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

Ladies and gentlemen, Ladies and gentlemen, good day, and welcome to the Godawari Power and Spark Limited Q1 FY '27 Earnings Conference Call, hosted by Monarch Networth Capital. [Operator Instructions]. Please note that this call is being recorded. I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you, and over to you, sir.

Thank you, Shi. Good afternoon, everyone. It is a pleasure to welcome you on behalf of Godawari Power & SpA Limited. Please note that today's discussion may include certain forward-looking statements and therefore, must be viewed in conjunction with the risk that the company faces. Today, we are joined by Mr. Abhishek Agarwal, Executive Director; Mr. Dinesh Gandhi, Executive Director; and Mr. Sanjay Bothra, Chief Financial Officer. May I now please invite the management to present on the company's business outlook and performance, after which we will have -- we will open the floor for Q&A. Thank you, and over to the management, please.

Okay. Thank you, Sahil. Good afternoon, everyone. Thank you for joining us on today's call. Our financial results and earnings presentation have been uploaded to the stock exchanges and our website. I trust you have had an opportunity to review them. I will briefly walk you through the key highlights of the results and progress on various projects, following which we will open the floor for Q&A. GPIL has made a steady start to FY '27, delivering resilient performance in Q1 FY '27, supported by healthy revenue growth, improved sales realization, stronger realization across key product segments. Sequentially, profitability was impacted by higher input costs driven by increased iron ore sourcing from the market and elevated coal prices following West Asia crisis. These pressures are expected to ease upon commissioning of beneficiation plant, enabling higher captive mining, improved raw material availability and enhanced cost efficiencies. Coming to the operational performance, our iron ore mining volume declined primarily due to space constraints for dumping up overburden in view of delaying obtaining tree cutting permission in the additional allotted land. This resulted in higher market procurement of iron ore for pellet production, leading to elevated input costs. Despite this, production grew Y-o-Y across product categories, except iron ore mining and galvanized products. On a Q-o-Q basis, production remains subdued across most segments with sponge iron and wire ferro alloys being key exceptions. We remain on track to deliver our FY '27 guidance with Q1 volume achieving between 16% to 29% of full year guidance. Our value-added product also recorded healthy Y-o-Y growth in Q1, led by sponge iron billet and production. This further supported by improved realization of most of the product, both on Y-o-Y and quarter-on-quarter basis, contributing to healthy revenue growth during the quarter. Talking about the consolidated financial performance. Q1 FY '27 revenue recorded both Y-o-Y and sequential growth, supported by healthy sales volume and improved realization. EBITDA and PAT remained broadly stable Y-o-Y, although profitability softened sequentially due to elevated input costs, primarily food on account of higher procurement of iron ore from market and coal prices. EBITDA and PAT margin stood at 19.1% and 12.7%, respectively except margin improvement. We expect margin improvement from Q4 FY '27 following commissioning of beneficiation plant, enabling greater utilization of captive iron ore pellets. Now coming on our key growth projects. The Ari dongri iron ore mine expansion is progressing as planned with ramp-up expected from Q3 following commissioning of beneficiation plant and full-scale operation targeted from FY '28. The beneficiation plant will strengthen the captive iron ore security and improve ore quality for pellet production. CapEx of INR 100 crores to INR 218 crores incurred in the beneficiation plant till June '26. 4.7 million tonne expanded pellet capacity operated at 77% utilization in Q1 and is expected to ramp up to around 80%, 85% in FY '27 as the operations scale up. As regards to our integrated steel plant and CRM projects, the company has decided to keep the proposed 1 million tonne integrated steel project in Aviance due to on-ground challenges and delays in approval, especially the approval for water allocation, which resulting in delay in final EC and consequently, the consent to set up the pellet plant -- consent to set up the integrated steel plant. Consequently, in order to leverage the benefit of state incentives and subsidies, synergies from proximity of this plant, the 0.7 million tonne CRM complex is proposed to be relocated to Maharashtra near Sambhaji Nagar, the identification land for the proposed CRM project has been completed and application for allotment of land has been submitted to Government of Maharashtra. We expect the land allotment approval by end of August '26. The project construction activities are expected to start from October 2026. The project is now targeted to be commissioned by December '27 with planned CapEx of INR 1,100 crores to be funded through INR 550 crores of debt and balance through internal accruals. The 20 