Godawari Power & Ispat Limited (GPIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q3 FY '22 Earnings Conference Call of Godawari Power & Ispat Limited, hosted by Go India Advisors. [Operator Instructions] I now hand the conference over to Mr. (sic) [ Ms. ] Sana Kapoor Go India Advisors. Thank you, and over to you, ma'am.

Thank you, [ Rutuja ]. Good morning, everybody, and welcome to Godawari Power & Ispat Limited earnings call to discuss the Q3 FY '22 results. We have on the call Mr. Abhishek Agrawal, Executive Director; Mr. Siddharth Agrawal, Non-Executive Director; and Mr. Dinesh Gandhi, Director. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. May I now request Mr. Dinesh Gandhi to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Sana. Good morning, ladies and gentlemen, and thank you for joining the earning call of Godawari Power & Ispat Limited today to discuss Q3 FY '22 results. I trust you have had a look at the earning presentation uploaded on the exchange and the company website. I will briefly discuss the result, and then we can start the Q&A. The company is progressing well on the strategic initiative and continue to strengthen the balance sheet. Deleveraging continues to be top priority at a group level now. And we have utilized surplus case for achieving the same. While we maintain our zero debt status as a stand-alone business, I'm happy to report that even at consolidated level, we have been able to reduce our debt significantly. Our consolidated debt which this term reduced from INR 3.3 billion as of -- in Q2 FY '22 to INR 1.2 billion presently. I'll discuss some of the key highlights of the results for the quarter. We have been ramping up the production capacity in our iron ore [indiscernible], and our production was up 28% Y-o-Y and 30% quarter-on-quarter. As you are all aware, we are in the process of getting up benefication and additional crushing facilities at the mine. And with these facilities coming up in the operations in the middle of the next financial year, the mining production shall get further ramped up and our aim in the medium term is to reach to a target level of 3 million tonne over a period of next 2, 3 years' time. The pellet production during the quarter was up by 11%, 16% and 14% quarter-on-quarter. Last quarter, we had a shutdown for maintenance in one of the plant, and therefore, the volume was lower. The billet production during the quarter was lowered slightly on account of shutdown of the old furnaces, which we are in the process of ramping up by replacing the new furnaces with large capacities. And therefore, some of the furnaces, we have taken it for shutdown, which will be up and ready by end of the current quarter. The HB wire production was also lower, but as a strategy, we have reduced the proportion of HB wire sale low-grade material as where we started exporting the high-grade wire rod. And therefore, we have reduced the conversion of wire rod into the HB wire and therefore, there is a lower sales and production. The iron ore pellet realization has dropped by about 17% during the quarter. Y-o-Y basis, it was still up about 20%. This was led by the fall in the international prices of the iron ore. The [ sponge iron ] TMT realizations have increased 42% Y-o-Y; and quarterly basis, it was flat. Despite the drop in the pellet realization, we have been able to post higher sales and EBITDA during the quarter led by higher volume of iron ore and GPIL itself. Our consolidated revenue were up 42% Y-o-Y. EBITDA was also up 42% Y-o-Y to 492.8 million tonne (sic) [ INR 492.8 million ]. The consolidated EBITDA was also led by consolidation of Hira Ferro Alloys during the quarter. Last quarter, we had -- the company got converted into the subsidiary company. The paid for the year was -- for the quarter was INR 328 crores. And led by definitely the reduction in finance cost as compared to the last financial year. I'll brief you -- updates on our solar power projects. The -- as you are all aware, and as presented in our investor's presentation, we are setting up 3 solar power plant with the capacity of close to about 155 megawatt. Out of that 70 megawatt capacity is it at [ Raigarh ] is -- the construction is going on full swing, and we expect...

Dinesh-ji-ji, I'm sorry to interrupt. Abhishek got disconnected. Can you reconnect him please?

[ Rutuja ]? Sorry. Sorry. Hello?

Yes, sir?

Yes. Yes. Please reconnect Mr. Abhishek. In the meantime, I'll continue.

He is connected back, sir.

Okay. Okay.

Yes. Yes. I'm here.

