Godawari Power & Ispat Limited ($GPIL)

Ladies and gentlemen, good day, and welcome to Godawari Power & Ispat Limited Q4 and FY '26 Earnings Conference Call, hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Sahil Sanghvi from Monarch Networth Capital Limited. Thank you, and over to you, Sahil.

Sure. Thank you, Ramesh. Good afternoon, everyone. It's a pleasure to welcome you on behalf of Godawari Power & Ispat Limited. Please note that today's discussion may include certain forward-looking statements, and therefore, this must be viewed in conjunction with the risks that the company faces. We are joined today by Mr. Abhishek Agrawal, Executive Director; Mr. Dinesh Gandhi, Executive Director; Mr. Sanjay Bothra, Chief Financial Officer. May I now invite Mr. Sanjay Bothra to present the company's business outlook and performance? After which, we'll open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Sahil. Good afternoon, everyone, and thank you for joining us on today's call. Our financial results and results presentation have been uploaded to our website as well as the stock exchanges. And I trust you have had an opportunity to review them. I will now briefly walk you through the key highlights of the results, following which we will open the floor for a question-and-answer session. We are pleased to say that FY '26 has been a year marked by several significant milestones and strategic achievements. Despite soft realization, GPIL delivered good set of numbers with revenues remaining steady and EBITDA and PAT margin strong at 23% and 15%, respectively. On the operational front, GPIL delivered a strong performance in FY '26, successfully achieving its production targets across key segments. Structural rolled products and ferro alloys surpassed their targets with production exceeding 100% of planned levels. Meanwhile, mining, pellets and billets achieved 92%, 95% and 96% of their targeted production level respectively. In FY '26, healthy production ramp-up was across iron ore mining, pellet production and structural rolled products. Q4 witnessed robust Y-o-Y growth in pellets, sponge iron and structural rolled products, supported by capacity ramp-ups and healthy demand. The sales volume in FY '26 saw an increasing trend in pellets, sponge iron, generalized fabricated products and structural rolled products. In Q4, the growth momentum of sales volume remained strong led by pellets and structural rolled products. Q4 witnessed sequential improvement in the realization driven by better pricing momentum across the steel value chain, while FY '26 realization remained softer across key products. Coming to the consolidated financial performance. FY '26 revenue remained stable while Q4 FY '26 revenue recorded a strong 41% quarter-on-quarter growth, supported by healthy production ramp-up, higher sales volume and improved realizations. FY '26 EBITDA stood at INR 1,253 crores, whereas Q4 FY '26 EBITDA increased by 38% Y-o-Y basis and 91% Q-o-Q basis to INR 439 crores. FY '26 PAT also remained stable at INR 802 crores, with Q4 FY '26 PAT rising to INR 280 crores. Cash flow from operating activities improved by 29% to INR 1,157 crores, driven by strong operational performance and efficient working capital management. GPIL continues to maintain a healthy balance sheet with a cash position of INR 837 crores. The standalone during FY '26 also remained stable and healthy. The standalone PAT growth of 19% represent dividend income from Ardent Steel and exceptional income on sale of a stake in Ardent Steel. However, in the consolidated results the stake held in Ardent Steel has been de-recognized upon [indiscernible] of stake held in Ardent Steel. Further, dividend income and profit on sale of stake of Ardent Steel does not [ form ] part of consolidated results, and therefore, consolidated PAT was lower as compared to the standalone PAT. Coming to the key achievements and strategic updates. I'm pleased that GPIL received environment approval and consent to operate from the CECB in 2026 for the capacity of the Ari Dongri Mines from 2.35 million to 6 million tonnes. The ramping up of the capacity has been already begun in a fast manner with full-scale operation target from FY '28. The iron ore [indiscernible] plant capacity expansion at Ari Dongri Mines increasing capacity 10-fold to 6 million tonnes is targeted for commissioning by Q3 FY '27. GPIL also received CTO from CECB for capacity expansion of the Sponge Iron Division from 0.59 million tonnes 0.65 million tonnes, HB Wire from 0.1 million tonnes to 0.115 million tonnes, and for additional 7-megawatt waste heat recovery-based power plant, taking the total waste heat recovery power plant capacity to 49 megawatt. GPIL commissioned its 2-million-tonne iron pellet plant in December '25, taking total pellet capacity from 2.7 million to 4.7 million tonnes. The plant is India's first-to-use advanced natural gas-based [indiscernible] technology, marking a shift from conventional carbon-intensive processes. GPIL is progressing on its 0.7-million-tonne CRM complex project with on-site construction expected to commission by July FY '26. Order for key equipment lines have been placed and advance payments have been released for all major process lines. The project is targeted for commissioning by March FY '27. GPIL is setting up a 20-gigawatt BESS project for which soil testing has been completed and construction of the compound [indiscernible] is currently underway. We have signed long-term agreements with EVE Power for Grade-1 628 Ah LFP cells and with Shanghai Shenyi Roche Energy Technology for BESS balance of system supply, securing the project supply chain. This project is expected to commission from March '27. The Board has approved the setting up of a 1-million-tonne integrated steel plant for manufacturing structural steel and wire rods. Land acquisition and environmental approval are in place, while consent to establish is awaited. Discussion with equipment suppliers and project engineering are underway with construction expected to begin in October '26. GPIL also expanding its capital solar power capacity by over 3x currently from 165 megawatt to 540 megawatts, to support captive [indiscernible] across iron ore mining, additional tooling in the pellet plant, CRM and upcoming integrated steel plant operation. In addition to current 165 megawatts, the company has commissioned solar power capacity of 25 megawatts yesterday only and additional 100 megawatt is expected to be commissioned by July '26. On the ESG front, the company has completed most initiatives under its energy efficiency and decarbonization project, reinforcing its commitment towards achieving net zero carbon emission by 2050. As part of its EV-led transition towards greener operation, GPIL has invested in 10 EV dumpers, 24 EV loaders and 15 EV excavators during the year. The adoption of electric transportation has reduced operating costs by nearly 75% and lowered carbon emission by around 88% compared to conventional diesel vehicles. The company has plans to shift the existing transport fleet to EV fleet to reduce emission and cost savings, which shall be announced in due course. Now coming to the market outlook. Global iron ore prices remained relatively resilient during FY '26, supported by steady demand from China supply side disruption and healthy steel production in emerging economies such as India. Benchmark 62% Fe iron ore prices largely traded in the range of $95 to $110 per metric ton during recent months. On the domestic front, India witnessed a sharp rise in the iron ore imports [indiscernible] high of 12 million tonne plus in FY '26, driven by strong steel demand and [indiscernible] of high-grade ore required by domestic mills. Despite higher domestic production, imports increased significantly, highlighting robust consumption trend in the Indian steel sector. Looking ahead, the medium-term outlook for iron ore price remains mostly balanced [indiscernible] steel demand in China and expected ramp-up of new low-cost supply from [indiscernible] project in Guyana. However, rising steel consumption in India and increasing preferences for high-grade iron ore are expected to provide structural support to demand going forward for pellets and high-grade iron ore. On the pellet front, demand for premium-grade pellets continues to strengthen globally, and decarbonization initiatives and the gradual shift towards gas-based DRI steelmaking. Industry reports project the global iron pellet market to grow at a CAGR of around 5% to 6% over the next decade, supported by increasing adoption of cleaner steelmaking technologies. Looking ahead, India's pellet demand outlook also remains positive, supported by ongoing steel capacity expansion and the industry's growth focus on low carbon and high-grade raw materials. In conclusion, backed by the competitive advantage of captive iron ore mines, a strong net cash position, ongoing capacity expansion and [indiscernible] ESG focus, GPIL remains well positioned to drive sustainable value creation through operational excellence, solar-led cost optimization and the continued support of all stakeholders. I would now like to open the floor for questions and answers.

