghat mines in future, then there is no Schedule V because it is not yet renewed. Only Schedule C will be imposed, like in case of OGOM. I hope I clarified.
Got it. Secondly, can you just repeat your guidance on coking coal for this quarter? How much increase are we seeing?
Coking coal price actually in quarter two, imported coking coal price I am talking about, quarter two was INR 22,930. October is INR 24,000. We believe November will also be INR 24,000, and December could be INR 23,500. So on the whole, quarter three could be around INR 23,800, INR 23,900 like that, as compared to INR 22,900 in quarter two. That means that there will be increase of around INR 1,000 in quarter three as compared to quarter two.
Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Rakesh Roy from Boring AMC Omkara Capital. Please go ahead.
Yeah. Good morning, sir. One quick question, sir. Are we reducing our full year guidance from 22 million tons- 21 million tons? The sales volume.
Yeah. We are looking at 21 million tons right now.
Okay. In Q4 you mentioned 22 million tons.
I am not able to understand. Can you repeat?
In Q4, FY 2026, you had mentioned for full year FY 2027 is at 22 million tons. This year currently you are saying 21 million tons.
No, last year it is not 23 million tons.
19 million tons.
It was 19 million tons.
No, no.
Sorry. I think crude steel production is 22 million tons, but saleable steel sales should be around 21 million tons. Steel production is 42 million tons. But not saleable steel. Steel that we are selling is not—
Okay.
—good steel, it is saleable steel, which is around 21 million tons. But the production of crude steel from SMS will be around 22 million tons.
Right, sir. Thank you, sir.
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. Firstly, just a clarification. This quarter, we did not have any benefit or negative impact of rail price revision, right? Just wanted to confirm that.
Are you talking about quarter three?
Quarter two, sir.
Quarter two, no, nothing. In quarter two, nothing. Actually, quarter one, we had an impact of close to around INR 300 crore. Quarter two, nothing. Going forward also, I believe we will have some positive rather than negative.
Sure, sir. Also, sir, generally, this second quarter normally being a weak monsoon quarter, volumes are generally suppressed. This time, we have seen a good amount of increase in volumes in the second quarter. What could be the reason? Was it a weaker monsoon or prices were going up, that led to some restocking? What in your view led to the strong volume performance in the second quarter?
Second quarter, actually, production volumes were impacted because of unprecedented rains in Jharkhand and Odisha, which was not there last time. It suffered in terms of production and techno-economic parameters as we have already discussed. Our effort was on stock reduction, on increasing sales and increasing high-end production. These two efforts have really given us a lot of advantage to the tune of around INR 700 crore- INR 800 crore. Borrowings have reduced, sales have grown, inventory has come down, high-end production has increased.
These are because of the sustained monitoring and efforts that we are making company-wide. That is the reason why the borrowings have also come down and interest has also come down by around INR 98 crore. Of course, on the back of good market. That means in quarter two, towards September, actually, market started improving. We have also taken the advantage of the market and our efforts have been in line with the market as well. This is through our strategic interventions in the top line that the turnover has increased and the profitability have also improved.
Sure, sir. What would be the mix of TMT bars and rails in our overall sales mix?
Rails are okay because last year we dispatched around 1.2 million tons. This time also, we are expecting to sell around 1.2 million-1.3 million tons. Rail This is percentage. Percentage in terms of gross?
In terms of volume.
In terms of volume, rail products are at 8%, bar and rod are at 22%, that is in terms of production volumes. But if you look at the turnover, it will be more than that actually. Rail will have more component, more than 8% in the total turnover.
Sure, sir. Sir, lastly, will you just give us how much of external coking coal are we purchasing any coke externally or most of it is now captive coke?
No, actually, we are consuming around 15% of indigenous and 85% of imported coal. Total coal basket is around 19 million tons. Out of that, around 85% is imported coking coal. As I was explaining through one of the queries, in this year, we are going to start production from Tasra coking coal mines in Dhanbad from January onwards. Once that stabilizes, it will reduce the burden of imported coking coal.
Sure, sir. I was talking about coke, sir. Are we purchasing any coke externally or we are fully captive with respect to—
We are not purchasing any coke because we are able to produce ourselves.
Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Netra Deshpande from Mirae Asset Sharekhan. Please go ahead.
