Jindal Steel Limited (JINDALSTEL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jindal Steel Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Partenza, Vice President from Anand Rathi Shares and Stock Brokers Limited. Thank you, and over to you.

Thank you, Steve. Good afternoon, everyone, and thank you for joining us today. We at Ana rate are pleased to host Q1 FY '27 Earnings Conference Call of Jindal Senior Limited. I will now hand over the call to Mr. Vishal Chandak, Head, Investor Relations, to introduce the senior management and initiate the proceedings of the call, which would then be followed by question-and-answer session. Thank you, and over to you, sir.

Thank you very much, Patik. Ladies and gentlemen, a very good afternoon. Thank you very much for joining us on a Saturday afternoon to discuss the financial results of Gendel for the first quarter of FY '27. Joining us on today's call are members of our senior management team, Mr. Damodar Mittal, Whole Time Director; Mr. DepoDutiroi, Executive Director, Riga; Mr. B. Nair, Executive Director, Angul, Mr. Sunil Agarwal, Executive Vice President, Finance; Ms. Rupali Mehra, Head of Sales and Marketing. Before we begin, it gives me immense pleasure to introduce 3 distinguished members who have recently joined the company's leadership team. Firstly, I'm delighted to introduce our Managing Director, Mr. V. R. Sharma. Though he needs no introduction, let me begin by saying, Mr. V. R. Sharma is a distinguished industry leaders with over 4 decades of international leadership experience across the steel, power, metals and cement sectors, a mechanical engineer with an MBA from the College of Applied Science U.K., he has held several leadership positions across the industry. Mr. Sharma previously served us as the Managing Director of Jindal Steel Limited from 2019 to 2022 and before that, as the Deputy Managing Director and Chief Executive Officer of the company from 2010 to 2014. He has worked with several steel companies in India and abroad during his long tenure of more than 4 decades. I'm also delighted to introduce Mr. Rajeev Kumar, Chief Operating Officer. Mr. Kumar is a highly accomplished steel industry leader with over 35 years of experience spanning operations, manufacturing, project execution and business leadership. A metallurgical engineer from BID Sandri, he brings deep expertise in integrated steel operations, product development, operational excellence and the successful execution and scaling of large manufacturing facilities. Mr. Kumar served as CEO of the aluminum business of Vedanta prior to joining Jindal Steel. He has also had a distinguished career at Tata Steel in various leadership roles. Lastly, I'm equally pleased to introduce Mr. Sandeep Modi, our Chief Financial Officer. Mr. Modi is an accomplished finance leader with over 2 decades of experience across the metals, mining and power sectors. A chartered accountant and the Masters of Commerce, he possesses extensive expertise in corporate finance, business strategy, treasury, taxation, commercial operations, capital market nations and M&A, among other critical areas. He is an all India rank holder in has chartered accountant examination and has received numerous recognitions for excellence in finance leadership. He was previously the Chief Financial Officer at HundistanZinc and has spent more than 20 years with the Vedanta Group before joining in this team. [indiscernible] I request you all to please join me in welcoming Mr. V.R. Sharma, Mr. Rajiv Kumar and Mr. Sandeep Modi. With that, I will now hand over the floor to Mr. Sharma for his opening remarks. Over to you, sir.