[Operator Instructions] First question comes from the line of Manav Gogia from Yes Securities Limited.

First of all, a lot of congratulations on a good set of numbers for the quarter. [indiscernible] on the iron ore mining guidance, I might have missed in the opening remarks, but for FY '27, if we go to Slide #17, we have a guidance of 3.4 million tonnes for FY '27. So now I think last call, you were guiding that we would be doing somewhere around 4.5 million to 5 million tonnes. So what's changed? Is there some delays in the ore production? Can you please just help me with that?

Yes. So a couple of things, firstly. So the guidance we have given is the net usable iron ore, which will be sent to the pellet complex for using it, because we will be benefited in the iron ore in the mines itself [indiscernible]. So the actual mining will be close to about 4 million to 4.25 million tonnes this year, because 1.5 million will be [ DNQ ], where the recovery will be less than 50%. So about 0.8 million, 0.75 million tonnes of iron ore will be [indiscernible] fillings. So the actual iron ore mining production will be about 4 million to 4.25 million tonnes. But the guidance we have given is the net usable iron ore coming to the plant for making pellets, which is about 3.4 million tonnes. So this year, we'll be doing about 4 million to 4.25 million tonnes of iron ore production. And end of Q3, early Q4, we should be able to hit the capacity target of 6 million tonnes. And from FY '28, we should be able to mine 6 million and the actual output concentrate usable for pellet plant will be about 4.5 million tonnes. That's how you want to see it.

And the 3.4 million tonnes also includes ore from Boria Tibu or is it [indiscernible] only?

No. See, Boria Tibu, last year, mining was hardly about 0.3 million tonnes. This year, we'll be doing about 0.5 million tonnes, because again, Boria Tibu is a very low-grade ore. So currently, we are bringing it to the plant and [ benefiting ] where the recovery is hardly about 40%. So even if we do about 0.5 million tonnes this year, the usable iron ore will be about 0.2, 0.25 million, which is very much substantial. So 3.4 million will be the net usable iron ore this financial year, which will be going to the pellet plant.

Okay. Understood. So to get it in a nutshell, we will be buying roughly 1 million, 1.5 million tonnes of iron ore for our pellet...

About -- yes, close to about 1 million tonnes, but that will drastically come down post-Diwali, which is November, once we are able to achieve the capacity post-monsoon. As the year whole, we can see total mining to be about 4.5 million tonnes, including Boria Tibu. Net usable iron ore about 3.4 million, 3.5 million tonnes for this financial year.

Okay. Got it. And the new mine now putting in the ore from this year onwards, how do we see the landed cost of ore changing? Do we expect it in the INR 2,900, INR 3,000 per tonne range?

No. This year, unfortunately, so [indiscernible] so because of the diesel escalation and the shortage all over because of the war, so our transportation cost is already up by INR 200, INR 250. But for the full year, we see the value to be at the similar levels of INR 3,000. And Mr. Bothra just mentioned, we have started talking to the transporters. We want to complete the entire fleet to EV trucks to have a substantial saving on the diesel side. So this year, the guidance will be at a similar level, which is about INR 3,000, INR 3,200 level. But Q3, Q4 onwards, we can see a substantial reduction in the pricing of mining.

Sure, sir. My second question is how do you see the pricing in Q1 as compared to Q4?

See, Q1, the pricing was pretty much at the same level of Q4 for the first half of Q1. But the second half of Q1, say, end of April, early May, the prices have softened a bit almost by 10% across the supply chain. It might be a war effect. It might be the summer season or the heat wave, which is across India right now. So Q1, the prices have softened almost 10% across the supply chain post end of April onwards.