gigawatt base project is progressing well and is scheduled for commissioning in Q1 '28. Soil testing has been completed. Construction of the compound wall is underway. Key supply agreements for major equipment and raw materials have been finalized, including long-term sales procurement, keeping the project execution on track. The project is also supported by incentives from the Government of Maharashtra. We have already incurred a CapEx of INR 501 crores till date in the project. As regards to the expansion of solar projects, capacity from 165 to 290 megawatt, the iron ore mine is an additional 2 million tonne pellet plant for captive use. The 25-megawatt solar plant commissioned has been commissioned in May 2026 and 100-megawatt project is under construction, targeted for commissioning by September '26. The proposed 250-megawatt solar project has been kept in a due to relocation of CRM project to Maharashtra in which the solar power was proposed to be consumed and also the delay in land allotment for the solar project. The 45-megawatt project for storage of captive solar power plant under implementation and targeted for commissioning by Q3 '27, targeted for commissioning by Q3 '26, not '27, sorry. Upon completion of plant projects, the captive solar power capacity will reach to 290 megawatts and solar storage capacity will reach to 45 megawatts. The CRESIL has reaffirmed the credit rating of the company at AA- stable for long-term facilities. I'm also pleased to mention that GPIL is recognized among India's 500 most valuable companies in 2025, Bargandi Private Harun India list 500 list, reflecting growing scale, strong business fundamental and sustained value. On ESG front, the company has completed initiative under energy efficiency and decarbonization program. The 6.9 megawatt WRHB plant has been -- has commenced commercial production, taking total WSE capacity to 49 megawatts. GPIL is also advancing its decarbonization efforts through 5 TPD carbon capture utilization project in collaboration with IIT Mumbai for which civil work is underway and completion targeted by end of FY '27. The company has demonstrated a strong focus on reducing carbon intensity with CO2 emission per tonne of steel trade under 2 internationally recognized framework Carbon Border Adjustment Mechanism, CABM calculation independently assessed by SGS and World Steel Association, ISO 14064 standard. Under CABM technology based on the total carbon basis, emission intensity stood at 3.180 CO2 tonne in Q1 FY '27, improving 1.9% quarter-on-quarter and 4.2% Y-o-Y from 3.244 tonne fixed carbon under the World Steel Association methodology based on fixed carbon basis, emission intensity stood at 2.485 tonne CO2 per tonne of steel production in Q1 FY '27, remaining broadly stable quarter-on-quarter and Y-o-Y as against target of 2.4920 fixed by Government of India. Overall, Q1 FY '27 reflects improved carbon efficiency under CABM framework, while WSA-based emission remained stable. As a part of its EV transition towards greener operations, CPL has added 5 new dumpers during the quarter, taking fleet to 15 EV dumpers, 24 EV loaders and 15 EV excavators. The adoption of electric transportation has reduced the operating cost by nearly 75%, CO2 emission by around 88% as compared to the conventional diesel vehicle. Now coming on the market outlook. India's iron or production is expected to rise to 8% to 340 to 345 metric tons during million tonnes during FY '27 with most incremental supply coming from captive mines, while pellet production stood at provisionally 120 million tonnes in FY -- in FY '26, up from 109 million metric tons in FY '25, led by Odisha and Maharashtra. The demand remains supportive, driven by rising steel production, higher pellet uses with shift towards higher grade DR-grade pellets. However, industry utilization remained constrained at 65% due to exports, limited high-grade availability and margin pressure. Globally, iron ore prices remained resilient, close to about 95 to 105 tonnes supported by healthy mill margin and inventory destocking despite peaking Chinese steel consumption. While additional low-cost supply from Chemandu project presents downside risk, iron ore prices broadly remained stable closer to about INR 5,0R5,500, while pellet prices are in the range of INR 9,000 to INR 11,000 per tonne with current levels at around INR 10,000 a ton. Meanwhile, India's steel demand outlook remains strong, supported by infrastructure, housing, railway and manufacturing investments. In conclusion, I would like to mention that backed by strong FD mining assets, strong balance sheet, ongoing capacity expansion and focus on ESG and cost optimization, GPIL remains well positioned to drive sustainable long-term value creation with clear road map and strong execution focus, company remains confident of achieving its Vision 2030 targets of 4x increase in revenue, 3x growth in EBITDA and PAT. We remain committed to delivering on our growth ambition and creating value for all stakeholders. With this, I would like to conclude my opening remarks and open the floor for Q&A. Thank you, and over to you, moderator.

[Operator Instructions]. The first question is on the line of Mana Gogia from Yes securities Limited.