Yes, yes. So sorry for the interruption, ladies and gentlemen. The solar power plant, as I was discussing, is expected to be commissioned in Q1 FY '23. And the commissioning of this solar power plant will be coincided with the commissioning of our increased capacity in steel melting shop. And the power to be generated by the 70-megawatt solar power plant will be used to meet increased power requirement in our billet facility. We are also setting up in -- 25-megawatt solar power plant at a different location at [indiscernible] in Chhattisgarh. The power from this project will be supplied to our captive iron ore mines at Ari Dongri where we are in the process of increasing the capacity -- setting up the benefication facilities and increasing the capacity of the iron ore crushing. And there, the power requirement is going up. I would like to mention that the power cost for the mines, as per the current tariff, is over INR 10 per unit vis-a-vis the power to be produced by power plant will be closer to about INR 2 per unit, including interest and depreciation, and therefore, this will lead to a substantial cost saving at the mine level with the increase in volume. Another project is 60 megawatt which is coming up at [indiscernible] at the [indiscernible] and the size of this project, we have recently decided 70 megawatt, but due to certain technical parameters, we have reduced it to 60 megawatts with the change in the guideline. And for these 2 projects, land acquisition is in process. We have placed the orders for the module, import of module for all these 3 projects, and the modules are expected to be delivered by end of the -- March, before the new import duties will come into the picture. And all these projects will meet or replace the grid power requirement for the company and definitely is going to add to the operating margins in the coming years. As regards the company's intent to set up a 2 million-tonne steel plant, the same is still on the drawing board. We have not been able to finalize on the cost of projects on the same. But we have prepared a tour and the tour has been filed with the environmental authorities for environmental approval. And we are simultaneously pursuing the other approvals, including the land. And once the environmental approval is there and once we have a full clarity on the cost of project and the exit size and the changes in which it is to be set up, we'll update the market in due course of time. Besides this, the current -- as you may all be aware, the current market conditions for the iron ore and in the international market, there will be some -- assuming that there will be some production recovery in China and the prices have already increased by about 50% to about $139, $140 at the current level. Led by the international prices, the domestic pellet prices, which went down to about INR 9,500 in the last quarter, have already increased to about INR 11,500 to INR 12,000 a tonne, and the other products like sponge iron and steel billet prices have also gone up, led by the improvement in the demand in domestic market. With this, I would -- we would like to invite the questions, if you have any. Thank you very much.

[Operator Instructions] The first question is from the of Kunal Motishaw from Reliance Securities.

Congratulations on a good set of numbers.

Thank you.

Sir, I just wanted to understand our export total and -- I mean domestic mix of iron ore pellets.

Abhishek?

Yes, I'll take your question. So on the product mix, so as we had mentioned earlier as well, we keep changing the product mix depending on the market condition and the demand. So as you're aware, the demand from the China was on the weaker side than in the last quarter. So we have managed to sell more domestically, where we are able to sell our high-grade cargoes of pellet to companies like Tata Steel and General Steel, [ GSTL ]. So the reason for that is see, the coking coal prices have gone up in international market because of a low [ demand in ] pellet. So there lies a better value in using our pellet compared to the market's -- pellets within the market. So at the moment, domestic is more than exports. But going forward, depending on China, the target can keep changing. So it all depends on the commercial value of the product.

Okay. Okay. Sir, and what of the realization? What is the export realization as compared to domestic?

See at the moment, as Mr. Gandhi mentioned, the domestic prices are hovering at around INR 11,500 to INR 12,000. On the export side, for a high-grade cargo, which is [ 651 ], the relation is close to INR 13,000 at the moment. So once China come back in the market, let's see how China responds to the new policy of steel making.

Okay. Okay. Got it. Sir, secondly, my question was on the production front. What are we targeting for, I mean, the coming years for pellets?

See the pellet in the coming years -- carry on, Abhishek. Carry on.

So on the production side, we have already revised the EC from 2.1 million to 2.4 million last year. And we maintained -- we were able to achieve close to [indiscernible] at 100% capacity.

I'm so sorry, I didn't get you, sir.

Our production will be close to 100% as for the EC which is 2.4 million tonnes.

[Operator Instructions] the next question is from the line of Vikash Singh from PhillipCapital.

Congratulations on a strong set of numbers despite challenging realizations for 3Q. Sir, I just wanted to understand one thing. On the high-grade pellet, what I have heard that these prices have gone past $200. So just wanted to understand, are we being able to convert everything into high-grade pellet and would be able to sell? Or what is the maximum mix we can sell as a high-grade pellet or export high-grade pellet?

No. See, at the moment, as you are aware, we are ramping up our mining production. So the high-grade production depends on value on the iron ore coming them, I know coming from a mine. So the moment, the target is currently producing close to 60% of high-grade pellets and 40% of [ normal value ] pellets. And as we keep ramping up our mining production, the percentage of high-grade production will keep going up. So a lot depends on the iron ore mining production. But at the moment, it at 50% high-grade, 40% the normal value.

So 60% high-grade which places us better realization in the export markets, sir. So [indiscernible]...

It's not necessarily export. As I mentioned a few minutes back, so we are also able to sell a couple of cargoes to General Steel and Tata Steel. So there is a possibility where we might be able to fetch more price commercially compared to the export market as well, if these guys still continue to buy. So it all depends on how China plays and how the coking coal prices are in the near future.

Understood. Sir, my second question pertains to our 2 million-tonne plant. I know we are still on the drawing board. I just wanted to understand what is our plan in terms of pace of CapEx once we have finalized something? Because looking at our current cash flows, still, it looks a little bit of tall order because that 2 million tonne is kind of a 3x size of what we are currently now. So would the -- it could be in a phased manner of 0.5 million tonnage? Or you want to go at 2 million tonne in one go? And what kind of technology you would be getting into? Is it -- would be again sponge? Or you would be looking at that furnace? If you could give us some details about your thoughts there, sir.