Okay. That's helpful. Sir, just one last question. I was looking at Slide 25 where we have a vision for 2031 and we have EBITDA growing substantially from the current level. So just want to get what all are you looking at from a company's long-term strategy point of view? Is it the current projects is what the estimate is or there are certain projects which haven't been announced or I mean...

No, no, no. So it's basically the revenue top line coming from all the projects we have announced. So if you see the BESS battery storage, which is about 20 gigawatts, so if you consider about 16 gigawatts from there, we see a top line of about INR 15,000 crores. New steel plant, we see a top line of about INR 6,000 crores. The CRM, we see a top line of about INR 3,000 crores INR 4,000 crores. And with the pellet capacity crossing 4 million this year, so put together, the current complex and the projects we've already announced, we see a top line reaching close to about INR 3,000 crores in the next 4 to 5 years.

Our next question comes from the line of Sunil Jain from Nirmal Bang Securities Private Limited.

My question relates to more of EBITDA growth, what we had seen quarter-on-quarter. So if you see the prices has remained more or less same for pellets, though we had seen increase in other commodities. But the delta seems quite high in EBITDA growth as compared to what we had seen in the prices increase of the pellet. Anything...

There are 2 reasons. One is there was a carryover inventory of iron ore pellet of about [ 89,000 tonnes ] in Q3, which got sold in Q4. So the additional EBITDA has come from there. Plus our new pellet plant started production end of Q3, which is December, and we were able to reach to a 70% capacity. So the additional volume of pellet came in from there. And lastly was our mining production, which was about 2.4, 2.5 till last year, we got the EC approval at 30th of February. So March, we could do the extra mining of almost about 2, 2.5 lakh tonnes. So majorly, these 3 factors contributed to the additional EBITDA compared to Q3.

Okay. And sir, second question related to this, so 20 million overall you will be -- 20 gigawatt overall you will be doing. And can you give the time line how it will be starting? First, you will be starting 5 gigawatt and thereafter how you will scale...

Sure, sure. So see, with the current development, we should be able to commission the first line by end of Q4, which is March '27. So first year FY '28, we expect to do 5 to 6 gigawatts of output, which is hardly about 30%, 40%. Second year, we want to scale it to about 70%, which is about 12, 13 gigawatts, 14 gigawatts. And third year onwards, we expect to do about 17 gigawatts. So next 2 to 3 years, we should be able to reach to a 90% capacity. That's how we have planned for the [indiscernible] 20-gigawatt line.

And if you talk about the margin in this BESS business?

See, when we started the project, when we conceived, we were expecting a margin of roughly about 7% to 8%. So today, if you see today, the price of 1 container is close to about INR 80 lakh per megawatt hour, which is about INR 4 crores per container. So when we conceived this project, we were supposed to be about 7%, 8%, so about INR 3.5 lakh, INR 4 lakh margin. But with current demand coming from Indian sector with the grid stability and all those things, the margins have gone up almost to 12%, 13% at the moment. But still, if you consider a very conservative figure of 7% to 8% on INR 80 lakh per megawatt, we do about a INR 4 lakh net margin. And based on that, you can multiply to [indiscernible] gigawatt line. That's how we have conceived the project. For INR 4, INR 4.5 per megawatt hour into a 16-gigawatt, comes to about INR 70 crores if everything goes well.

Yes. Great. Sir, something related to this only, like how we are -- related to any increase in lithium prices, lithium sales prices, if that happens, then how we have safeguarded?

See, so as Mr. Bothra announced, we have a long-term tie-up with a Tier 1 Chinese company called EVE. So the way we have priced the entire supply of the cells, it is index-based, where we have captured a few important components, which contributes to the manufacturing of lithium cells. So if the market goes up, the supplier will pass on the price to us. If the market goes down, it will be vice versa. So for example, if you see 6 months back, the prices of lithium cells were about $37, $38 per watt, which is now at about $55 per watt, in the same way, if you see 6 months back, the price quoting in India was about INR 70 lakh per megawatt hour. And today, price quoting for the same container is about INR 85 lakh per megawatt hour. So eventually, any increase -- substantial increase in the cell price will be eventually passed on to the buyers in the Indian market to maintain the margins. So the pricing we've done with the supplier is on index-based so that it is fair to both the parties.

Our next question comes from the line of [ Aman Kothari ] from Equitas Investments.

Congratulations on the wonderful set of results. Sir, I wanted to get a current understanding on the iron ore environment that we are seeing. Recently, we have seen that it has been hovering around 105, 110, currently around 107. So do you think these prices will be stable for the next of the year? And then being at these prices spread, will eventually increase?

If you see about 15 days back, the prices also about 110 [indiscernible] with this war situation and the currency fluctuation, the prices have softened a bit. But as you see the national report, I see this year, the prices should remain about 100 levels for the entire year. That's what [indiscernible]. And there is demand from China. Import into India is also happening because of availability of iron ore in India is not up to the mark. So I feel $100 plus should be the target for the entire year on iron ore side.

And for the pellet plant, I think you mentioned, sir, it is a gas-based pellet plant that we have set up?

Yes. So earlier, we're using coal gas [indiscernible] into gasification. So now from coal gas, we are shifting to natural gas. We have done a 7-year MOU with [indiscernible] for supply of natural gas. So our new pellet plant is running 100% the fuel is natural gas.

Sir, with that, I think you clearly explained in the last call the difference between coal-based DRI pellet and gas DRI pellet. So you clearly stated you will not want to look into, let's say, a DRI that's gas-based. But with this, are we looking at that kind of an export market?

