Jindal Stainless Limited (JSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '22 Earnings Conference Call of Jindal Stainless and Jindal Stainless (Hisar) Limited, hosted by Investor Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ritesh Shah, Head, Mid-Market Coverage and ESG, Investor. Thank you, and over to you, sir.

Thanks, Stephen. Welcome, all, to Jindal Stainless conference call. Trust you and your families are fine and safe. We have with us the entire Jindal Stainless management with us. I'll have a quick introduction for them. We have with us Mr. Abhyuday Jindal, Managing Director of JSL and JSHL. Mr. Anurag Mantri, Group CFO, Jindal Stainless Limited; Mr. Jagmohan Sood, full-time Director of JSHL; Mr. Ramnik Gupta, CFO, JSHL; and Mr. Goutam Chakraborty and Miss Shreya Sharma from the IR team. I'll hand it over to Goutam for the call. Thank you. Over to you, Goutam.

Yes. Thanks, Ritesh, and good afternoon, everyone. We'll begin this call with a brief opening remarks from our MD and the group CFO. Following which, we will have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some of the statements made in today's call may be forward-looking in nature and the disclaimer to this effect has been included in the results presentation that was shared earlier. And now I'd like to invite our MD, Mr. Abhyuday Jindal, to make his opening remarks. Over to you, sir.

Thank you, Goutam. Good afternoon, everyone. Hope you and your families are doing well. On behalf of the management team, I welcome you all to the earnings call for Q3 and 9 months of the financial year '22 of Jindal Stainless Limited and Jindal Stainless (Hisar) Limited. First, I would like to share the key highlights of Q3 FY '22, following which Anurag will take you through the operational and financial highlights. Normally, stainless prices continue to remain on the higher side, due to strong demand and higher prices of all raw materials. In Q3 FY '22, for instance nickel prices went up by 24%, while ferrochrome prices surged by 73% on a year-on-year basis. Now coming to our performance, I am happy to -- I'm happy that our strong performance continued in Q3 as well on the back of an improved product mix and the agility to step up exports by harnessing global markets. This is despite steep and unsure competition from Chinese and Indonesian imports. We continue to remain agile and increase our export share in both the companies on a year-on-year basis from 15% to 26% in JSL and from 8% to 15% in JSHL. We work closely on various government infrastructure projects, aided by strong demand from the industrial and construction sectors. We also increased sales of our special grades, such as Duplex, Super Austenitic Chequered plates. Semiconductor shortage and moderate 2-wheeler demand has resulted in a slight dip in the automotive segment supplies. The Pipe & Tubes segment also witnessed a minor decline owing to lower-than-expected market demand and higher raw material prices. Railway segment, on the other hand, has done well on an overall basis, and we maintained our strong hold in the lift and escalator segment as well. Sales volume in the specialty products division rose by 32% year-on-year. We have recorded highest ever total sales in the blade, steel and precision strip segments during Q3 FY '22. I'm glad to share a few other significant developments. The credit rating of both JSL and JSHL improved to AA minus to a high degree of safety as a result of accretion from prudent financial management and focused deleveraging. In December 2021, we launched India's first hot rolled selected stainless steel chequered sheet with brand name Jindal Infinity. This is our second foray into the branded category after the launch of Jindal Saathi, the core branded stainless steel pipes and tubes products. Jindal Stainless will be supplying 2,000 -- approximately 2,000 metric tons of stainless steel for the recently inaugurated Kanpur Metro. The scope of this metro project includes design and development of 201 coaches, with each coach consuming approximately 10 metric tons of stainless steel. It also gives us pride to share that we are among the top 2 companies in the world that can supply 2J and No. 4 finish required for metro coaches. There has been progress on the merger front as well. The honorable NCLT Chandigarh Bench has held a force motion petition and reserved this order on February 8, 2022. The detailed order mentioning the date for convening the meeting of shareholders and creditors is likely to be received within 2 to 3 weeks. On the project side, I would like to assure you that all our brownfield expansion projects announced in Q1 FY '22 are proceeding as per plan. I would now like to highlight one key concern, which is the subsidized imports and dumping. The impact of suspension of CBDs on stainless steel products from China and Indonesia in the union budget has been damaging for the domestic industry. The first 9 months of FY '22 witnessed an 84% increase in stainless steel plate products, volumes compared to average monthly imports in the last fiscal year. Chinese and Indonesian imports increased by 230% and 310%, respectively, on a year-to-date basis in FY '22 as compared to a monthly average in FY '21. The revocation of these duties was again upheld in the recently announced budget of FY '22, '23, for the apparent reason of containing higher prices of metals. But as you know, stainless steel prices are a function and thereby reflect the increase in raw material prices. Keeping the interest of domestic customers in mind, we have not passed on this price increase entirely to them. And therefore, the Indian price increase is lower than that in U.S. and European markets. However, going forward, the decision to continue suspension of these duties will have an impact on the domestic industry. Moving on to another strategic focus area. I assure you that we are constantly working on reducing our carbon footprint. We have been putting in a lot of efforts to work initiatives such as clean generation from wastage, use of bioproducts for carbon gas, declaiming effluent water, recycling high volumes of steel scrap and deploying electric vehicle for ambition. We intend to integrate a robust ESG and net zero strategy framework in our overall corporate strategy. As testimony to our efforts, JSHL won the Golden Peacock Award for Energy Efficiency for the year 2021 and also received a National Safety Award organized from the Ministry of Labor Environment in Government of India. With this, I would now like to hand over to Anurag to discuss the operational and financial performances. Anurag?