Sir, my first question comes around the steel plant that now is getting delayed again. So just wanted to get your sense of if you could help me in understanding, are there any specific milestones or conditions that need to be satisfied before the Board revises this project? And also now going ahead, should we continue to build this steel plant into the company's medium-term expectations? Or should now we view it as an optional growth project rather than a committed CapEx plan?

So on the first question, the milestone which we expect was the water allocation. So earlier, we were given an LOI by the state government for the water allocation. But once we got back to them for the confirmation letter, so then there were challenges and because of which the entire water adotment of 9.4-something MCM has been delayed. It's been almost been 6, 8 months now. So that is the reason the project has been kept on hold. And from an investor angle, I think you should keep the steel plant as an option now for the medium-term growth.

Okay. So we are keeping it as an optional...

Yes, still the time we don't get the water approval and all. So we really don't know when that's going to happen. So better to keep the option now.

Okay. No, no, that is quite clear. But just a follow-up on the same because your slide on the Vision 2030, the numbers over there for revenue and EBITDA, I believe that still includes any commitments coming in from the steel plant. So how should...

No, no, no, that doesn't include. It's mainly on the CRM complex, which will get commissioned in Q3 of FY '27, which is December '27 and the Z Batyorage project, which is well on track. So we have revised the guidance. If you see our earlier presentation, it was 4x and the EBITDA level. Now we have removed the steel part from that investor presentation. Yes, we have.

Okay. No, that is quite helpful. Sir, second question comes on -- just pertaining to these challenges that we are seeing out for the steel plant. This doesn't have any impact on the rest of the projects, like the BES or the CRM mill because now the CRM is shifting towards Maharashtra.

See, because CRM was coming on the same line as the steel plant and we're not getting the desired approval for the water allotment. So that is the reason we have decided to take this step and move CRM complex to Maharashtra. Maharashtra, again, we have opted for AR Industrial belt, where it's a plug-and-play model, just like the battery storage. Land allotment will happen by end of this month. And as Mr. Gandhi said, we should commence the activities on ground by October. So CRM, there is a delay of almost 6 months, but CRM will be on track, and please consider steel plant as a whole as of now for medium term.

Okay. Understood. Sir, just a follow-up on the CRM. We are now moving closer to our BESS facilities, right? So what benefits will take place either for the CRM complex or for BESS in terms of cost, I mean, from moving the product from Chhattisgarh to Maharashtra or just now moving the plant directly over there?

See, on the battery storage side, it was always planned in Maharashtra only. So there are no changes in the battery storage project from day 1. On the CRM side, the additional advantage, what we envisage is the local consumption of the value-added steel, which we're going to be producing. So Maharashtra being in an automobile hub, right? And a lot of our products will be consuming automobile. So we expect a demand growth local in Maharashtra, which will add to the benefit of CRM. For raw material, there is a lot of supply like JSW and Joli, then there is Ashland Mittal and Gujarat. So we don't see a challenge in procurement of HR coil. On the consumption side, Maharashtra is a big state for the consumption. And that is why the industrial policy of Maharashtra government is giving us those benefits in terms of SS and other things. So we feel shifting CRM is actually a boom to us by shifting to Maharashtra rather than Chattisgarh.

Understood. Understood. So my next question comes on the Ari Dongri mining side. So we faced some challenges this particular quarter in terms of the production from the mining. So is it expected to continue for Q2 as well and Q3 or...

No, no, no. So I'll tell you, so the mines had basically 2 lands. One was the private land where we already started dumping. All the formalities are over, and we have started using the land for dumping. On the government land, last stage approvals are pending, basis which we will be allowed to enter the land and do the tree cutting and all. So that should happen in Q2. From Q3 onwards, we expect the mining production to ramp up and eventually achieve full capacity from Q4 or early Q1 next financial year. So Q2, you can expect the same numbers in terms of mining production.

Understood. So we'll continue to have a higher procurement from the merchant miners.

No, -- so Q2, if you realize, we have already informed the investors last month only, we have shut down one of our -- the new 2 million plant because of ability from the market as well as the gas pricing. So Q2 will be done in terms of pellet production and mining numbers. Q3 onwards, we expect to run the pellet capacity at full production and mining ramp-up will happen from Q4 and eventually full capacity from Q1 of FY '28.

Understood. Understood. That is quite helpful. So just one follow-up more. Now the beneficiation plant is coming in from Q3, right? And can you just help me in understanding how should we look at the quarterly trajectory of the captive ore availability? Because you're saying Q4 is where we'll ramp up to full mining production activities, right? And post the pellet -- sorry, post the beneficiation plant coming in and the iron ore mine production ramping up, what sort -- are we going to completely eliminate the merchant iron ore procurement that would be the right way to look at it?