We are, definitely, with [ CBAM ] coming into picture with demand from export market and with the capacity of pellet being added in India, the whole idea was we want to be export-ready, so whenever the domestic demand is -- for example, today, the domestic demand is on the [ big ] side, you might hear a very good [indiscernible] exporting pellet from the next quarter. So we want to be future-ready, and that was the whole idea. Plus we also saved about close to about INR 100 crores of CapEx on the coal distribution side to generate the same kind of fuel. So INR 100 crores CapEx, as said, on the CapEx side, plus we are future-ready whenever export opportunity is there. That was the whole idea.

Got it. And sir, for the coal, I think you mentioned last time that South African coal prices had increased because of the supply. So can you just give us an idea on how the prices are hovering for this quarter?

See, this quarter, we are very well covered within the limits. So our average pricing should be somewhere about INR 12,500 to INR 13,000. But Q2 onwards, because of the war impact, the [indiscernible] has gone up substantially, from $15, $16, it's almost crossed $22. Dollar is up from 93, 94 level to 97 level. So there is a substantial impact on the imported coal price from Q2 onwards, at least by 15% to 20%.

20%. Okay.

Yes, yes. Yes, at the moment, it is.

And domestically, we wouldn't have a problem for the 40% mix that we have?

No, see, domestically, so at the moment, we are close to about 100% using imported coal. We have been using imported coal to maximize the production levels in the DRI. But any given point of time, we can always switch to domestic coal, and the availability of domestic coal is abundant. There is no supply or -- in supply of domestic coal sourcing. So we can switch whenever we want to. So we are carefully monitoring this war situation. And if we see the situation is not dying down, so going forward, we might shift to some part of domestic coal for DRI.

Perfect. And just sir, last question before I join back in line. I think we have established some really good tie-ups in terms of our BESS setup, how we are progressing with EVE, with [indiscernible] and other players. Sir, do you -- can you just give us a sense on how you think this market is going to play out in India? Because we've seen a lot of players announcing the CapEx or announcing the expansion of BESS projects that they would do. Can you just give us a bit light on how our talks with potential customers or early pipeline talks are progressing?

See, at the moment, we haven't gone to the market yet. We want to get into the market once we know we can deliver after a certain time period. So we intend to go into the market end of Q2, which is, say, about September, August. But see, it's an open market. People do feel the initial CapEx on the lower side, but it's actually not. And the challenge will be a continuous supply from Tier 1 components across the globe. So that is the reason we feel the market is going to be competitive. But eventually, what quality components and how you make the container eventually will play out. So once you deliver in the market, then only probably you can see who is able to deliver and want to deliver.

Yes. Okay, sir. Because I think in terms of capability [indiscernible] China is the #1 player in battery energy storage and since they're sourcing components from most of those tie-ups, I think we should be in a very good capability.

Yes. So we also -- so recently, just to inform all the stakeholders, we recently also have tied up with [ Femar ], which is an Italian-based company. They have a plant in India for PCS, and we have tied up with a Gujarat-based developer for [indiscernible], which is compulsory as a part of battery storage by the Indian government. So we are continuously doing long-term tie-ups with key component suppliers so that we don't -- we have a continuous supply for all the components on a regular basis.

[Operator Instructions] Our next question comes from the line of from [ Vinit Thakur ] from [ Plus 91 AMC ].

Congratulations on a good set of numbers. Sir [indiscernible] conversion ratios, how do the conversion ratios look right now when mining [indiscernible]?

See, the conversion from mining to pellet is about -- close to about INR 2,000. And from pellet to DRI, including thermal coal, of course, so it comes to about -- so the conversion cost -- operating cost is about INR 15 from pellet to DRI, and remaining is your coal and iron ore cost. So iron ore is about 40%, coal is about 35% and remaining is the operating cost. So [indiscernible] a breakup of [indiscernible] INR 20,000, of that, pellet will be about INR 10, coal will be about INR 8.5 and remaining [indiscernible] operating cost. That is breakup for the DRI.

[indiscernible] quite incremental Q-o-Q and Y-o-Y growth on [indiscernible].

Yes. So a couple of things. One, so we took the [ RS for ] rolling mill, which we had designed. There was some modification required to improve the quality and upgrade the production. So that modification was over in end of Q3. So that's why you are seeing a substantial increase in the rolled products production from Q4 onwards. And now you can see this production happening on a continuous basis quarter-on-quarter because the [indiscernible] is quite stable, and [indiscernible] of the product in the market. So we have a healthy order book of almost 6 months on [ RS spot]. So now you can see the volumes on quarter-on-quarter basis.

So sir, what would be our capacity and what would be the utilization for this year, you are expecting for FY '27?

See, so total rolled products, including Godawari, we should do about somewhere about 3.75 lakh tonnes for the entire year.

Our next question comes from the line of [ Stutti Agarwal ] from [ Chester Investment Limited ].

Sir, regarding the exceptional line item in P&L, you had mentioned in your opening remarks that the difference between a positive reflect some of positive INR 36.69 crores at standalone level to a negative INR 18.29 crores at consol level due to the non-inclusion of profit on sale of Ardent Steel. So could you please give us the bifurcation between this profit and I guess the write-off of preoperative [indiscernible] power plant?

Yes. See, in other income, there is a INR 91 crore item of dividend from Ardent Steel Limited, associate company, and there is around INR 73 crores profit on sale of the stake of Ardent Steel, which is [indiscernible] in the exceptional item with stand-alone results. [indiscernible] cost to cost basis, but when the consolidation comes, so on the equity method, the profit recognized in stand-alone on cost basis is eliminated and INR 117 crore profit is there on the entire plant [indiscernible] Ardent Steel stake thing. INR 17 crore gain as exceptional items and around INR 37 crores or INR 36 crores write-off of the [indiscernible] Godawari Energy [indiscernible]. So net-net, there is INR 17 crore loss in consolidated [indiscernible] as exceptional loss.