Sorry, I was on mute. Thank you, Abhyuday. Good afternoon, and warm welcome to everyone joining us on the call today. We have shared our investor presentation with the stock exchanges, and today's calls and discussions would be on the same line. As can be seen from our operating performance, the strong momentum continued in Q3 FY '22 as demand in most of the segments have been good, such as the process industry, Railways, specifically coaches, metro infrastructure and lift and elevator segment. Higher sales of specialty products are encouraging for our business. Improved product mix attuned to the market demand has been helping us to remain agile and responsive to the customer requirement and also tapping the export market in a swift manner. Exports have gone -- as Abhyuday mentioned, exports have gone up in both the companies. Pro forma exports volume increased by 50%, i.e., 21% of the total sales in 9 months ending FY '22 versus 14% in the corresponding period in FY '21. So there's a good 50% jump in the exports volume. Let me now take you through the key operational and financial highlights of the quarter. On a year-on-year basis, pro forma combined revenue and EBITDA grew up by 48% and 58%, respectively, to INR 8,880 crores and INR 1,261 crores. On TTM basis, the pro forma stand-alone combined revenue grew up by 52% over FY '21 to INR 29,136 crores. EBITDA rose to -- rose by 80% to INR 4,329 crores, while PBT grew up by 190% to INR 3,488 crores. For the 9 months FY '22, the pro forma combined revenue, EBITDA and PBT stood at INR 22,896 crores, INR 3,444 crores and INR 2,786 crores, respectively. Happy to share that our operating subsidiaries also continued to perform better, and the combined EBITDA of all the operating subsidiaries grew up by 59% on a year-on-year basis to INR 114 crores in Q3 FY '22. For 9 months FY '22, the combined EBITDA of the operating subsidiaries have more than doubled over the previous year to INR 275 crores. As Abhyuday was mentioning, the raw material prices continue to remain on a high level, which is reflected in our average realization. The average prices of LME nickel and domestic ferrochrome in Q3 FY '22 increased by 4% and 2%, respectively over Q2 FY '22. As on 31st December 2021, our pro forma combined entity net debt stood at INR 3,372 crores, down by 29% as against March 21 level. As we have been saying, we have been -- we have maintained our leverage ratio on a prudent fashion. The pro forma debt equity and debt EBITDA ratio stood at 0.4x and 0.8x, respectively. With this, all of our borrowing rates, the combined interest cost sustained reduced by 40% and 49% in Q3 and 9 months FY '22 to INR 94 crores and INR 253 crores, respectively. Interest due to low at 1.1% of our revenue for 9 months FY '22 for the combined entity basis. Focus on financial prudence will continue going forward. As mentioned by Abhyuday, our credit ratings -- about the credit rating upgrade, I'm pleased to share that major credit rating agencies have consistently been upgrading our rating. For both entities, all the major agencies like CRISIL, CARE and India Rating Research have updated our ratings to AA- for the long-term facilities, while reaffirming the highest rating to A1+ for the short-term facility. There has been 5 launches improvement, with almost a full category bank change from BBB in a 1-year time. Significant improvement in the business risk profile, operational and financial performance, a strong liquidity improvement in gearing and deleverage balance sheet, culminating in reduced finance costs have been the key reasons behind these consistent upgrades. Our focus will continue to be an improving product mix and agile business strategy. The ongoing expansion projects will bring about further economies of scale. Government trust on higher capital expenditure, logistics and infrastructure development will boost demand for the stainless steel going forward in the domestic market. On this note, I would request the moderator to now open the floor for the Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss.

Congratulations for a great set of numbers yet again. I have two questions. The first question is essentially on -- I mean, this is the oft repeated question I have on your EBITDA margin. So EBITDA per ton, if you look at it, I mean, it is almost touching INR 30,000 crores now, INR 29,000 crores plus. So would you -- and given the outlook on the stainless steel prices, would you increase your guidance at this point in time? That is my first question.

