Could you explain the reasons for volume decline on a year-on-year basis? And given the earlier guidance of 8.5 million tonnes to 9 million tonnes, with Q1 volume sharply down, is the guidance still remains, or do you look to cut down on the same?
From our standpoint, production was broadly stable quarter-on-quarter basis in the 1st Quarter. Sales volume was certainly impacted by 10%, but that happened because of the early onset of monsoon. Also had an inventory buildup, which certainly will get liquidated over the entire course of the year. As far as guidance towards the production and sales, for the balance of the year and for the full financial year, we remain on course, and we remain committed to those numbers.
On the Angul commissioning, would you be able to also provide some guidance on volume that we can expect from the BF-2 and BOF-2 this year and next year?
Our guidance remains the same, in fact, which Saby also mentioned a while back. We are committed to the guidance that we have given at the start of the year, both in terms of production and dispatches. And we are very hopeful of hitting those numbers.
Update on the other projects like the Q&T line, Color Coated, Galvanized. And in railway rakes that we are looking to acquire, and prior to that there was a news report about JSPL being selected for financial assistance incentive on their 2 million tonne coal gasification plant. Is that a new coal gasification plant?
We have already commissioned 200,000 tonnes of galvanizing line. This is the first from the table of Jindal Steel. We will continuously be adding a lot of lines getting into this financial year. The next in line we are expecting our color coating line, which should be there by end of quarter three, this financial year. And then, of course, two more lines which we will be adding, our galvanizing line and our color coating line number 2. So, both should be with us in quarter four of FY '26. Talking about Slurry Pipeline, we have already given an update. We continue to run faster at our steady speed over there. The major bottlenecks are behind us now. And our guidance remains the same.
On Tensa - it seems like it has some reserves on the boundary. So I was under the impression initially it can sustain till 2028. What is it now, end of life? And is the Rs. 1,000 per tonne raw material cost saving from non-coking-coal items sustainable?
The other cost is sustainable. I have already spoken that this was due to one-off, around Rs. 1,200 per tonne in Q4. And other savings that I have spoken, we think that is sustainable in future. The effect of Tensa is there in Q1. So, we have not taken much from Tensa. Only 0.13 million tonnes that we have extracted in Q1. So, that hardly had any impact in Q1. So, we think that whatever cost saving is there, we will sustain that in future as well.
When do we expect Utkal B2, any timelines there? And on commissioning of BOF-3 and DRI-2, where are we on the timelines?
We are already there. We are seeing the monsoon season and there are some delays, but we are expecting the coal to be with us at the start of quarter three. (Clarification: this was about Utkal B1.) On B2 - B1, we have set our own priorities as of now. We are working on it one by one. I think B2 is definitely on our cards, but we will let you know. On DRI-2 of course, that is one project which we have already announced our revised timelines which is into FY '27. On BF-3, we remain committed to completing in this financial year, quarter four of FY '26. On the coal portfolio, Gare Palma IV/6, Utkal C, Utkal B1, Utkal B2, these are the four mines of which we have spoken about. We have recently won Saradhapur Jalatap coal block as well. So that has a geological reserve of about 3.2 billion tonnes, it is a partially explored block.
Just to understand the difference between the consol and standalone EBITDA. This would mostly be from Jindal Odisha. The overseas coal mines would not have contributed too much to the EBITDA?
This is mainly from the Odisha project that we have started, mainly from that. Certainly, going forward, when we start the production from this new project, we will give separately, if required.
Update on Pellet Plant-2, 6 million tonnes, when are we planning? And what is the update on the ramping up of the recently commissioned 6 million tonnes Pellet Plant utilization? And CAPEX for next year will be similar to this year, Rs. 10,000 odd crores?
Let me start with the utilization of our existing Pellet Plant, of course, it is going well. If I was to compare year-on-year basis the production has gone over 50% and more. So, here is the Pellet requirement, as and when, if I was to share some more updates, we could scale up our DRI production strongly because of our own Pellet Plant ramp up in Angul. And as and when BF-2 is going to come up, we are very hopeful of spreading these efforts very right. From a Pellet Plant-2 perspective, this pellet plant would be coming up in FY '27. On CAPEX - in our capital allocation framework, we have mentioned already that on an annual basis we will do a CAPEX of Rs. 7,500 crores to Rs. 10,000 crores. But for FY '27, it is too early to give any guidance. We will come back to you during the Q4 results for next year's guidance.
On the new Blast Furnace commissioning, should we model some kind of losses, let's say, in the first two quarters with the Blast Furnace ramp up before we reach some kind of stabilization level somewhere in FY '27?
We just spoke about our quarterly numbers, most of you guys said they are wonderful numbers. The company remains committed in terms of operational excellence, and it would be too premature for me or anybody else to speak on this, but we are committed to making sure we sustain our numbers getting into the subsequent quarters also.
What was the utilization in this quarter? In March quarter press release and presentation utilization was mentioned for company at 85%, with production number say 2.11 million, so 2.09 it should be lower than 85%, but you mentioned closer to 90%?