Our next question comes from the line of Yogansh Jeswani from Mittal Analytics. [Operator Instructions] Our next question comes from the line of [ Sinclair Desozur ] from [ Welka Securities ].

I wanted to ask what is the revenue guidance for FY '27 and the EBITDA margin guidance for FY '27?

See, revenues -- revenue, we should -- top line should be INR 6,000 crores plus with our new pellet plant operating at close to 80%, 90% capacity. So there will be additional volume and additional revenue coming from there, as other volumes remains almost constant. And FY '27 guidance, at current market levels, we should be able to do somewhere about 24%, 25% of -- at EBITDA levels at current market levels. It's very difficult to comment, it's actually such an early stage of the financial year. But looking at the current market scenario, 25%, we should be able to maintain the EBITDA levels and top line should cross INR 6,000 crores with the additional volume of pellet coming in.

Our next question comes from the line of Sahil Sanghvi from Monarch.

Congratulations again on very good results. My first question is on the pellet, if we have to see the quarter-on-quarter realization, it's not moved at all versus the market pricing. So what's happening over here? If you can help us understand the reasons? And how can pellet prices look for FY '27?

Sahil, so on the Q4, we see the pellet pricing hasn't moved much compared to market because there was a phase where we were not able to do mining at the full capacity because of the EC decision, as EC got delayed right from October, November, then finally came in end of Feb. So we were not able to produce the same volumes of high-grade pellet where we draw more than INR 1,000. We had to make the [indiscernible] commercial pellets. So that is why you were not able to see a difference in the pellet pricing compared to the market scenario. That was the major reason. No other reason beyond that. And on the FY '27 guidance, so see, as the mining portion goes up from Q3 onwards, once monsoons are over, the product mix of high-grade will start going up drastically, and that will definitely show a difference between the pellet pricing for Godawari and the others in the market. But that will happen from Q3 onwards, as the mining portion starts going up post monsoons.

[Operator Instructions] Our next question comes from the line of Yogansh Jeswani from Mittal Analytics.

Congratulations to -- and the entire team on a good set of numbers. Sir, just wanted to understand on the new mining and the pellet plants [indiscernible] that you were explaining before. So earlier [indiscernible] lakh tonnes of ore and [indiscernible] convert that into pellet [indiscernible] because of the [indiscernible] plant, you're saying that the mining would be higher, 4 million, 4.5 million [indiscernible] or would be 3.5 million. So why is there a change in that? If you could help me understand, sir.

So there is a slight correction. So earlier we used to mine about 2.4 million tonnes. If you see last year's mining production, it was about 2.35, 2.4 million tonnes. This year, we have done about 2.7, 2.8 because we were able to get the EC in Feb and there was initial production in March. So that's why there was an initial increment. Till last year [indiscernible] was not in operation. We started [indiscernible] operations last year only where we did the mining of [indiscernible] lakh tonnes. So if you compare based off that, against the 2.4 million, we will be doing about 3.4 million tonnes. So straight away a jump of almost 1 million tonnes for this financial year. So if you compare with that, 3.4 [indiscernible] and actual mining will be 4 million plus. And from next year onwards at full capacity, the actual mining will be 6 million tonnes and [indiscernible] will be about 4.5 million tonnes after [indiscernible]. Earlier there was no [indiscernible] plant in the mines. The [indiscernible] plant started last year. So there was a little bit of [ benefication]. And the further we go up once we commission the new plant of 6 million tonnes.

Got it. So sir, if you can broadly explain how does the economics and margin change once we do verification, because [indiscernible] we are extracting more ore and converting to lesser pellet. Is that [indiscernible]?

Yes. Exactly.

So just how does the margin or the economics working in case of [ verification ] plant?

So just to give you a very brief explanation, we benefited -- average grade in the mine is about 59, 60 Fe. We [indiscernible] benefited that, upgrade that towards 67 concentrate, based off which we will be making a high-grade 65 pellet. So once you do that, about 15% of iron ore is wasted in the form of [ fillings ]. So if you do 100 tonnes of mining, about 85 tonnes of concentrate you will be getting to feed to the pellet plant. This is one scenario. And the second scenario is we will also be mining a [ BNQ ], which is a low-grade [indiscernible] where 35, 38 Fe will be average [indiscernible] 65, 67. In that, the recovery will be [indiscernible] only 30%. So when you put together whole, the recovery based on the 6 million will be close to about 70%, 80%. So about 20%, 25% of the entire iron ore will be wasted as a [ filling ]. So on a 6 million, if you subtract 25%, you'd get about 4.5 million tonnes of iron ore, usable iron ore, of 65-plus concentrate. That is how it works.

Got it, sir.

If I don't beneficate, if I [indiscernible] iron ore, I will get more volume, but [indiscernible] pellet will be below 59, which is not sellable in the market. So i will have to beneficate to upgrade [indiscernible]. That is the whole idea.

Got it. And sir, I think a couple of calls ago, you had mentioned that beneficating at the mine will be saving some logistics as well. [indiscernible] more on these new plants, what was the number, if you could share or if there is any change in that number?

See, so currently the [indiscernible] is about INR 1,000. So if we're able to remove 10%, 15% of [indiscernible] inside the mine [indiscernible] will bring on the [indiscernible]. Earlier we were doing benefication inside the pellet plant and [indiscernible] complex, so we were losing on the [ thread ]. Now from Q3 onwards, we'll be beneficating inside the mine. So straight away, there will be a saving of about [indiscernible] per tonne on the final concentrate being sent to the plant for usage.

[Operator Instructions] Our next question comes from the line of Vedant Sarda from Nirmal Bang Securities Private Limited.