Okay. Amit, so if you see, on a 9-month average basis, our EBITDA part, which we have achieved is in the pro forma entity level is INR 27,214 crores. Now for FY '22, shortly given because 3 quarters have passed and given these type of trends, we are confident that we will be ending FY '22 with around the same number as against the guidance which we have given you last time was INR 24,000 crores to INR 25,000 crore. So effectively, FY '22 guidance, we are increasing to almost -- to maintain almost the same EBITDA levels around the number of 9 months FY '22 average level. Now for -- going forward, because we have seen so many part phase development in last 2 years' time, at this moment of time that's the reason we are -- depending on certain strength and consistency, we have maintained an average sustainable guidance of INR 18,000 crores to INR 20,000 crores. Because as you may appreciate that this will depend on many things in our raw material price -- continuous raw material price movement, global scenarios. And so it's a bit early to comment on upgrading the long-term sustainable guidance. So short term, we are increasing it, to say, from INR 24,000 crores, INR 25,000 crores to INR 27,000 crores. But long term, at this moment, we will still maintain that sustainable EBITDA of INR 18,000 crores to INR 20,000 crores, which is healthy for our business model, even for our rating agencies and everything. They are happy with those type of numbers to maintain. But having said that, yes, whenever now, as you have been seeing -- whenever the opportunity exists, we would like to be very agile to capture the best of the value from the market.

Okay. That is helpful. The second one is on essentially what we have seen. There has been a series of dilution of protectionist measures as far as stainless steel industry is concerned. And this has started -- I think it has been continuing for last 1.5 years now. And given that we are expanding capacity right here, when protectionist measures are diluting every day. So I just wanted to understand, first of all, how we are working with the government to ensure that it is our interest don't suffer? And are we targeting export markets more for our increased volume?

So yes, Amit, I'll take this question up. So definitely, we don't see a challenge. We see stainless steel demand in all sectors that we have present in growing quite steadily. With infrastructure coming up quite fast. Railway has announced good projects. Metro projects coming up. Secondly, what we have done to counter this is also increasing our exports, and that is what we're gearing towards because we're planning to build a very strong team up in the U.S. market. We already have us a good team in the European market for the planning to strengthen. So that will any eventuality that we see coming in the domestic front, we are always geared up to export. And also another thing that we're trying to tackle through this important increase are selected series segment. So that we are very competitive, and there are both China and Indonesia don't export a lot of 400 series. So that's another strategy that we're working towards to grow in selected segment.

Wonderful. Actually, I just wanted to understand because we are increasing our volume. And so does export view better realization than the domestic one?

Exports currently definitely had, and we see that going forward. Also, we'll have better realization.

The next question is from the line of Rajesh from B&K Securities.

Congratulations again for good set of numbers. So my -- I have two questions. One was, how should we view the inventory gains for this quarter? And the second part of this question is that we've seen a movement of nickel by 15% YTD and a fall in ferrochrome of a similar amount. I'm just saying around ballpark. So what -- how should we look at these numbers in terms of the raw material inventory price change for this quarter?

Rajesh, so as we have been explaining that this is -- we call it more as a positive inventory valuation is negative inventory valuation. This is more because with the trend -- the moment -- the way of raw material prices keep behaving. So technically, in a continuous uptrend, there would always be some of the positive gains which will be falling and also because of the market buying sentiment, because in the upward trend market. And it's vice-versa case and a downward trend, it happens on the downward trend. And obviously, sometimes the destocking happened for 2, 3 months, and there will always be a fall. But it's very difficult to -- actually all the raw material prices keep behaving in a different session. So it's difficult to get a breakdown of the EBITDA on those levels. We would say that these are inherent part of the value chain. And what we are doing is at our front is that we are doing a very strong risk mitigation to keep the -- would not have a very large underlying commodity exposure. And so we will not have a phenomenal gain, neither will have a phenomenal -- large sort of losses in terms of both the sites.

And sir, do we have to pass on the price reduction in ferrochrome in terms of price reduction in the products we have plan? You've seen it pretty sharp fall in ferrochrome prices on a quarter-on-quarter basis?

It's -- I would say, the basket of raw material prices, which get -- which determines actually goes into the final price of the final product. So -- and because it's not only the raw material price and according the international prices also get adjusted, the language price, the dollar/rupee. So it's a combination of that, but to answer your question in a better directionally, raw material prices get passed on. The answer is yes. It's not that possible to do that because it's grades are so varied and even some -- we have to take into consideration all the raw material into the picture. So accordingly, the prices we announced are final product prices.

Okay. Sir, I just wanted to get a hang of -- I mean how -- what is the kind of scenario of -- these are the 2 key raw materials, nickel and ferrochrome, more or less? What is the end scrap, which is not that volatile? So how should we look at these sales in terms of guidance you're giving, like with a sharp fall in nickel affect our margins more or a sharp fall in ferrochrome?

See, depending on the mix, I would say, because say like the high nickel bearing series, sharp fall in nickel and that specific consumption pattern, the impact will be more on because the buying pauses for some time because at least it's...

It's always a very short-term impact at this period, the market settles itself eventually. So only absolutely, Anurag is right. When the prices are falling, that is the time when there is a bit of an impact. But it settled down eventually. And we are quite agile enough that if we see a sharp reduction in either of our raw materials, we can always switch to CDs, which consume less of those raw materials to counter that.