See, in regard to this project, as I said in my opening remarks as well, the things are on the drawing board, currently. I can assure you one thing, that the CapEx will not be lumpy at one time. If required, we will divide this project into the phased manner. As of now, our focus is on land acquisition and environmental approval and deciding on the technology part. Once we are able to decide on the technology part and the type of product to be manufactured, finally, and based on that, we'll update you in due course of time. But beyond that, I'm not able to say anything on this because it is still work in progress.

Understood. Sir, just one last question from book keeping point of view. Sir, what is our current spot realizations versus the 3Q average right now? If you could tell us.

See pellet realizations are closer to...

If we know that sponge was [indiscernible] if you could tell us.

Siddharth, what is the price for sponge billet?

So I'll take that one. So on the sun side, the current prices in Chhattisgarh around INR 35,000. And on the billet side, it is close to INR 40,500.

[Operator Instructions] The next question is from the line of Shivam Agarwal from Equitas India.

Yes. Thank you for the opportunity, sir, and a phenomenal set of results, and congratulations to the entire team. Sir, firstly, I want -- yes.

Yes, yes. Thank you, Shivam.

So sir, firstly, I wanted to know, in general, your view regarding the realization and margins. So recently, we have -- and as you mentioned, we have seen uptake in both realization but as well as the cost of our raw material, mostly in terms of coal and coke, is increasing. So how do you see the margins going ahead in future? Q-on-Q are a bit has been dropping, but how do you see Q4 and Q1 going forward, if we can have your view?

Abhishek?

Yes. Yes. I'm taking it, yes. So on the input side, see, firstly, we don't use coking coal because currently, we are a making see-through the DRI route, which is thermal coal-based. Yes, we are importing thermal coal. And on the costing side, of course, the market has almost gone up by, say, 40% since 2022, starting we do this. Primarily because of the ban from thermal coal from Indonesia, and there is a shortage of thermal coal in the global market because of Australia going through a COVID phase and the monsoon as well as Africa is, again, down because of their [ political ] issues. But we are covered, say, at least next 4, 5 months at a very decent price. So the margins, I would be saying that. And looking forward for Q4 and Q1, I think we are sitting at a good place at the moment right now with the current inventory and the market shooting up. Because sponge prices are up towards all-time high, INR 35,000, and the market is still quite bullish on the domestic side.

So more or less, the 31% EBITDA margin, we can expect to maintain for next quarter then?

Hopefully, hopefully. So it's difficult to, of course, give a comment on the exact number, but yes, with the current trend in the market, we should be able to achieve that if everything goes well.

Fair enough.

Yes.

Sir, secondly, I wanted to know your view on the budget. So a few products, I think the import tariff has been reduced. And also in our end product, I think in ferro alloy, in ferrous -- various other ferrous, import tariff has been reduced from almost 15% to 10%. So what is your view? do We yet impacted but negatively or positively because of any of this reduction?

No. So yes, firstly, the tariff has been revised. That has been to support the MSME so that the input cost goes down and the domestic prices come at a level of what input prices are. So the tariff revision has mainly happened on the count of the imports mainly to support the MSME sector. For us, we are not impacted at all because the tariff import was primary used in certain products, digital manufacturer. We are in [ completing ] to mined steel whereas the tariff has been revised in alloys and other categories. So at the moment, we are totally -- that entire sector are technically zero for us which is [indiscernible].

None of our nonmaterial gets impacted?

No. Nothing, nothing, nothing. The raw material we import or the finish that we export, the tariff remains the same.

Okay. And in the ferro specifically, I think tariff has been reduced from 15% to 5%. So does this impact us? Or do we export ferro alloys from India?

Yes, from -- yes, we do export from Godawari. The volumes are small as the capacity of ferro alloys is small. But at the moment, I don't see a major impact because the [ pellets ] production globally is quite down because of the higher energy inputs, especially in Europe and other Asian countries because of the oil being towards going all-time high and the thermal coal prices also at elevated levels. So the cost of [ pellets ] in Europe is quite high. That is why a lot of big players have cut down on the capacity. So -- which can indicate, India very -- will continue to benefit in countries [ where we ] export.

[Operator Instructions] The next question is from the line of Parthiv Shah from Tracom Services.

Firstly, congratulations for fantastic set of numbers. Sir, my question is regarding the spread of prices that I'm reviewing in Godawari pellet vis-a-vis the pellet realization at Ardent. I recollect there used to be almost a spread of $1,000, $1,500, and now the spread has decreased. Could you help me understand what's happening here?

No. See, the spread between Chhattisgarh and Raipur depend -- will depend purely depending upon the market conditions in the world market and the timing at which you have booked your orders, okay? There is a time lag in booking the orders at one company or other company, then it will impact the pricing. Otherwise, the difference between the pricing -- and then third reason is it could be due to the hydrate pellet as well. So all in all, there are a number of factors which impact the pricing.