Sir, just wanted to know, any of our plans to increase our mining capacity or [indiscernible] into new mining, like [indiscernible] capacity?

See, at [indiscernible] levels, we already planned the expansion to for Ari Dongri, and that will take care of the next [indiscernible]. On Boria Tibu plant, we've already announced earlier, we are planning to take the mining capacity from 0.7 million to 4 million tonnes, along with benefication inside the mines because, again, Boria Tibu is a low-grade ore, about 35 Fe content, 40 content. That will take about 3 years from now on. We already started working on it. So Boria Tibu should be online by I think FY '30, including benefication. Once we are able to do that, so Boria Tibu, the output, usable output, 1.5 million tonnes. So these are the current mines which we plan for. In future, if there is any new mines coming up in auction, which we feel is attractive, we are always going to explore that. But at the moment, we don't see any good mines coming up in the area. If there is an opportunity going forward, we will definitely explore it.

Our next question comes from the line of [ Wendana Rathi ] from [ Coleman ] Capital Investment Advisors LLP.

One bookkeeping question. So I wanted to understand how much [indiscernible] inventory gain in Q4?

Can you come again, please? You're not audible.

How much was the inventory gain in Q4?

Inventory gain in Q4.

Yes.

No, I think -- Bothra, you have that figure for that, inventory gain?

We have roughly gained INR 20 crores on account of unsold pellet stock carrying from last quarter and sold during the quarter. So that's higher realization, INR 20 crores roughly, on 90,000 tonnes.

Yes.

Okay. Sir, my next question is [indiscernible] go into the results, I was seeing [indiscernible] crores of loan [indiscernible] to the education subsidiary company for some residential project. Do you want to highlight something on that?

We have taken an enabling resolution for the time being. The school will separately go for the loans from the other sources. In the meanwhile, for the timing arrangement, we have taken this enabling resolution.

[Operator Instructions] our next question comes from the line of [ Divya Agarwal ] from [indiscernible].

Sir, only one question regarding the 2031 guidance. So basically, in the guidance, you have mentioned that you'll be achieving INR 3,000 crores PAT. So that's like a 10% PAT margin. So just wanted a clarification, is it because the margins are coming down because of our BESS project?

BESS and the CRM. So both BESS and CRM will be on the lower margin side. So the stock volume will go up heavily, but the margins -- so BESS is about a 7%, 8% margin business. The CRM is about a 7%, 10% margin business. So that's the reason the overall margins are coming down, but the top line is going heavy, exponentially there is top line growth.

Right. Got it. And secondly, sir, just wanted to know your outlook on the current pellet situation domestically. How is it? And in terms of the capacity as well, are you seeing any overcapacity coming in? Just wanted to get a sense on that.

See, at the moment, we don't see an overcapacity coming in. But there will be a challenge to merchant pellet players who are solely dependent on market for purchase of iron ore. We can definitely see a squeeze in margins for them. But for people like Lloyd, Godawari or other companies which have the capital resources, I don't see a pressure on margin there and also on the demand side. So at the moment, there's [ no over ] demand supply, plus exports is [indiscernible]. You see today, export market is very much viable if you want to really explore. So I don't see at the moment going forward, all depends how the steel market grows.

Our next question comes from the line of [ Varun Mehta ] from [ Welping Investment ].

So I just want to know how the steel plant cost [indiscernible] INR 700 crores, I think [indiscernible] 1 million tonnes of your INR 4,000 crores [indiscernible] something else on this?

No. Yes, so I personally send an apology to all the stakeholders. Because for us being the first time [indiscernible] we did a wrong calculation. There was a wrong estimation done by us on the CapEx side. So again, once again, sincere apologies. So if you can please omit that entire story from your mind. We were wrong on the cost estimation. The current CapEx given of INR 7,000 crores is very much on the practical side. We have done a thorough study with the equipment suppliers. And based on that, we have shared the details with the stakeholders.

Okay. And what is [indiscernible]?

There are a couple of changes, which there is an increase in CapEx. One is earlier we had said we had no intention of putting up a [indiscernible] plant because there was ample of import of coke available from [indiscernible] other countries. But last year to support the local domestic coke industry, government of India has imposed restrictions on import of cokes, because of which we are investing heavily in the coke oven plant, one. And secondly is the product we want to enter into is a value-added product. It's not a PMC or a regular wired product. So the structure mill which we are proposing, it's a value-added steel and it has a substantial cost compared to similar volume of a PMP or [indiscernible]. So on these 2 accounts, the [indiscernible] is slightly higher compared to a standard 1 million steel plant. But apart from that, numbers are pretty much on the similar levels.

So how much return we are looking at for this investment of [indiscernible]?

We expect an EBITDA of more than 20% once the plant is operating at full capacity. So currently [indiscernible] steel, and currently, there is not much competition from the Indian market. So we should be able to do EBITDA more than 20% going forward once the plant is running at full capacity. But again, it's a commodity market, it's steel. Anybody is open to invest in [indiscernible] CapEx. It's just an estimation, which we have thought of going ahead.

And can you just share what is [indiscernible] what is the basic cost [indiscernible]?

See if you consider INR 2,000 benefication [indiscernible] our current cost of pellet should be about INR 55 to INR 57 after benefication.

Okay. And last question is the guidance, what we have provided for 2031 on the sales part, does [indiscernible]?

Yes, it includes the steel revenue, includes the first phase of battery storage and the CRM revenue. All three.

So the steel plant is [indiscernible].

No, no. 1 million steel plant, the battery storage and the CRM complex, all 3.

Our next question comes from the line of [ Aryen Bhatia ] from [ Inward Research ].

[indiscernible] 4.5 million tonnes mine, what will the pellet [indiscernible]?