Okay. And my second question is just on the merger. Where is the NCLT meeting expected? I know it's not in your hands, but any idea on that?

So Rajesh, margin, as Abhyuday mentioned in his opening speech, there has been a good progress. And just 2 days back, the only honorable NCLT Chandigarh Bench has heard the first motion petition and reserved its order. So on February 8, this is -- this development has happened recently. Now we are awaiting the details order mentioning the date of convening and further convening the further meetings and the processes. So at least the process has moved a step forward. And now as this -- all the norm routine processes will start, which is the NCLT appointing the Chairman for the various meetings, serving notice on the regional director, ROC, official liquidator, IT, ETC, which are more process, but at all will then probably another 6 to 7 months. But good thing is that at least this NCLT bench was not taking up the routine matter earlier, and they were focusing only on the very critical liquidation matter. So at least our case have been now heard, and they have now moved forward.

The next question is from the line of Rahul Jain from Systematix.

So I had a couple of questions. First is, there is a gain from -- in one of your subsidiaries of INR 160 crores. Can you explain what is that? INR 146 crores in the Jindal Southwest Holding page in the presentation?

So you are referring to the JSHL consolidated results?

Yes. Yes.

Yes. So this is not the gain, it is there. So if you look at the standard perspective, because this JSHL has made the investment in the JSL and JSL is treated as an associate company in the consolidated book of JSHL. Whatever the profits with JSL consolidated debt in terms of presented in the JSHL consolidated results as an associate profit. It is not the one time gain, it is a profit from the JSL. It has been reported in the consolidated result of JSHL.

That has nothing to do with our Indonesian subsidiary, right?

No. No. This is not Indonesia, this is the consolidated results of the JSL, which gets as an associate adjustment in the JSHL results. Because this has been shown as the associates of the JSHL. So they have a stake of 33.37%. Yes.

And sir, we've seen a debt increase Q-o-Q. So this is temporary more to do with the high nickel prices and things like that? And should we expect a release in the fourth quarter?

See, Rahul, this slight increase is primarily because of the higher working capital, largely because of higher working capital debt. Because as you can see that the prices have moved up considerably in last almost 6 to 9 months. So commensurate -- it's not even commensurate. We are still trying a very size control on the working capital, but obviously this is -- some of the debt increase is largely because of that. Now Q4 also, it may not get paid because we are seeing a continuous trend right now. So it's difficult, at least at this stage, we are not seeing that this will get released immediately in Q4 because nickel and other raw material prices have moved up further.

Right. Right. And sir, can you give the CapEx number for next year, if you have finalized? And so far, how much have you done?

So CapEx, what we said is that in the 2 financial years, it will be close to INR 1,100 crores to INR 1,200 crores spend in each financial year. And this is what we are doing. And in terms of the CapEx done so far, it's -- I would say, because it's a combination of cash spend and [indiscernible]. So almost 70% to 75% is already committed. The cost has already committed.

Right.

We are seeing it on track. So maybe...

On track. Right. So you are targeting 3rd Q3 commissioning, right?

Yes. Q3 and Q4. As we've given the various projects that Q3 and Q4, we are well on track on that. In fact, as we now have SPD in Hisar, which we doubled. Actually that project we commissioned and we announced in the last quarter, and it's ramping up well. In fact, today, we have reached almost 70% to 80% capitalization on the combined basis for the full capacity.

The next question is from the line of Ritesh Shah from Investec.

A couple of questions. In the initial remarks, you indicated we have not fully pass on the raw material prices locally. I'm just trying to understand the thought process behind it?

So it is only to counter the imports that are coming in from China, Indonesia. So only for that front and to give the government also a clear indication that we are there to support the domestic industry.

Okay. You did indicate -- basically we are trying more on U.S. as well as on the 400 series. But if I had to understand our product mix locally, for both the entities put together, where do you think -- where should we understand there's more damage from the imports? Is there a particular segment which has been hit more? And how should I understand this?

So the biggest segment that is actually being hit from imports is an area that we are not big in. Mostly is the utensil sector that import coming from China, where we have only maybe a market share of 7% to 8%. So it's not such a big impact. It is more on the sentiment that it gives a negative impact.

Okay. So when we say not pass on the full raw mat prices, it is only pertaining to the 7% to 8%, not beyond that?

No, no. That is for the whole market in general. But mainly where the imports are coming on is in the utensil segment.

Okay. Sure. Sir, secondly, you indicated export realizations are higher. How should one make sense of it when one looks at it a profitability standpoint? And if you could give a broad color on which regions do we export to? Basically, is Europe a major one or any particular regions or continents that you would like to highlight?