Understood. And sir, I appreciate the fact that it's still very nascent in terms of the plans for our new steel plant. But I'm very curious to understand now that in the budget, it has been talked about the extension of 15% tax for new manufacturing until March 2024. Do you sense any scope for our company to take advantage of that or be eligible for that? Or -- because I understand you're setting up such a huge steel plant takes a lot of time even from the beginning. So any such plans? Maybe I was understanding that a lot of companies in this sector, they've gone for something like a refurbished plant because a lot of capacities in China because of decarbonization are getting cut and a lot of such plants are available for sale. So maybe can we expedite our CapEx? Is my thought process correct? And also, sir, I want to understand that there is also this PLI scheme for a lot of various grades of steel. So are we even trying to target that because taking advantage this lower tax rates and the PLI scheme might enhance our ROCE for this project.

Maybe I'll take this question. So yes, on the PLI scheme side, we have appointed E&Y as our technical consultant to see where we can actually gain out of the scheme proposed by Government of India. So we are working with E&Y on the different products under which -- which fall under the PLI scheme. As Dinesh-ji mentioned earlier as well, things are still on the drawing board. So we still need to decide which products we need to manufacture going forward. So that is something which we still need to decide and it might take some time. On the CapEx side, as you rightly mentioned, although the corporate tax is on the lower side, but difficult to comment at the moment whether we can really achieve those targets and all because things are quite nascent at the moment. Thank you.

The next question is from the line of Ayush Mittal from Mittal Analytics.

First of all, congratulations to the team for such a fantastic performance. Despite the dip in iron ore prices, that's commendable to see what the company has achieved.

Thank you.

So sir, coming to this expansion plans that we have undertaken for the iron ore mining benefication and increase in pellet capacity, can you, sir, share more pointed insights as to by when will these capacities come into production? And by when will we see ramp-up on a quarterly basis going forward? And how will each office of this benefit us in coming times?

Abhishek?

Yes, I'm taking this. See, on the mining side, as you have seen in Q3, we produced those 2 over and above 6 lakh tonnes, so we are gradually ramping up iron ore capacities going forward. Earlier, that mining capacity was 1.8 million tonnes. We were advised EC to 2.35 million tonnes from 1 specific mines. So total EC is close to 3 million tonnes. So since iron ore mining is in the [ driving ] process, so we are hopeful to increase the capacity in the coming quarters going forward. So turning on the benefication side, the benefication plant which you are installing in the mine that's -- the project is already underway, and it should operation by, I think, starting of Q3 of this financial year, which is '22, '23.

Q3 of '23?

Yes. So...

October, November of 2022, which is Q3.

Okay. Okay. So basically, we can do higher pellet production going forward from this coming quarter?

No. See, we are already running at 100% capacity utilization on the pellet side. Our current EC is 2.4 million tonnes, and so the iron ore mining increase will not did impact the pellet production. Rather, it will help us in reducing our input costs and as well as producing more of high-grade pellets, which will give us better realization.

The next question is from the line of Raj Nahar from Mili Consultancy.

Congratulations on superb number. My question is basically on the beneficiation plant. Though you have answered, but once you complete the benefits of the plant, the entire 2.4 million tonnes pellet will be of [indiscernible]?

No. That will take some time because for that, we need to ramp up our iron ore capacity further. So yes, so with -- currently 60%, 40% of the [ charges made ], I would assume the high-grade pellet production will go up to close to 75%. And 25% is remaining the normal way production.

Okay. Are you still buying lump ore?

No, we don't buy lump ore from the market. It's been -- I think it's been years since we bought some lump ore from market. we use our own iron ore pellets for our steel making.

Okay. Okay. Is it possible to -- because now price of iron ore, of late, has been quite reasonable in your area, including NMDC, they have reduced price substantially. You are not initiating to purchase from them and completely run the pellet plant from your own, and use those lumpy ore in your small iron ore plant? So that you can get the benefit of higher pellet sale and can also get the same benefit in steelmaking by purchasing the iron ore from the market.

See, the point is very valid, but the only reason we don't use the iron ore of NMDC because our own pellets are quite low in cost for us. So the steelmaking, which we are doing right now, we are exporting our entire wire rod. So the [ sulphur phosphorus ] content, which needs to be guaranteed below [ 40 ] levels. By using the NMDC ore, we won't be able to achieve those phosphorus levels in our steel making, so which will impact our supply chain on the steelmaking side because we are getting at a premium by supporting of iron ores compared to domestic market. So that is the primary reason we don't use NDMC's. We are [indiscernible]. Plus, it's difficult to source the entire raw material required for [ steelmaking ]. A monthly production of DRI is close to 50,000 tonne. So for that, we need to source almost 80,000 tonnes of [indiscernible] from [indiscernible]. Looking at the current suppliers of [indiscernible], we won't be able to source that much because there are other units in Chhattisgarh which have a long-term agreement with NDMC. So the uptake will be much less compared to what is the requirement. So that is the reason we have never -- we have given a thought but eventually we didn't opt for this because technically, it doesn't suit our requirement of steelmaking because of the sulfur content.

Okay. And the last question is about your new solar power. This only the daytime you will be able to get. So in night, you have to get from the grid or will it be bankable with the grid? What kind of arrangement you have?