Okay. So you're not audible, still I [indiscernible] the question. So as said earlier, we'll be doing about 0.8 to 1 million tonnes of procurement of iron ore this year to run at full capacity. And that should drastically come down from Q3 onwards once monsoons are over. And the conversion from mining to pellet, as I mentioned, it's after benefication of all kinds of ore, it is about -- so if you mine 100 tonnes iron ore, you'll get about 75 tonnes of usable concentrate of high-grade to feed the pellet plant. So if you do 4 million mining, you get about 3 million, 3.2 million tonnes of usable iron ore for the pellet plant.

[indiscernible] how much is the [indiscernible] how much is the [indiscernible] and how much is the [indiscernible]?

Okay. So for this financial year, so the [indiscernible] will be close to about 2.3 lakh tonnes, which will be further [indiscernible] 0.2 for the rolled to 1.1 [indiscernible]. And on the structural side, [indiscernible] 1.2, 1.3. So put together, we [indiscernible] about 3.7 [indiscernible] rolled products this year.

Our next question comes from the line of [ Ajiv Seti ] from [ IQOR Quantum Solutions ].

So my question is on the CRM complex. So in the previous con call, we have guided for 50% utilization in CRM complex in FY '28. So are we on track to achieve that guidance?

Yes. At the moment, with the current status being shared with all the stakeholders, made earlier by Bothra, so at the moment, we are on track. We are hopeful to commission the first line by end of Q4, early Q1 next financial year. And that's why we've taken a very conservative guidance of 50%, which is at about 3, 3.5 lakh tonnes of CRM complex for FY '28.

And sir, how can we expect the further ramp-up of capacity going forward?

So from FY '29, we should be at about 90% capacity for sure.

Our next question comes from the line of [ Rohan Mehta ] from [ Strategy ].

Just a couple of questions. So currently, the Indian pellet prices seem to be around INR 10,000 and the global price is around INR 11,500. What I wanted to understand was what is the delta because of the higher freight cost that we are looking to export?

Can you come again please? You were not audible initially.

Sorry. Indian pellet prices seem to be around INR 10,000 and export market is around INR 11,500, if I'm not mistaken. But because of the higher freight cost, what is it that we are looking as delta to export?

See, currently, if you talk about from my plant to, say, China, just for a number, including the freight costs, it is somewhere about INR 3,000. So if I'm selling at INR 10,000 at plant, so my export price to be at the same -- similar level, that should be somewhere about INR 13,000 level, which is not the case. But today, the Indian prices are about INR 9,500, and with the dollar inflation, today, if we want to export, we can easily achieve more than INR 9,000 [indiscernible] plant. So the delta is now hardly less than $10 between domestic pricing and export pricing.

So probably sometime in the next quarter or this quarter end, we should start exporting, right, if I'm looking at correctly?

See, it all depends. If the Indian market continues to remain on the lull side, which is at the moment because of XYZ reasons, and the export market remains at these levels, so we might see some volumes going into export.

And those reasons currently in the Indian market, is the Lloyd extra capacity or just monsoon coming up?

See, to be honest, Lloyd hasn't hit the Chhattisgarh market at the moment right now. 90% pellets are going into the Chhattisgarh market. So Lloyd hasn't touched the Chhattisgarh market at the moment. But there is overall -- there is a demand -- there is a lull in the steel demand. There's no selling in the finished side. The prices [indiscernible] almost by 10% in last few weeks. So the overall sentiment is weak. Based off that, we have started exploring the export market.

And the second question is on the BESS front. Just like everything else, the 5, 6 gigawatt-hour for the next year is a conservative guidance or that is what we are looking to achieve?

No. It's a very conservative guidance.

Perfect. And in the 2031 explanation that we are assuming, we have not considered the phase two of the BESS thing. Is there a reason for that?

No. There's no reason. [indiscernible] we thought whatever we have announced, whatever the projects we have started taking shape, we want to give our estimation, which is that. Phase two, when it will come [indiscernible] will come, we don't know. Because battery storage itself, it's huge, it's [indiscernible]. Hello?

Sure, sir. Go ahead.

We haven't considered phase two. The only reason is because it's something which is very new for us. We want to establish the phase one. We want to run the plant at full capacity. And based off that, we want to decide whether we want to go ahead in the phase two, whether we want to get into expanding capacity in phase two or whether we want to go [ battery ] indication and enter into a cell manufacturing with [indiscernible] tie-up. It's a very nascent stage for us to decide for the phase two. So that [indiscernible] estimation is based off the current project shaping up.

Our next question comes from the line of Manav Gogia from Yes Securities Limited.

Sir, I just wanted to know, or one clarification, the new steel plant of 1 million tonnes that we have, is this a blast furnace or is it in the DRI route?

No, this is a blast furnace route. See, we have no intention of getting into coal-based DRI because it becomes very challenging to be cost effective in producing steel and compete with the big guys. So it's a blast furnace route, which [indiscernible] in India at the moment now. We did over the gas-based DRI route. But looking at the current supply discussion and dependency on import of natural gas, we thought it's better to go with the commercial blast furnace route, at least for the phase one.

So this will include the 1 million tonne blast furnace or 0.7 million tonnes of coal [indiscernible] as well, right?

No. So the blast furnace capacity should be -- the [indiscernible] should be about 1.1 million, 1.2 million tonnes. There's a 0.5 million coke coal one, nonrecovery coke coal one. There will be 1 million sinter plant. So our idea is to -- 50% pellet and 50% sinter because you want to also [indiscernible]. We don't want to keep selling pellets in the market. So 50% pellet from a new plant will be going to the blast furnace. And then remaining steel complex, right, from converter to the finished side.

Got it. Got it. And secondly, what sort of land parcel, I mean we have roughly 452 acres, right?