Yes. Region I'll take, Anurag, realization will answer to that question So a main market for us is the Europe. Highest volume currently is in Europe. But we are seeing U.S. market demand is picking up, very strong demand for our products is also picking up very well. So we see in the next couple of years that U.S. could become a stronger market than Europe. But as of today, Europe is our biggest market to export to. And in Europe, mainly Germany, at least.

Okay. And -- sorry, go ahead, you...

Yes, I had a related question basically. Anurag sir, when you answer, I think in September, we had affirmative duties, which were imposed on both India as well as Indonesia by Europe. And what I see is the duties against both the entities and India for Jindal stainless and Hisar, it's nearly 13.9%. And this is higher than IRLC , which is 10.2. And all other companies over there is 20.2 So how should one look at it from a profitability standpoint given the affirmative duties are already in place? And like has it impacted our volumes, profitability, how should I understand that?

Okay. So as you mentioned the duty technically, we are surely one of the -- we have one of the lowest duties in AU actually most of the other companies have almost 20% and ours have been because we are not doing the undercutting of the prices because after the detailed investigation, these numbers were arrived. And despite this, because of our quality and the timely commitment, we have been -- as Abhyuday already mentioned, we have been able to shortly ramp up the export whenever we see the value opportunities in those markets. So in Europe, it still continues to remain our key market. And the U.S., we are ramping up very fast now because there is a good demand improvement in the U.S. and besides I hear another geographies. So I don't know what your question is, that we have been able to export in Europe with this duty?

No, we are able to export, but is it at a lower profitability than we used to have it earlier?

See, as -- because I think we will always give preference to the value.

Not at this point of time only because prices -- all raw material prices are quite high. And demand in every industry and every country has picked up. So at this point, the duty is easily being absorbed with higher realization.

Sure. That's helpful. And lastly, on the cost side, how should one look at the scrap sourcing strategy, given we are expanding new capacities? How is it that you have placed on the sourcing for scrap? And is there a way to understand scrap metal spreads? Any flavor that you can provide over here, which can actually help us understand the profitability better?

Yes, I think Mr. Sood can take that up.

Yes. Yes, I will take this. Ritesh, in recent time, the scrap -- the commodity has not actually shown any relent. It has consistently gone up. And as the nickel is going to -- as everything is going up, the scrap is also going up. On the one hand, the import prices, prices of the 300 series from Indonesia and China, they are going down. But because of the strong demand in the European Union and U.S., the scrap is consistently performing very well, and it is basically only half again. Okay. Now to basically -- on the cost front, how to manage our costs? Yes, what we are doing, we are slowly reducing our buying from the far off market, which is basically European Union and U.S. And we are consistently localizing the sourcing. We are continuously buying more and more scrap and raw material from nearby countries or the domestic market, which is giving us leverage in terms of not only cost but also exposure. This is what we have a strategized in terms of scrap sourcing.

Sir, would there be a quantifiable number over here on how the scrap spread has mold for any particular year?

Okay. if I could give you in 3 or 4 in past couple of months, it has moved up almost in tandem with the nickel prices. Okay? So as nickel --- LME has increased, the scrap prices have also increased, okay? It has moved up almost by -- in last couple of months, almost by 30%.

[Operator Instructions] The next question is from the line of Nishith Shah from Aequitas Investment.

Sir, last few weeks, what I've read is that there is some shortage of coal, and some companies are not cutting railway rate allocations. So are you also facing this issue?

Yes. Mr. Shah, I will take this question. Yes, it is very much an industry problem, coal is in short supply and every other industry, which is using power, energy or coal in big form. They are facing the heat. If you talk about Jindal stainless, so far, we have not been able to get affected by this rising in coal prices because we are actually buying this coal from all India, which is on the basically LTL basis, long-term lease agreement basis, okay? And going forward, we are quite hopeful that we will be able to -- or continue to buy from the local sources. We will not be -- we shall not -- we have to get into the import market. We are very much sure that we will be able to source from the local market. And we -- our profits will not be paid by that.

Okay. And about the rate?

Rate allocation is definitely an issue. Rate allocation is preferentially being given to IPPs, not the CPP, captive power plants. Basically, they are given the last priorities. We have already taken up this issue with the MCL and CIL, and both are assured that rate allocation moving forward in the next couple of months will be reallocated for CPPs. So we are quite hopeful that assurance has been given by the coal minister as well.

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

So a few questions from my end. Firstly, you mentioned a couple of times during the opening remarks and even in the Q&A that demand is strong in Europe and overseas, despite higher prices. So in these markets, what would be the average growth rate that we are seeing? And second question to the export market is that, is that U.S.A. will be a key export market in the next 2 years? Will it be at the expense of Europe or it will be over and top of what we are already doing in Europe?

Okay. So in these export markets, stainless steel world average is growing at about -- I would say about 5.5%. This market is growing also around that 6%, 6.5%. Domestic market is growing around 8% to 9%. Secondly, to your second part of the question, in terms of volume, it will be over and above the European export, because we are expanding as well. So we will -- over and above our European export, we export to U.S.