See, on the solar product, the [indiscernible] government has had -- come up with a banking policy, whereas, as you rightly mentioned, so there will be generation during the daytime. And during the evening time, the generation is banned, and we'll be drawing power from the grid. So there will be [indiscernible] the entire generation basis, annualized basis, not on a daily or monthly basis.

[Operator Instructions] The next question is from the line of Yogansh Jeswani from Mittal Analytics.

Congratulations to the entire team for a great set of numbers and performance. Sir, one follow-up on the capacity exercises that we have lined up. So we are expanding this [ billet ] capacity by almost 20% and so then we are almost doubling the billet plant and both are supposed to happen by Q4. Are we on track for the billet expansion? And what's the status of this sponge iron sir?

On the sponge iron side, we are very hopeful. We should be able to get -- so see, we have already got the clearance from CPCB, which is the Central Pollution Control Board. From the state pollution board, we are hopeful we should be able to get the clearance probably by next quarter, early next quarter. Things are in progress. And on the steelmaking side, we have already taken up the modification in our current steelmaking. And that project should be completed by Q1 of next financial year, which is April to June. And when that is completed, we should be able to increase -- ramp-up our steel capacity.

Okay. All right. So sir, once the approval for sponge iron comes in and once the billet plant is up and running by Q1, typically, how much time do we think we will take to ramp up this capacity?

See, on the sponge iron side, we don't need any time, it's -- because we have already done the positive improvement. It is a matter of just getting the clearance. On the steelmaking side, we would need at least 3 to 5 months to stabilize the process and then ramp-up capacity. So I'm hopeful by the end of this financial year, we should be able to start producing at the desired level.

Okay. Okay. So sir, if I understand it correctly, basically, in FY '23, are the major volume growth can happen from on 1 Jan for the first half? And then for second half, once our iron ore mines has scaled up and we also have a billet plant up and running, then the second half will -- the volume growth might come in from the iron ore ramp-up and billets, right?

Yes. And also, as Mr. Dinesh-ji mentioned in starting, there will be the additional advantage with the solar power coming in to operations from Q1 of financial year. So that will reduce our input costs drastically. So currently, whatever power we're drawing from the grind, INR 7.5, that will be replaced by the solar power. So that also adds to our bottom line.

Absolutely, absolutely. That's fantastic. So sir, lastly, if you could just share a number in terms of what kind of volume growth do you expect for the FY '23 and FY '24 because realization is not something which is in anybody's hand. But in terms of volume growth, what is our internal target for both '23 and '24?

See, we have been...

Sorry. Dinesh-ji please take it.

See, we have been producing the almost to be maximum capacity available we have been producing across the division. So without any further expansion in the capacities, except like billet where we are increasing the capacity from 400,000 to 600,000 tonnes, the rest of the end is -- from 500,000 to 600,000 tonnes. These are the 2 sections where the capacity ramp-up possibilities are there over a period of next 2 years. And once the approvals are received, we'll target the same capacity to be utilized going forward over the period of next 12 months. And rest of the divisions, we are operating the plant at full capacity. And of course, there is a ramp-up of the production in the mines is also going up.

Sir, just one clarification. You said steel billet is at 6 lakh tonnes, right?

Yes, [ also ] 6 lakh...

6 or 7 lakh?

No, that is the final capacity. The present -- the aim is to take it to 600,000 tonnes.

Okay. Okay. And sir, do we have scope for more capacity expansion in the current plant beyond this [ 7, 6 lakh ] and then sponge?

No. No. No.

No? Then we'll have [indiscernible]...

There is negligible scope remaining at the existing level. I think we have fully utilized -- wherever the scope were there through the debottlenecking. I think we are on the verge of completion. And whatever is there, it will get completed by end of this year or maybe by middle of next financial year.

The next question is from the line of Kunal Motishaw from Reliance Securities.

I just have a follow-up question. Sir, for the pellets, do we have any contracts in place? Or I mean, do we just sell on a spot basis? Or how does it work?

Spot basis.

It's 100% spot basis.

Yes, 100% spot basis, like -- we keep on booking in orders a month, 1.5 months. The rest is all like -- on that basis we go. We don't have a long-term contract with any party as of now.

Okay. Okay. Understood. And sir, secondly, I just wanted to understand from a business perspective, does it make more sense for us to sell more of pellets than selling sponge iron ore billet or -- I mean our margins, because at least -- obviously, the captive mine is the main positive for us.

See, there is a value addition at each stage. So it is always better to sell the finished product. At times when we see that the value addition does not make sense, we sell the intermediate product as well. But wherever there is an excess capacity of the intermediate product, we keep on selling that capacity.

Okay.

The production out of that capacity. Yes.

Okay. Understood. Understood. Okay. But margin-wise, I mean obviously, you don't give margins for each of the thing. But how would margins say, probably for sponge iron and billet be as compared to pellet?