See, so Q3, you can say we'll still -- so we'll be running at pellet plant at full capacity. The purchase of market will be still about 25%, 30%. And from Q4 gradually, it should come down below 10%. And finally, in FY '28, it should be 100% captive. That is the target.

[Operator Instructions]. The next question is from the line of Aman Kothari from Aequitas Investments.

So the first question was just a follow-up on the previous one that the 3 million guidance that we've given for iron ore, that is after including for beneficiation?

See, so basically, benefication is more on the input side, the 3.4 million guidance given for the whole year for the mining production, which is basically a usable ore for pellet plant, that is still on track. That is very much on track. We're not revising our mining guidance for the full year, 3.4 million we have given for this year, and it is very much on track.

And the rest would be the market purchase additional 1.2 million, 1.3 million...

Yes. No. So in that case, what will happen is our pellet production will be on the lower side, we expect. So accordingly, our market purchase for the full year will be on the lower side because we have already shut up one of the pellet plants last month. And I think it will continue to remain shut in this quarter. So accordingly, the purchase from market in terms of volume will be slightly on the lower side.

Got it. And sir, the reason for shutting down the pellet production, obviously, first was the iron ore, but how big is the gas supply issue for us? Is it expected to normalize post Q2?

See, no, to -- see, I think there was a little misunderstanding. So we are able to secure the 100% gas from the supplier. But the issue is as per the new guidelines of PNRGB, so the value -- the purchase value of the gas has gone up drastically. It's almost up by 40%, 45%. So purchasing iron ore from the market and also getting gas at a higher price that makes pellet plant operational commercially viable. And that was what we have stated in our statement last month. commercially in the current market scenario where steel is down and pellet prices touched all-time low of about INR 8,700 in starting of July, it makes pellet plant commercially unviable to purchase on the market and use expensive gas.

Fair. Makes sense. Sir, the second question is on the iron ore pricing. So this year, we have seen iron ore come down to around $94. We further expect that the Simadu project should ramp up by the end of this year and further double down the next year. So how do you see the iron ore market pricing for the next 1, 2 years?

Yes, I feel iron ore will keep hovering between $90 to $100 because the Semandu project will take some time to ramp up. plus the demand in India is definitely growing for iron ore. You see a lot of board-based plants have started importing iron ore. So I feel iron ore should remain in the levels of between 90 to 100 depending on the market to market, yes. We don't feel iron ore going down below $90 soon.

Okay. Got it. And with the beneficiation we'll have, we will -- we'll be able to command a much better price in terms of quality?

See, beneficiation will mainly help us in reducing the mining cost because right now, I'm benefiting the entire ore factory complex by paying a transportation of INR 1,000. So by not benefiting in the mines, my mining cost will go down abusable concentrate, which will feed to the pellet plant. So the idea is to reduce the mining cost and improve on the profitability. That is by putting up a beneficial plant in the mines now.

See, beneficiation will mainly help us in reducing the mining cost because right now, I'm benefiting the entire ore factory complex by paying a transportation of INR 1,000. So by not benefiting in the mines, my mining cost will go down abusable concentrate, which will feed to the pellet plant. So the idea is to reduce the mining cost and improve on the profitability. That is by putting up a beneficial plant in the mines now.

See if you ask me, right, INR 100 down in iron ore pellet, we will lose INR 40 crores in a year basis of 4 million production of iron ore pellets. It's very simple. Iron ore cost still doesn't impact so much in terms of pellet prices. Pellet prices are only driven on the steel sentiment. For example, today, if you see the steel sentiments are slightly down. So that's why the pellet prices were below INR 9,000. But last couple of weeks, the market has revived almost by 10% in the domestic. So pellet prices are back to INR 10,000 levels in the domestic. So I would say pellet plays more important role in our cost economics rather than the iron ore fines prices.

Okay. And pellet prices, as you mentioned, are entirely driven by your steel economics and steel demand?

Yes, yes, definitely, definitely, definitely.

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

Just one question on the 3 things that we are doing. So the pellet plant is already up and running, right? Like you said, we are not operating it, but it's up and running. And then we'll be having a benefication that's coming up and the mining scale up. So once all these 3 of our major actions come into force, say, suppose end of FY '27, so FY '28 onwards, what kind of benefits do you see coming into our books? If you could quantify that broadly? Like you touched upon that we'll save INR 1,000 per tonne in transportation with the benefication at mine. If you could just break it down in a little more granular form and just help us understand how much our EBITDA per tonne can change with all these 3 things combined...