Yes. So we have 450 acres, and that is more than sufficient for the entire complex.

No. Yes. My question was what would be the scalability in the future if we had to go for a brownfield expansion? So will we have enough infrastructure from -- if we plan to move on going ahead post...

So see, we have left a certain space for a brownfield expansion, plus we also identified nearby land, which is adjoining to the current land. So if we think we want to go for a brownfield expansion, we can always use that same parcel and a little bit of adjoining parcel to expand. But to be honest, at the moment, we are not thinking of phase two. We're just considering the phase one at the moment right now.

Got it. And we continue to maintain focus on the [indiscernible] products because I think we also have a CRM complex. So [indiscernible]...

See, the idea -- see, the problem is, see, for a CRM complex, right, for HR mill, the minimum capacity, which is technically commercially viable is 2 million [indiscernible] because the mill has to be [indiscernible] plus. So for a [indiscernible] 2million mill, we didn't have the hot metal, then CapEx would have crossed maybe INR 12,000 crores INR 13,000 crores. So we don't want to go that high. Secondly, even with the steel capacity announced by the big players, we already feel today India's market is oversupplied by HR coil, plus import is always open, right? So it's not -- instead of doing a HR complex, let's just focus on CRM, which is a [indiscernible] and enter into [indiscernible] product where we are entering into the structural and other segments. So that is the whole idea behind not going to HR complex here.

Understandable. Sir, second question is, could you please highlight how the next couple of years would look in terms of CapEx? And what sort of debt numbers do we see coming up because INR 7,000 crores, I think 1:1 would be the debt equity [indiscernible]?

See, the CRM, the battery storage, we have already invested more than almost 40%, 50% in both the projects. So this year, the CapEx on the steel side hardly will be about 10%, which will mainly go into account of ordering of equipment and advance. The major CapEx we're going to incur in steel will happen from FY '28. FY '28, FY '29 will be the major money inflow into the steel plant. Apart from that, we are [indiscernible] approval. So whatever debt we have to take on will be happening from FY '28 only and [indiscernible] steel CapEx.

Got it. So in a nutshell, if I have to assume for FY '27, we can take INR 1,800 crores to INR 2,000 crores CapEx number, right? Would that be the correct way to think of it?

Yes, including the balance of CRM balance of your battery storage and solar, we can [indiscernible] CapEx of close to about INR 1,500 crores to INR 2,000 crores FY '27.

And '28 onwards, it can probably go towards INR 2,500 and INR 3,000?

Yes, about INR 3,000 crores. About INR 3,000 crores FY '28 and INR 2,000 FY '29. Very correct.

Okay. Got it. That is helpful. Just one request I had. I think in our earlier presentations, we had split the project-wise CapEx and the time lines and whatever CapEx we had incurred. If you could just bring back that from the next presentation would be really helpful.

Sure. Very well noted. We will take care of that.

Our next question comes from the line of [ Aman Kothari ] from Equitas Investments.

Sir, I think in the last con call, we had guided that pellet capacity will be running at over 90% utilization and we'll be targeting around 4.1 million, 4.2 million tonnes. So I think what you guided that we'll be looking at around 3 million to 3.2 million tonnes. So any reason why we're looking at 3 million to 3.2 million tonnes pellet quantity for this year?

No, no, no. There's a confusion. So pellet guidance for this year is 4 million tonnes. The iron ore volume, net usable iron ore for the pellet is at 3.4 million tonnes.

Okay. So that will be the captive one you were stating earlier. Okay.

Exactly. Exactly. So the pellet guidance is 4 million tonnes this year, and iron ore guidance negligible is at 3.4 million tonnes.

Got it. And it would be the same mix, sir, [indiscernible] same than captive?

Yes. Captive capacity remains the same. Captive capacity is about 0.9 million to 1 million tonnes. There will be no incremental captive capacity. So the pellet [indiscernible] will be at about 3 million tonnes.

Got it. And as you had earlier rightly pointed out the increase in diesel cost that we have seen particularly, so can you just give an idea on the incremental cost it would accrue in terms of mining cost?

See, diesel, the good thing is, of course, we have also invested heavily into EVs in the mining as well. So [indiscernible]. So currently, our major concern is on the transportation side because our entire iron ore comes by road. So the diesel pricing on the rising side and looks to be at the similar levels for quite some time. We have started working on the EV, and we want to replace that with EV. So currently, that transportation is about INR 900. We foresee it can go up to INR 1,150, INR 1,200 if the diesel prices continue to rise in the near future.

INR 1,150 to INR 1,200, okay.

Yes, yes. For short term. Yes.

Short term. Got it, got it. And sir, as you rightly pointed out that we're looking to transition to an EV fleet. Do you have -- is there an estimate on what would be the fleet size that we are targeting and the amount that we will be committing to the same?

See, the amount of iron ore we need to move at the full capacity, we need to deploy more than about 300 trucks, about 350 trucks capacity. Yes, 350 trucks. So at a full side CapEx should be more than about INR 350 crores.

Okay, INR 350 crores. Got it, sir.

Yes, yes. With the charging infra and other things, it should be about INR 350 crores at full scale.

Participant has left the queue. Ladies and gentlemen, that was the last question for today. I would like to hand the conference over to the management for the closing remarks. Thank you, and over to you, team.

We would like to express our sincere appreciation for joining us on this conference call, and we are confident that we have adequately addressed all your queries. Should you have any further questions or need additional information, please feel free to reach out our IR team at Go India Advisors. Once again, we sincerely thank you all for your active participation and unwavering support. Thank you.

Thank you so much, sir. Ladies and gentlemen, on behalf of Godawari Power & Ispat Limited, also Monarch Networth Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect.

Thank you.

Thank you.