Right. Sure. Okay. So eventually, for the merged entity, would it be a reasonable assumption that exports could inch up in the high 30%, 35% range over the next...

Yes. Yes. We do see that in the next few months, quarters actually.

Okay, in the next few quarters. Wow. That is encouraging. Okay. And like steel, would stainless steel be the highest price in the U.S. market?

Yes. You are right. U.S. is the highest priced market.

Great. Okay. So that will just add to the margins going forward?

Correct.

Okay. And on the domestic front, what is the opportunity for railways, metros and infrastructure-related? What would be the percentage of total sales volume in the current year? And where do we see it going over the next 3 years?

Exact number, Mr. Sood would you have?

I would -- yes, definitely, I can pitch in here. As you would notice that during the recent budget, the Finance Minister announced Gati Shakti project. Gati Shakti is consisting of various platforms where it is around railways. It is basically a mass transportation system. It is around other things, which require huge quantity of stainless steel. So having said this or having launched this Gati Shakti, definitely gives a boost to stainless steel users. So we see a very good demand in stainless steel coming up.

And also the positive thing is there are only 2 approved sources, Jindal stainless and Salem Stainless Steel, that are approved to supply to railway metro projects. So any growth coming in will be directly impacted.

And moreover, we are actually approved by all global vendors, including Alstom and Bombardier and everyone, unlike any of other competitors.

[Operator Instructions] The next question is from the line of Ashish Kejriwal from Centrum Broking.

My first question is, in last 9 months, how much working capital has been blocked in our console numbers? And what is the CapEx number which we have spent in the last 9 months?

See, almost if you see -- as I -- mentioning, is that because of very high raw material prices. The working capital was close to INR 3,000 crores increase because of our turnover and also increased in both volumes and as well as the prices have also increased.

And what about the CapEx?

The CapEx it is -- CapEx, as I said, it's around -- 70% to 75% have been committed. Now the payment -- cash flow payment is keep starting in a phase manner. Because there are LCs. There are advanced commitments accordingly.

What's the cash flow impact of CapEx in the last 9 months?

So maybe Ashish, we can work offline with you on the cash flow, we can help you understand the full cash flow. Maybe Goutam and Shreya can do that.

And sir, second question is, obviously, until now, we are able to pass on the continuous price hike or raw material price hike. But do you think that we'll reach that day that any further price hike will start impacting demand, basically in India?

As I explained is that it's a matter of not only the prices because it's the size of end product depends on the multiple factor. The international demand scenario, international prices, the ForEx blended price of the -- in the country. So as far as the global demand and the entire supply chain remains on a point. Typically, we're seeing that it's continuous way. When the other way -- reverse starts happening, that also, as we said, the global -- at least the domestic demand, we are not seeing any of the challenges. So that -- even if some of the -- sometimes the buyer pauses for some time, where -- when we can drop the prices or we don't drop the prices. But in either way, it's not as maximum, the buyer can hold the buying is probably maybe 1.5, 2 months, because people don't keep the stock beyond that. Because we have seen -- in last 10 years, we have seen this consistent trend whenever the price. So we -- as we mentioned that as a risk strategy, we are maintaining it in a more prudent fashion. So that both sides will remain protected within the range.

Sir, my question was not at company level. My question was at a macro level that are you seeing that demand can start getting hit because of such high prices?

Mr. Sood you can -- you want to...

I don't think so. It is because the demand is clearly basically factored by series of schemes launched by government. And there is something as a stand on the OEM infrastructure and all those things. So we definitely feel the demand is going to be there. And as West European Union and U.S., it is showing -- it is continuously to be into the higher spectrum. So China also, after opening up -- after this winter games, probably will add on to this. So in long-term basis, I don't think demand is going to come down. It does not have any impact of the raw material prices or any other thing.

So you mean to say that even if stainless steel prices sustained at this level, we are not seeing any on the demand, even in the short to medium term?

I think so. Yes.

The next question is from the line of Bhavin Chheda from Enam Holdings.

Good afternoon to the entire team for staying strong result and good guidance, overall turnaround, what you have done for the company is excellent job. Sir, my question first on Slide #25 of the presentation project and the time line what you have given, can you run through -- which all equipment have been ordered, which is on site and how about you going about each of the segment of the CapEx, what you have mentioned? You have mentioned the time line, but which civil work is started, which equipment is ordered, which is on site, if you can throw some light on that?

See, Bhavin, the 2 things that we can assure you, I think Mr. Sood is running this project and have a confidence with them that we will be delivering this time line. In fact, SPD time line, we have delivered it much ahead of time. And that's why we are assuring you, at this point of time, it's not very far away. Q3 and Q4, which we committed we will deliver it on time. 70% to 75% costs have already been committed. So both in terms of time line and cost-wise, we are well in.