To give you a very brief breakup, currently, our mining cost stands about between INR 3,000 to INR 3,500 depending on the production. So our target is to bring down the mining cost below INR 2,700 from FY '28. So benefication is a part of it. Again, the EV deployment in the mines is again a part of it. So the whole idea is to bring down the mining cost. So INR 100 saving in the iron ore a gives a EBITDA of INR 5 crores, INR 50 crores on a 5 million, 6 million production of iron ore. So the idea is to bring down the mining cost, and that's why all these initiatives have been taken. So that is on the first side. Pellet production, we expect to be at full capacity from FY '28, which is about 4.5 million tonnes. So shraightaway with higher volumes, that will give us a higher number in terms of profitability. So these 2 are the major reasons for iron ore mining and the pellet...

Right. And sir, with the more iron ore mining that we can do, will this volumes help us in generating some business or we can't sell because of the feeling that we have of 40 million something on the pellets -- 47 million -- 47 lakh on the pellets, sorry.

See, we are allowed to sell as a captive miner as per new MMDR Act. We are allowed to sell 50% of our iron ore in the market at an additional royalty of 150%. But that is only possible if you are able to feed 100% to your pellet plant. So in the longer term, we have no intention of selling iron ore in the market. We want to make 100% iron ore captive to the pellet plants. And going forward, maybe 2, 3 years down the line, if we feel the opportunity that is there, we are still able to have a surplus iron ore, then only we'll think of selling in the market. But at the moment, we have no plans of selling iron ore in the market. Rather, we'll conserve it and keep mines running longer.

Fair enough. So FY '28, at least we don't have any plans to sell...

No, no, no.

And sir, if you could just help me understand what is the conversion rate from your beneficated iron ore to your pellet? In terms of quantity?

It is about -- it depends between INR 1,500 to INR 1800 on an annual basis.

Sorry, your voice broke, sir, I couldn't hear.

It's between INR 1,500 to INR 1,800 on an annual basis.

Okay. Okay. And sir, broadly, like you said, as of now, we are not looking to sell iron ore, but suppose we decide to sell in future, what kind of delta would you capture? Is it safe to assume that the delta that you capture with pellet is much more versus what you capture in iron ore and hence, we don't want to sell iron ore outside?

See, the first thing is if you want to sell iron ore, we have to pay 150% royalty on lumps and 250% royalty on pines. So straight away, INR 1,000 of delta goes away if we intend to sell iron ore in the market. And the delta in pellet is almost INR 4. So commercially, it doesn't make sense to sell iron ore in the near term. Unless pellet prices really, really crash to below INR 1,000, then probably we can think of selling iron in the market, but I don't see that happening very soon.

Got it. And one last question from my end, sir. So in FY '28, there will be very limited volume growth, right? Now the major growth will come in on our steel business once the CRM mill comes up, right?

Yes.

And other than that, the main driver for our EBITDA growth would be from the BESS once it comes online from Q1 FY '28 onwards.

Right.

[Operator Instructions] . The next question is from the line of Sunil Jain from Nirmal Bang Securities.

This was more related to iron ore mine. You said that part of the land was private and part of the land was government. And in private land, the operation has started. So first of all, in the government land, whatever the approval is pending, what type of -- what nature of that approval and will that can delay the production for a longer time?

No, see, the approval, which is pending is the final approval from the state government for entry to the land and free cutting because it is a government land, it's a revenue land, and there was a transition done. So there is a process that have to follow, which includes the forest department as well. So the file is under application. We are very hopeful we should get the desired approvals by end of September. And this is that from October onwards, we will get the land to start dumping.

And thereafter, the key iron ore production can take some time?

So ramp-up will happen -- start happening from October onwards. But as I said, eventually, the full ramp-up capacity will happen end of Q4 and early of Q1 next financial year.

Yes. But on the private land, whether we can independently start producing iron ore or both still.

No, no. See, we can start producing iron ore at 6 million capacity from today itself. Basically, we needed additional land for dumping of ore burden. So on the private land, we have started dumping the ore burden. That is where we're able to still produce the current capacity of iron ore. Once we get the government land, so the dumping capacity can improve and eventually the iron ore production will improve.

Okay. So basically, post...