See, this margin keep on fluctuating, depending upon the input clients. And this is something like ore and -- ore [ alone ] a steel basis. This keeps fluctuating between INR 5,000 to INR 10,000, on an average about INR 7,000 or so. And on pellet side, depending upon the pricing, the margins could be in the range of INR 4,000, INR 5,00. And if the prices go down further, then the margin will go down. So that's how it will work. So finished product pricing is very important. Raw material for us, there are 2 major raw materials. One is iron ore, where we are almost captive or maybe 90% captive. And in terms of coal, we are open to the market. So whatever coal prices are there in the market, it will impact thermal coal.

The next question is from the line of [indiscernible] from SteelMint.

Congratulations on the good set of numbers. Sir, on the wire rod front, I wanted some update from you. Like you said -- mentioned that we have started exporting high-grade wire rod and certainly, we have lowered the production of HB wire. So any update, if you could share, the export volumes and any target that we have set for this fiscal and next fiscal?

Abhishek?

I would like to be funny here. I think SteelMint covers quite a bit of Godawari Power. And I just read an article yesterday by SteelMint where Godawari Power export more than 1 lakh tonne of wire rod in the last financial year. So as you are aware, we are almost out of the commercial market of wire rod. We are producing the export-quality wire rod. SAE 1008, SAE 1010 and different grades, as stated by BIS and -- Indian Standards. So our focus will be to continue exports of wire rods because we get a better realization, plus the domestic market is so volatile. So we always prefer to operate at a minimum inventory levels. So -- and we always have a healthy book of export order, right? So that is where we're going to keep operating going forward as well.

[Operator Instructions] The next question is from the line of [indiscernible] from KLG Securities.

Congrats to the management for providing excellent result.

Thank you, [indiscernible].

My question is, I understand that are we allowed to sell the iron ore? If yes, are we selling or not?

I think with the recent policy changes, we are allowed to sell the iron ore, not to the 100%, I think 25% of that -- of our production, but we are not selling it because we need the iron ore for our captive requirement, and we are not selling it.

But the realization...

We will get much higher valuation -- are highly by converting it to independent pellet and billet rather than selling the iron ore.

Okay. And secondly, that the pellet sale are -- is it difficult to sell? Or it is a hot cake item? We can sell it immediately?

So pellet is a better product if compared to the virgin iron ore, and it is well accepted. And even China, when they cut down the steel production or when they shipped -- they shipped on the pellet rather than going on the iron ore. And whenever there are high prices, they go on iron ore. It's not that they are not producing or using only pellet, but pellet is a better product and it finds demand, and we are able to sell it without any difficulty be it in domestic or international markets. Pricing will, of course, depend on the prevailing market conditions.

Okay, sir. And how is the China demand, sir, presently and in future?

Abhishek, would you like to comment on that?

Yes. See, at the moment, as everybody is aware is China, the iron ore market globally is up almost 30% -- 25%, 30% in last 4 weeks. And everybody is quite bullish if China will continue to start producing steel at the desired level, which it was last year before they announced the production cut to maintain the emission levels, because once the Beijing Olympics is over -- so at the moment, the sentiments are positive, and I feel the market should be on upward trend.

Okay. But presently, they are not buying from us?

No, they are buying. They are definitely buying from, definitely. There are a lot of place from India against buying from China from January onwards because the prices of domestic and exports have almost come to parity. So going forward, there is a demand. And of course, China will keep that in the prices.

[Operator Instructions] The next question is from the line of [indiscernible], an individual investor.

Congratulations, sir, on a good set of numbers.

Thank you.

I would like to ask you that since FY '21 for the -- in case of iron ore pellets, right, it was basically more related to export since China was producing a lot of steel, right? So what I can go through this production summary is for this 9 months ended, we have produced more iron ore pellets, okay, in GPIL as well as ASL, right? And even if you compare last quarter to this quarter, there has been an increase in production, whereas the sales is not equivalent to that or quite close to it. So we have got a decent amount of inventory left with us. So can we assume that the domestic market is there to consume all these iron ore pellets that we have produced as in?

No, see, there is some accumulation of inventory in the steel in the last quarter. And even it continues to be so because of the logistics issue and availability or rigs. And most of the rigs are diverted for coal import and coal transportation, and therefore, there is a lesser availability of the rigs for exporting or shipment of the pellet and most of the parties are preferring the transport of iron ore through the rigs. And therefore, there is some amount of accumulation. It will get easier the moment transport situation is -- wherever there is a shortage at the end consumer level, then they change their order to load [ road transfer ] rather than deferring on the rail, but depending upon the demand/supply and logistics facilities available. There's some accumulation, but we believe that this will get eased over a period of time.

Okay. So basically, the -- this [indiscernible] as in [ I5 ] noted on iron ore pellet GPIL, 14% increase in [ Q-o-Q products ]...

There is still slightly larger, there's a major problem about the logistics and therefore, the inventory -- you would have seen Ardent is still the same. The sales is lower than the production.

Right, right, right.

I think -- I don't think -- Abhishek, do we have any -- this kind of logistic [ efficiency ] with GPIL? I don't think so.