Okay. Since we were looking for how much civil has been completed and how much equipment has arrived or how much we have constructed. So we'll give you item wise as we have completed almost 80% to 90% of civil work and almost 20% of the equipment has started arriving. And we are well on time -- well ahead of time actually here. In the CR combo line, we have completed almost 60% of our civil and our equipment has started coming into the site. And here also, we are well on time. On the ferrochrome, we have already -- sorry, share, can you just -- because I just wanted to see. So on the ferrochrome front, also, we are well on time. The equipment has been ordered and the civil work has started -- it has just started, okay? On the JSHL front, on the present state, the first phase has already been commissioned. That was well on time. Yes, though there was some hiccups because of the second wave of COVID, we were very badly hit. The country was -- an entire country was hit. So here also, we had a kind of hiccup when there was a delay of about a month. But then we are well on time in terms of commissioning. We have already attained 75% of short-term estimated capacity, which we have wanted to announce. And one or maybe just in the starting of quarter 2, we will be able to achieve 100%. And on the Phase II, we have -- we are, again, well on time. We have ordered the equipment. Civil work is going on. And for where there is still phase 1, Phase 2, both the items, both the things. Orders have been completed. Civil work is almost 80% completed. And we are here also, we are well on time.

Sure. Sure. So good to hear that. Just there is just this steel-melting shop, this is -- on a single go, you are adding 1 million tonne? Or is it -- is there a place to that?

Steel melting shop, we are adding in Jajpur. It is just in the same way, same area, and it is 1 million tonne. We are adding 1.1 million tonne we are adding, okay?

Great. Okay. And out of this INR 2,600 crores, what would be already spent? And what will be spent in FY '23?

Bhavin, I mean, I would say that, okay, we just answered this question, again, because in the interest of time, because Abhyuday to leave at 4:00. So I would refer participants to have a strategic question first. Any of the reconciliation and financial numbers, we are happy to sit with you separately.

The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.

Very much congratulations on excellent numbers. I just -- first on the export side, I just wanted a comparison on the profitability. How are we placed as compared to the domestic sales that we do maybe on EBITDA per tonne basis, or any kind of ballpark number on percentage, could you help me on that? Could you provide some kind of idea on that?

Yes No, I think, see, split-wise, we don't give that wide-part number because ultimately, as we have been saying, we are working on a very agile and flexible model. So whenever -- and we try to capture the best of the margin from whichever market and whichever geographies we get. So if some time we have seen in the past like -- so our export actually just same quarter last year was just 8%. Today, we -- last quarter, we did a 14%, it's almost double the exports. And this is because when we saw domestic markets giving us the good margin, then because the logistic challenges were there earlier in the international market, we immediately increased our uptick in the domestic market. So on the -- that's why we always say the guided blending business because those is actually we want to remain very flexible and agile and give the more shareholder value in a holistic manner to have a blended EBITDA per tonne.

Right. but it will be higher. Could you give that at least? Would it be higher than the domestic number? Because there is a freight also involved. So just wanted an idea.

As Abhyuday mentioned that right now, export markets are higher.

Okay. Okay. Okay. And my second question would be on the imports that are coming. So at what point can it actually affect our business? I mean I understand that the products that are being imported is different. But, I mean, are we shielded primarily or could there be a point where the imports can start affecting our business?

No, we don't see that affecting at any point because the imports coming in are very low-quality products in very low quality segments, which is not Jindal Stainless' focus area or focus segments at all. So -- and that is where China, because China, Indonesia, whole strategy is homogeneous, low-quality, low-grade products, and that is why it would not impact our market at all. And we are agile enough, like we've discussed multiple times, to export also and we cater to all industries possible.

The next question is from the line of Chetan Shah from Abakkus Asset Manager.

Congratulations on a great set of numbers. I just have 2 quick questions for Mr. Abhyuday. Sir, if I want to look at combined company from 3- to 5-year time horizon, I just wanted to understand on a 2-part. One, what is our big picture you discussed this in the past from a capacity and a price point of view? But from a raw material and also from a key strategic input point of view, how do you want to kind of safeguard our sales as an entity as an organization? If you can give us your thoughts behind that from 2 count, one nickel, which is one of our key raw material and second the scrap? So if you can give some color on that, we will be very, very helpful.

It was good. Definitely, I can take this up. So raw material and backward integration is going to be a key focus area for the organization going forward in the next 3 to 5 years, because after our expansion for another 1 million tonnes of stainless steel, we will be quite comfortable to retain the demand requirements of the country. So we definitely now want to focus on backward integration. In terms of -- a lot of projects are in the pipeline right now, which is too early to discuss. But all we are in discussion with all our major suppliers, we have already convinced them. Some of them have already set up yards very close to our factory. So that would really help us in managing our inventory and our cash flows as well. Similarly, we have our own yards. And we are planning to open our own catchment yard in various parts of the world, which will further strengthen our positioning for scrap. And we are in talks, which is little too early to see, to explore some nickel projects in Indonesia. So that is still at the early stage, but it's going to be a key focus area for the organization going forward.