Let me clarify. In that the land for dumping ground is separate from the land for mining. The mining area and dumping area is slightly different. This additional land, which has been allotted is only for the dumping ground. So in that also, there are 2 land, one is private and another one is the government land. So cutting for the dumping land is something which delays the mining operations. I hope it is clear. For mining, my full land is available.

Available. Okay. Fine. Okay. For dumping, you need area and they are the...

Yes, yes, yes. This land was for the purpose of dumping, the overburden.

Okay. Fine. And -- but the point is like from the -- without that dumping, you can't increase the current volume.

Yes, I don't have the space to keep the overburden in the mining area.

Yes, yes, true. And sir, second thing related to the project, which we had shifted now to Maharashtra. Now whether we will have a better profitability in base project or even in the cold rolled mill capacity. Any possibility of higher margin because of that? Or still you will go with your earlier guidance?

In terms of profitability, we don't see much change. The only positive sign in Maharashtra is the local consumption in Maharashtra is on very higher side. So for us, we already have demand available, which will save us on the transportation cost on the finished product. So that is one advantage we will get in Maharashtra. Plus the Maharashtra industrial policy incentive is also much better compared to Chhattisgarh. So that -- from that also, we will -- the incentives that we will be getting early will add to the profitability of CRM complex. The storage from day 1 was in Maharashtra only, and that project remains on track. Nothing changes there.

So this incentive will be able to improve the margin or no?

Yes, yes. So the incentives will improve the margin by another 2%, 3% for sure, on the CRM complex side.

Okay. So earlier, you were targeting somewhere at around 7%, 8%, so it can move up.

Yes, yes, exactly. We should touch 10%, 11% with incentives.

[Operator Instructions]. The next question is from the line of Tanuj from SKP Securities.

Just wanted to understand that there has been an increase in the iron ore production cost by approximate 10%. So I wanted to understand the reason. Is it just with respect to the natural like the fuel...

No. So the iron ore cost has gone up because of the higher purchase of iron ore from the market, no other reason.

Mining cost.

Mining cost, okay. The mining cost -- exactly, the mining cost again has gone up. It's mainly because of lower production in the mines and the other operating cost has gone up only because of the lower production. Once we are able to achieve a desired capacity, the mining cost will automatically come down.

Okay. Because in last 10 years, this is the highest mining cost.

Yes. Yes, yes. Because of the lower production on the mining side, that is the cost has gone up. Once we achieve the production, the mining cost will automatically come down, no other reason.

Okay. My second question is like...

Plus, as Mr. Gandhi mentioned, of course, there's also impact of the diesel, which is consumed in the mines to the operations. So that also has an impact on the mining operations.

Okay. Got it. My next question is, I have seen an increase in the sales volume of the pellet. So in your peer group companies also, there has been a drastic increase in pellet production and sales. So is there any specific reason behind that?

No. So see, our new pellet plant was running at full capacity. In Q1, we were operating all the 3 plants. So that is why the additional production happened, and that is why the additional pellet sales happened because the captive consumption for pellets remains constant with our DRI capacity. So whatever additional pellets will be produced will be sold in the market. So that is why you see a substantial jump in Q1 for pellet sales.

Okay. And sir, can you give a view on your like demand? How is the demand on the pellet side?

See the demand was quite lull end of June, early July. The prices had touched COVID low of below INR 1,000. And that was the reason we had to shut one of our plants because the operations were commercially viable. But since the steel market has revived in last 2, 3 weeks, so pellet demand is better compared to probably July and the prices also shot up by almost 10%.

Okay. Got it. Now sir, like we have moved our -- we are not going ahead with our integrated steel plant. So is there any plans to use the internal pellet to make sponge or something like that? Like how are we moving ahead? If we like we have canceled our ISP plan. So what's the CapEx pipeline? Like are we thinking in terms of something around sponge or anything like?

Firstly, we haven't canceled. We have kept the project on hold. Once we get the desired approvals, probably we'll have a rethink what to do. On the consumption of pellet side, we have no plans of expanding the DRI capacity. But again, getting a new land going for the EC, it's a long-drawn process. So we have no plans of increasing our DRI capacity. Whatever pellets will be produced will be sold in the merchant market. And there is actually a good demand of high-grade pellets, be it the domestic market or be it international market. We actually -- we started exporting -- we exported 2 ships in end of Q1 and early of Q2 before shutting a pellet plant. So we will keep selling pellets in the market in the longer term.

Okay. And sir, I was going through your past con calls, like there has been a tendency like with respect to all of our approvals, there is a lot of delays. So is there any specific reason or it is just the...