Basically, in our Raigarh plant our capacity utilization was 95% and Angul we are roughly around 83% - 84%, on an average we can say that we were blended 90%. Overall, we can say that last quarter it was 88% and current quarter is 87%. 1% production is down from quarter-on-quarter basis. The capacity utilization is down by just 1%, production remains stable, the decline is on sales volume.
In the presentation deck, you have mentioned on Slide 32 about the timeline of Blast Furnace-2 Commissioning, which is Q2 FY '26. Is it possible to mention the timeline of BOF-2 as well? When it is expected to be commissioned?
You rightly said we are at a very advanced stage in terms of our Blast Furnace number 2 start up. Sunil mentioned a while back, we completed our stoves dry out, furnace dry out and we are just trying to inch the last leg of the commissioning activities. And I think sometime very soon we will be able to announce BF-2. And BOF-2, if I was to take that, it would be starting almost sometime very close to Blast Furnace-2 also. So, we are at the advanced stage of commissioning at both these units. BF-2 we are expecting in quarter two of FY '26.
If I look at the P&L, the raw material cost per tonne has gone down by almost Rs. 3,500 - Rs. 3,600 per tonne. While coking coal is one factor, what are the other factors that resulted in such a sharp decline in raw material cost per tonne and are some of these factors sustainable going ahead?
If you remember, last time we had a one-off of around Rs. 231 crores in the previous quarter, that has an impact of around Rs. 1,200 per tonne. After adjusting for captive consumption of Rs 336 per tonne, the net reduction works out to be Rs 2,864 per tonne. In Q4 FY '25, the one-off impact was around Rs 1,200 per tonne. Excluding these, net impact is around Rs. 1,600 per tonne, which has come out of coking coal that we have already announced that we had a saving of around $11 per tonne during the quarter. So, that has resulted in around Rs. 500 per tonne. And second is the PCI also, we have saved around Rs. 200 per tonne, and we have the savings in scrap and other items that amount to Rs. 900 to 1,000 per tonne.
I was just seeing the presentation like the sectoral split of volumes. Auto seems to be only 3%, whereas flats are 44%. So flats earlier used to be like 20% - 25% range, which is your plates. Where does this increase come from then, if not from auto? And by when do you think auto volumes could start to be meaningful?
Most of the flats are coming from the new commissioning of hot strip mill, which we have done. And auto, the ramp up takes some time. So, we have started supplying to a lot of auto manufacturers and all. But major volumes of auto, we are supplying to a lot of value-added segments. So, as you have seen, our value-added sales have gone up to 72% in this quarter compared to the previous quarter. So, a lot of supplies of very high grades of HR coils. So, that is what has contributed to the increase, other than auto. It will start ramping up as we will move ahead quarter-on-quarter.
On Tensa, did you produce any iron ore from Tensa in the quarter? And given that steel price has corrected since the last quarter, could there be any NRV impact on the opening inventory of 0.2 million tonnes?
We produced a bit of iron coming from Tensa, but yes, Tensa is, towards the end of the mine life, and if I was to just share with you guys, the results what we have seen is minus Tensa almost, for this quarter. The important part is to have our security done, and that's how we have gone ahead with Roida-I mine, that would be compensating for the loss in volumes from Tensa, getting into the future quarters. So Tensa did contribute, but a very minimal impact of that in this quarter. On NRV - certainly, the effect of price reduction may be, but we are maintaining that inventory from the quarter-on-quarter basis, and it will, sequentially, will have the effect. Now the prices are moving upward, so we do not see much effect of that. Impact on an aggregate basis, we do not anticipate any major impact at all.
My first question pertains to the net debt position. I believe this is the highest threshold level we have reached post 2021, right? And opening remarks sort of inform all of us that 1.5x is the threshold. So, it is fair to assume that this is the peak, and from here on going forward over next two to four quarters, we should see some debt reduction happening?
We are seeing it as a peak, because I have spoken that we have built up the inventory in Q1 for around Rs. 2,400 crores, which is getting liquidated in Q2, so that will improve our cash position. And now we are going to start the Blast Furnace, and our BOF-2, that will start contributing, and we do not see this 1.5x breaching anymore. So, we are at the top of our net debt to EBITDA limit that we have set. We have still maintained net debt to EBITDA at 1.5x. 1.5x is sacrosanct to us, it is a red line we will not breach. I reiterate, we will not breach. And in coming quarter Q3, the situation will automatically improve. In Q2, we have already crossed almost half of Q2, we are still below 1.5x.
On value-added side - 72% is one of the highest in the industry vs industry around 60% - 65%. How confident are you to ramp up from here, say 72% going forward? And what do you perceive as a value-added product?