My apologies for repeating this question multiple times in the past. But as your big picture vision, could you just tell us that how do you want to see this company in the next 3 to 5 years? Is 5 million, 3 million is the first stage than 5 or 10? Because India is one of a very integrated and an important part in terms of the growth going forward. And also the export opportunity, which we are seeing, in a neighboring country and also in Europe and U.S., which has been discussed in the last 45 minutes in a call. So just from your point of view, as an owner/promoter of the company. If you can give us some color on that to get a sense that where do you want to see yourself or a company in the next decade or so and 5 years or so? I know it's to a larger picture, but just being a shareholder we wanted to hear your view.

I'm trying to tell you a larger picture, but definitely, we want to maintain -- definitely in the next, I would say, coming decades, also want to maintain and further grow our strength in the stainless fell domain, we see that really being an industry which has been lagging behind only due to the lack of knowledge and with that increasing with the kind of policies also helping to increase the industry, there's going to be a very bright and bullish future that we see. So definitely, we want to maintain our leadership in that area. Then now that the company has financially become very strong, any strategic assets that will be coming in place in the future that also the organization will be looking at -- so now -- and as a corporate itself, we really are working towards the ESG front stainless steel already has a leg up in that race because of we're 100% scrap recyclers. So these are the major topics that we want to work. We want to become a responsible corporate as well. Further improve in CSR projects that we're doing really make our country happening. It's really difficult to say 5 years forward, but at least for the next 3 years, these are our clear vision. And these are the clear areas that we want to work towards.

Congratulation and best wishes for the time to come.

Thank you.

Ladies and gentlemen, due to time constrain, we take one last question from the line of Nimit Baya, an individual investor.

Congrats on the great results. I have two quick questions. Your volumes in JSL averaged about 250 to 255, whereas your capacity is about 275 per quarter. So I just wanted to understand, there's 90% 95% -- 92%, 93% the peak capacity that you can reach? Or can it actually go up to 100% as well?

Maybe Mr. Sood Mohan can answer this.

Sorry, yes. definitely, it can be ramped up to 100%. Yes, 93% is because certain constraint from product mix side, from other things. But definitely, you just to answer your question, it can be ramped up to 100%.

Okay. Great. And second question, if you can -- so given the imports and exports from India is increasing both ways, can you give some idea on what global capacities are being set up? You know the India already because you are the major player over there. But globally, who else are setting up capacities? And what is going to come in the next 2, 3 years?

Yes. Nimit, the global capacity is, whatever they are coming right now are in Indonesia. Okay? So maybe in the next 4 to 5 years' time, it is going to add up almost 5 million tonnes to 6 million tonnes. Whereas in carbon steel China is slightly reducing, but India is increasing. So the capacity balance will remain same. From Indian parlance, if you just see, India is set to grow from 110 million tonnes, in carbon steel I'm talking to about 300 million tonnes by the year 2030. Going by any agent or some role stainless steel market is almost 2.5% to 3% of the carbon steel. So today, we are having a market size of about 3 million tonnes. If the stainless steel grow -- if carbon steel grows from 100 million tonnes to 300 million tonnes in the next 7, 8 years, stainless steel is also set to grow by that number. So we definitely look forward to a very bright future going forward. So by 2030, we definitely see a number, 8 million to 9 million for stainless.

Okay. So the Indonesia capacities that you were mentioning, do you see the global demand supply dynamics to remain favorable over the next 2, 3 years? Or the supply can overshoot the demand in the next 2, 3 years?

No, no. I think it is going to remain favorable because certain less efficient units are going to phase out, majorly in China. So probably it is going to remain same and credible. And India is the largest growing market.

And India is -- demand side, India is the fastest-growing stainless steel market globally. Because our journey has just started for stainless steel.

Understand. And my last question, Anurag, for you is, you've taken approval for a INR 7,000 crores debt rate across both the companies of INR 3,500 crores each, so that needs approval -- is like generic approval for now?

Yes. Okay. So let me just start. It's not aggregate INR 7,000 crores, it's INR 3,500 crores. And just a -- it's a more enabling resolution and it's in both the companies because we may go into some of the market as a co-borrower because now the merger is already on the card. So we bought the entities. But overall, we have taken an enabling resolution at the merged entity level of INR 3,500 crores, which is for -- of the refinancing as well as some of the general corporate profile, long-term working capital and some of the new partial CapEx purpose. So that's more enabling and the new instruments in the market. it's not INR 7,000 crores, it's only INR 3,500 crores because JSHL, we have taken approval as a co-issuer.

I would now like to turn the conference over to the management for their closing comments.

I would like to thank everyone for attending this call. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would like to know more about the companies, please feel free to contact our Investor Relations team. Thank you once again for taking time to join us on this call, and please stay safe.

Thank you. Ladies and gentlemen, on behalf of Investec Capital Services, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.