Good morning, sir. Thank you for the opportunity. My first question is pertaining with the net debt level that you already said about the debt position has fallen, and also the debt which we are targeting, what would be that for FY 2027. There was a cost, the financial cost that was raised in this quarter despite the lower debt. What is the reason this is now pertaining with the, because debt rise as the expansion plans are just picking up. What are the targets for the FY 2027, and why is there this reason for this, for the rise in the finance cost for this quarter?
Let me explain to you. I have already told these numbers. as on September 30th, the debt level is INR 20,583 crore, which is around INR 1,080 crore less as compared to opening of this year. In this year, we are expecting further debt reduction in quarter three and quarter four, that is the thing that we are looking at right now. But as you said correctly, going forward because the capacity is increasing, because of the expansion, et c. Going forward, the debt will increase from next year onwards. May increase from next year onwards.
That is number one. Number two, regarding cost of borrowings. Cost of borrowings through better treasury management. In H1, it is 6.34%. Last year was 6.42%, now it has come down to 6.34%. The point which I mentioned is because the repo rate has increased by 25 basis points, naturally in quarter three and quarter four, the fresh loans and loan swaps, et c, will be little costlier as compared to the current levels. It will be much competitive so far as the industry standards is concerned.
Okay. Thank you, sir. My next question is pertaining about the status of expansion plans like IISCO and the others that Bhilai has also approved. What is the status for the Rourkela and Bokaro, and what would be the timeline and the funding mix for this new expansion?
Expansion, as I told, in IISCO, the execution work has already started. Major packages have already been ordered out. At Bokaro, it is in the advanced tendering state. At Bhilai, they are going to start the tendering in couple of days. Rourkela, the DPR is prepared, and it will be going for in-principle approval.
Okay. Any timelines specifically? How would be the funding mix for these plans for the expansion?
Ma'am, I have already explained regarding funding. We are targeting to improve our profitability through interventions in the top line and cost reduction, so that every year we should be able to get around INR 10,000- INR 12,000 crore from internal accruals. Supposing we achieve INR 12,000 crore at least from internal accruals, or maybe INR 10,000. So INR 10,000 into four is around INR 40,000- INR 50,000 crore from internal accruals. The rest will come through FPO and the borrowings. Those are the last options. First of all, the internal accruals, and the borrowings, et c, will take place towards the later stage.
Okay, sir. Sir, the last question is about EBITDA per ton. This quarter, there was kind of a moderation that is as the market estimates of around INR 8,500- INR 700 per ton. So it is INR 8,170. What would be the moderation, which is primarily by sequential moderation of NSR due to this or monsoon and cost inflation? What are the estimates for the coming quarters?
It is a combination of both, actually. NSR point and the cost implication because it is impacted full rate, and as well as because all of us know quarter two is a rainy season, and we had unprecedented rain at Jharkhand as well as Odisha. So the furnaces suffered to some extent, the raw material suffered to some extent, and as well as the technological parameters suffered to some extent. So quarter two is generally not good for most of the coastal belt plants.
That is why Q2 was not very good in EBITDA per ton. But H1 EBITDA per ton is INR 9,561. We were looking at INR 10,000. We could hit around INR 9,600 per ton. In quarter three and quarter four, it is going to improve further. If you look at last year, quarter four also, I think the figures were somewhere around INR 11,000 or INR 12,000, something like that, if I remember. So we are trying to hit those levels in quarter three and quarter four.
Okay, great, sir. Thank you so much for this. Thanks.
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Ashish Kejriwal for closing comments. Over to you.
Thank you. We would like to thank the management for giving us an opportunity to host this call. I would request Mr. Panda for his closing remark. Over to you, sir.
Yeah. Thank you, Ashish. The forecast for Indian economy by various agencies have been quite encouraging, and the support by the government is strengthening the belief that the economy will continue to do well in India. Steel demand also continues to prosper, and we are hopeful that the prices will maintain the momentum that has been gained post-monsoon.
Apart from the improvement in the operational performance, the company also remains committed towards sustainable performance, including emphasis on decarbonisation, improving capacity utilization, value addition, achieving cost competitiveness, and more focus on safety and digitalization. I thank all our investors for their reposing faith in us, and I am hopeful that the same shall continue in future as well. Thank you very much.
Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.