No, no, no. We don't have any [ partnership ] with GPIL. Orissa, see, Orissa is kind of challenging in terms of [indiscernible] because there's so much of volumes. So even 10% could go [indiscernible]. So there is a [ challenge ]. But [ Chhattisgarh ] at the moment, we don't have any kind of issues. And if you do pay -- we [indiscernible] is always an issue. We have been able to come out with solutions until now. Yes.

[Operator Instructions] The next question is from the line of [ Anshuman Mohta ], an individual investor.

Congratulations for a good set of numbers. I just wanted to have a color over what would be the like long-term iron ore prices going ahead when everything gets normalized? Where do we see the iron ore prices settling? It went to 230, then it came to 80 then I think 140? So what is the long-term...

It is very difficult to predict where will be the iron ore prices when everything gets settled, and when does it get settled. So [indiscernible] beyond predicting where the prices will be...

Basically, that's beyond [indiscernible].

They went to $70, $200, $230, so -- and this is a middle of the level. What it leveled earlier, what it went up to and where the current market is, so it's very difficult. And who can presume that the prices can go up 100% in a year and can fall down 90% or, say, 70% from the top?

That's correct. I'm just asking that you must be having some averages like for the year, 1 year, 2 year ahead, it can prevent...

[indiscernible] It is early in the year hardly -- anybody can predict to the level the kind of market dynamics are there. So sorry, I'm not able to answer your question exactly.

I shall answer in one word -- in one line, that nobody knows what happened in China, even Chinese people don't know. So speculating is not the right way to go about it. We just need to enjoy the ride, whether it is going up or down. Because even China doesn't know what is going on and what policy will come up in next [indiscernible], right? And with commodity markets, especially iron ore because they're the biggest importer of iron ore in the world, China drives the iron ore market. There is no denying about it. So China wants produce more steel, iron ore will go up, like last year. If they want to produce steel, then iron ore would probably stabilize to a certain level. So it's difficult to speculate, and it's not right also to speculate.

The next question is from the line of [ Nitin Shan ], individual investor.

Sir, I just wanted to ask a question regarding Godawari Green. You've taken a shutdown and you're going for a total ramp-up of people. And can you throw some more light on that?

See, Godawari Green, we had taken a shutdown. It's just periodical shutdown after 7 or 8 years of completion, and this shutdown is for the maintenance of the turbine, and that was, say, preventive maintenance as per the operating module of the OEM. That has been completed and it resumed to operations.

Okay. So it was nothing like...

Nothing. Nothing. Nothing. It was routine maintenance. Well, and the 2, yes, it was after a gap of 8 years.

Okay. Okay, sir. And sir, one more thing. It still is being mentioned as a noncore asset in your presentation. So I assume when the CapEx for the 1.5 million to 2 million tonne steel plant is about to take off or something like that, would you be thinking of having it off at that time? Or will it continue to be 100% on? Is there a change in thought? Or any view on that line, sir?

No, there is no major change in thought. If there's the right opportunity at the right time, I think we want to do it. It's not that, and therefore, we are showing it as a noncore asset.

Okay. Okay, sir. And sir, one more thing regarding the dividend distribution policy. You had mentioned around 10% to 15% of the net profit would be distributed in form of dividend or buybacks. So we are almost 9 months -- 3 quarters in the year. So can we expect it on dividend side? Or are you thinking of any buyback [indiscernible]...

I think first quarter, we declared an interim dividend.

Yes, first quarter you did. Yes.

And basically, whatever policy which has been laid down by the Board, Board will definitely honor it so -- at the right time.

The next question is from the line of [ Marshal ], an individual investor.

Yes. First of all, definitely a big set of congratulations for the healthy result. At the same time, I also want to congratulate the CFO and the old [ ally ] team for presenting such beautiful and detailed presentation.

Thank you.

One thing has -- but I think one thing has been missed out from the presentation, which is regarding the coal report. since our company is in the steel production and the coal is a metal cost, especially the highest in the coal [indiscernible] that we show in the last 6 months. So can you please like take this opportunity and explain it better?

I'll take your advice, sir. I think we have been disclosing the iron ore prices through a chart. I think we are not disclosing the coal input cost. We've taken note of this, and we'll start publishing it from the next quarter onwards.

But I want to ask something that is currently, for example, in -- within 1 year, for example, how much of -- how much metric tonne of coal you are consuming? Do we have the linkage with the coal [indiscernible] or the subsidiary? Or are we importing the coal from outside? Or do we have a captive mine? So can you please add this to your question?

See, we don't have any captive mine. We keep on participating in the mine auction as and when we are able to get at a reasonable price, we'll definitely go for it. As regards to the consumption, I think we consume about 900,000 to 1 million tonne coal in our sponge iron ore power plant as well as in our pelletization facility through coal gasification. And part of that, the coal for DRI is imported. The rest is domestic coal, partially procured from the Coal India through the linkages and partially in the auction.

So it means that we are [indiscernible]...

We use thermal coal, we don't use coking coal.

Also -- so anyway, like because the coal price was very much high, so definitely, it means we are exposed to the degrees of the coal, like the differences in the coal prices?