Value-added in our case, category-to-category is much different, but then, it could take a thumb rule or a benchmark that anything above 350 MPa strength is value added in plates. In HR coil, we are most of the high carbon, medium carbon, and different grades. So, it is the grade which defines whether we treat this as a value-added or not value-added and the jump in realization. These two parameters we consider. On 72% sustainability - since we are ramping up HR coil facility and we are not at the full life level of HR coils, so our focus is entirely on getting the best out of the asset and that is how the very high volume concentration of value-added products we are making in our hot strip mill. In plates also, we got a heat-treated segment, which is absolutely high-grade plates, getting into very specialized sectors like defenses, automobiles, and even high end of construction, one of the examples of which is Chenab Bridge that we did. From high alloy wire rods and even the large size TMTs, we are the only company making 50 mm TMTs.
Just wanted to get the percentage of longs and flats in this quarter.
44% is flats and 56% is longs.
What has been the trend in the HRC import from China to India? After the BIS norms of the import materials in July and August, how did it fare? And if China HRC prices go down, would imports still be very low?
The Chinese import has practically stopped now and except for some advanced license imports against advanced license. Two factors, one is the Chinese prices improved by roughly around $50 in the last 1 month, 1.5 months' time, so that has made the price almost unviable for them. Today, in fact, Chinese imports are at a premium to domestic prices. And the QC order and melt and pour strict enforcement of that, that has impacted the imports from China. Going forward, we have not seen China as a major threat directly. But indirectly, it may have an impact. India is becoming a net importer for fifth consecutive quarter. Our exports are very low. So, in the international market we are not able to compete because of the Chinese factors. And Chinese exports are at an all-time high. They are roughly exporting 9 to 10 million tonnes every month. The low quality or inferior quality imports, which used to be a bit threat to Indian players have started coming down. And the government has taken a very positive step in that direction.
On thermal coal - just want to understand what was the mix in Q1 and how are we benefiting from more captive coal and how is it going forward?
Utkal C continues to be performing well for us. Quarter one if I was to say, our 90% - 95% of the thermal coal came out of our own mines, we continue to have some FSA, small amount of that with MCL mines. Getting into the subsequent quarters, we have already announced that Utkal B1 is expected to be on track in this quarter itself. So, we should be able to meet our coal requirements from our own mines, getting into this financial year. There is a delta of around 3% - 4%, that is what I can say as of now, in terms of using our own coal versus the bought-out coal.
On captive coal strategy - you mentioned you are already sourcing 90% to 95% captive. So what are we going to do with the coal from the additional coal blocks? Is there some element of commercial sales as well or are those for our captive power plants?
These are going to be for our captive power plants. We have almost stated that we are starting Unit-1 of our Shree Bhoomi Power Plant, in this quarter itself. So as and when we are going to keep adding our power units, we continue to ramp up our coal lines.
On pricing - in the opening remarks I think sir said that prices right now are around 5% to 10% lower, which I assume you would be talking about the trade prices. Given a very high share of value-added products in our mix, is there a possibility that the fall that we might see this quarter would be much less than what we are seeing in the trade markets?
The point which you made about our exposure to trade and our exposure to OEMs is absolutely right. And since we have a very high proportion of value-added steel, value added sales, the elasticity of value-added prices on value added is much lesser compared to the non-value added or trade type of steel. So, you are absolutely right. The impact will not be as high as it is on the trade level prices. And that has been a strength of Jindal Steel.
If I see this quarter, we had a cash profit of roughly Rs. 2,100 odd crores. And we sold shares from the ESOP Trust as well, which I believe would be around Rs. 500 odd crores. So, Rs. 2,600 crores together. Even if we adjust for the CAPEX in this quarter, the debt increase is roughly around Rs. 3,800 odd crores, which looks very significant. What are the amounts raising debt?
Basically, if you see our EBITDA earnings basically moved to working capital which I have already explained that our working capital movement is around Rs. 2,900 crores and we have earned that. And whatever the total net debt has increased, that is mainly going to the CAPEX side, which is Rs. 2,226 crores and balance is around Rs. 700 crores, for which we have made some repayments of loan as well during the quarter and we have paid the interest as well of around Rs. 500 crores.
On Tensa, can we assume 3 million tonnes run rate for FY '26 or how should we project it?
Tensa, we have mentioned that we extracted about 0.13 million in Q1, it is at the end of life. I do not think you should build in that high number in your model while looking at overall profitability for the year.
We saw a drop in demand in Q1 due to the early onset of monsoon, so we have seen inventory build up. We are already halfway into Q2, are we seeing any signs of the inventory position easing? And, are we seeing an early monsoon withdrawal, plus festive season being preponed this year, adding to demand factors in Q2, which will lead to a drawdown in inventory and increase in sales volume?
This time, the monsoon has arrived a little early. So, the demand season started tapering down the monsoon, in fact, it started somewhere in the month of June. But then, we are in the month of August now, and we have already started seeing the signs of revival of demand from the construction side. More importantly, there are some lead segments, which indicates that how the demand is going to unfold, something like yellow goods, something like construction equipment. We are seeing a very, very strong demand coming from these sectors now in this month, which indicates that in the coming quarters the demand will be extremely good, and this impact will completely take a big drag down and we are looking at good demand quarters ahead. Yes. 100%. Inventory easing in Q2.