Yes, not to the 100% because I think -- Abhishek, we would be importing about 500,000 to 600,000 tonnes of coal imports?

Yes. So for the sponge iron, we are importing about close to 0.5 million tonnes annually. And for the gasification, which has been using a pellet and for the power plant, we have linkages from Coal India. So that part is already covered because the Coal India notified price is quite -- a little low compared to the open market. Of course for sponge iron, we are exposed to the international market. So as in where the prices they go up, we have to increase the cost. We have no option.

Yes, one last question. So what was the prevailing price of coal in the Q3, imported coal? And what are the current prices?

See the Q3 pricing, are you aware?

The average [indiscernible] -- I'm aware. I'm aware. So for Q3, the average price was close to around [ 12,300 ] tonne [indiscernible] from my sponge iron ore consumption, which is delivered to the plant. Q4, the cost will be on the higher side because the market has gone up quite drastically in the last 4 weeks, which was never expected because of the ban from Indonesia, which was announced on 1st of January. So the cost of Q4 in coal will be slightly higher compared to Q3.

Sorry, sir. I missed your statement. Can you please kindly repeat that average coal price in Q3 and the present price approximately nowadays?

The present price, I won't be able to disclose because we buy on a [indiscernible] basis. So the index, which is something which is always discovered end of the month. So by the 1st January, the [indiscernible] index was 172. February, the mix has already closed 180. So for Q4, the prices will be difficult to come in at the moment. For Q3, prices is around INR 12,000 [ per million ] tonne.

12,000 rupees or dollar? What do you say?

No, that was INR 12,000 delivered to my plant.

INR 12,000 net of cost?

Yes.

And currently, the cost is higher or lesser, at least that idea?

Yes. For the same quality, currently, the cost is higher. Cost is definitely higher compared to Q3.

Okay. Okay, and like -- and how soon we can have the transcript of this conference call like uploaded in your website and the stock exchange, this announcement?

Sorry, come again?

How soon we can have the transcript of this conference call uploaded in your website and as well as in the stock exchange?

I think Dinesh, would be the right person to answer this.

Coal chart, we'll start amending it from the -- inserting it in the presentation from next quarter onwards.

That is fine. I mean like you've already answered this question. I'm just asking transcript of this conference call.

The transcript of the conference call.

Sorry?

He's saying the transcript of this conference call. He wants the transcript of this conference call.

Yes, I think we'll get in next 2, 3 days, and it will get uploaded. I will take the last question now, it's 12:30. Yes.

Ladies and gentlemen, this will be the last question, which is from the line of [ Shashi ], an individual investor.

Thank you for the good numbers posted. And my question is what is the total power leases at the consolidation level? [ 14 megawatts ] is the basic and what is right now the captive generation? And what is expected captive generation going forward? What is -- I mean it's after considering this expected generation, if there is a shortage or excess power? And also what is the power cost to sales ratio?

So I think, if I got it correctly, you have got 2 question. What is the current power mix? How much you are getting presently? And how much it will be after the solar project is a set up? Am I correct?

Yes, yes. And in megawatt.

In megawatt. Our current install capacity is 73 megawatts. And we are generating close to about 50 crore unit annually at our existing plant. These 3, 2 plants, 95 megawatts in GPIL will operate at about, say, 17%, 18% kind of PLI. So 18 megawatt, this additional power will come. Once the next initial year in [indiscernible]. Initially, 70 megawatts will come in Q1 and 25 megawatts will come in by Q3 around that level. So additional 18-megawatt plus 73 gigawatt will be the kind of 70-plus -- additional 25 megawatt, we are buying it from [ Tectum Power ] so 73 plus 25, it is close to about 98 megawatts plus actual generation of closer to 18 megawatts from the solar.

Okay. What is the...

Besides this, in Hira, our subsidiary, Hira Ferro Alloy, we have a 28-megawatt of power-generating capacity, 20-megawatt coal-based and 8-megawatt biomass and 1.5 megawatt windmill. So 29.5 megawatt. So 8, 9.5 is a grid power, which we sell into the grid and 20-megawatt is captive in Hira Ferro Alloy's plant. 60 megawatts additional solar power plant is coming up in Hira Ferro Alloys, and that will be also fully for captive to replace the power which we are buying from the grid currently. Hello?

Okay. What is the total power cost sales ratio?

See, our current cost, for coal-based power is close to about INR 4 to INR 4.25 paisa blended from all sections, vested recovery, coal-base import from [indiscernible], imports from grid, et cetera. And going forward, the cost will reduce as the solar power will come at a substantially lower cost.

Thank you. Ladies and gentlemen, as this was the last question for today. I would now like to hand the conference over to Mr. Dinesh Gandhi for closing comments.

Thank you, ladies and gentlemen, for attending to this conference call of Godawari Power & Ispat Limited. We have tried to address all questions in general. If anything is left out or if anybody has any question, you are welcome to contact us on the off-line, and we'll be happy to answer your question. Thank you very much. Thank you. Thank you all.

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.

Thank you. Thank you very much.