Good afternoon, ladies and gentlemen, and thank you, Vishal, for the introduction. My name is V.R. Sharma, full name is Vidya Ratan Sharma. I have more than 4 decades of experience in steel and metal industry. And the privilege to lay industry once again. However, the Managing Director in the year 2019 to 2022. You have seen that it was a great comeback by JSPL under the leadership of Navin Jindalji biting that tenure. So I'm again delighted yes, to be part of this company and part of wonderful team, what we have today. When I look around the teams at Angul and Raigarh, it reinforces my belief that we are building not just world-class assets in terms of plant and equipment, but also a world-class organization driven by exceptional and outstanding professionals what the company has chosen from different field and different companies. I welcome you all to Jindal Steel's Q1 FY '27 earnings briefing, and thank you all for taking out time on weekly off that is Saturday to attend this particular meat. Let me begin with a brief overview of the global macroeconomic landscape. As you all know that the world has been passing through a very critical geopolitical situation. For the last 4 years, we are seeing that Ukraine and Russia war is going on, which has shattered the economy, which are shattered not only the economy in Europe, but everywhere in the world. Now for the last 1 year, the repulse and then a big fight in between America, together with Israel and all Iran. So this has also created a lot of problems for the whole world. The economy has dwindled the fuel prices have gone up. The steel consumption per se at the moment. [indiscernible] that is stable or retail will be a down trend. But there is always a light after the end of tunnel. So we are seeing that over very soon, there will be a solution to both the problems, what we are, which are being fought in between within Europe and also, So the moment these 2 awards are stopped, then we are looking great to come back and to supply steel worldwide. So I would say that is a good future, which exist today. In India, the RBI projects GDP to grow at a rate of about 6.6% in FY '27. Despite near-term uncertainties, India continues to remain the fastest-growing economy in the world, supported by strong domestic demand, sustained capital expenditure and stable macroeconomics environment. Domestically, the steel industry witnessed seasonal softness. This always happens, especially in the monsoon season during this quarter. India's crude steel production declined by 6% on a quarter-on-quarter basis to 42 million tonnes, while finished dairy consumption declined by 7%. There is about 41.5 million tonnes. Globally, China has announced a significant policy reset focused on capacity swap reforms to strengthen supply display. We believe this is a positive development and could accelerate a much-needed supply-side reforms. In the Chinese steel industry, especially because today, we are seeing that in China, the capacity reduction is about 50 million to 60 million tonnes, whereas the demand has gone down by 100 million tonnes. So this has greatly a little surplus in the international market, but I'm sure the moment these 2 geopolitical situations or the war, this is settled then everybody will find its place in the international market and the domestic market because scale is not only in the form of steel it goes outside. This also goes in the outside in the form of machinery, plant, equipment, vessels, pressure vessels and many more semi-finish and used equipment. So China has been doing export of plant and machine. I'm sure once the world settles down in terms of the ease please consolation of these 2 words. China will again come back with -- to supply more and more equipment plant machineries. And there'll be a good room available to the Indian industry to export steel to these nations and also to the brining countries. In the domestic market today, we are seeing that HFC prices have increased sequentially and remain from throughout the quarter, while TMT that is the debar prices for the construction steel. They opened with a strong note. But after that, the demand came down. And during the -- during this particular monsoon season, yes, it always happens. The reconstruction activities, they have slowed down. So -- but we are very much confident that in times to come, say, from end of August onwards when the monsoon is receding. The country will come back with the gain construction boom supported by government of India and especially the Indian bankers. -- in terms of extending loans and funds for the capital infrastructure as well as well as for the construction industry. So we feel a very good future is offing today. As far as general steel incite overall plan is, I'd like to highlight that today, we have a strongest team available -- and the strongest team consists Mr. Rajiv Kumar who is a veteran in the steel industry. He has a background of more than 35 years ago this data steel. And also, he has worked in Vedanta as a CEO. Then we have Mr. Sandeep Modi, he came from Vedanta, and he is charter content with Masters in commerce. And he has joined us as a CFO, brought a very good experience to lead the financial sector, financial team. and to deal with the numbers basically. Then we have a very good team urban in the form of we have recently hired a CHRO. He has come from indigo to that, he is also wording many other companies like Hetal, et cetera. So that team is in place. We have Ms. Rupali as Head of Marketing, so who is the company to last many years, more than 20 years. And she will be taking care of the complete sales and marketing. So in a nutshell, I would say that the team is already in place. We have 2 senior directors live in the plant. One is Mr. Dado, who is heading the Raigarh who has again about 30 years of experience, and he also comes from Tata Steel. -- the other gentlemen Mr. Biju Nair, who was with OsloMet, and he also has more than 30 years experience. So he is adding the Angul plant. Similarly, the people at the other segments, basically, the domain, they are all highly experienced talented people. So I'm sure that the team will deliver much better results in come times to come. I'm lucky to have such kind of team, and I'm lucky to lead this kind of team from front. And finally, we are committed to bring the company to a different scale in times to come. Our first and foremost focus is that we should reach to the 100% capacity utilization. This is the first point. The second point is we want to reduce our cost base once we increase capacities with the economy of scales, we reduce cost also. Then we have a very strong team, as I told you, led by Mr. Rajiv Kumarj and he is adding the complete operations. So the specialty is how to control the costs with the best or best opportunity available today. So I think we'll be in a position to control the cost also. This will add to the NSR, add to the EBITDA. Then the next is we already discussed with our bankers. We have negotiated very good rate of interest, very good means the lowest one. And the financial cost borrowing costs will also come down in times to come. And this is what Mr. Sandeep Modi on it, and he is doing it. Then as far as the inventory is concerned, we are well within the limit. We are more than -- less than 10 or 11 days of total production as an inventory, so which is, I would say, very lean and best in the industry ability then the product mix, what we have that is 1 of the best in the world, I would say, because we are the only company who makes low products, flat products and especially flat products like plates and the tampered plates. So we make places, about 2 million tonnes today in a year. We are going to increase it to about 2.5 million tonees, basic requirement for the any capital goods industry, then we have a state-of-the-art hosted mill, which we commissioned last year. And this mill can produce about 5.5 million tonne hot-rolled coils in EM. And that to valuated grade of cells. We are not in the way of putting more and more hosipbills or more and more commodities. We are here to utilize our mills to the best of its technical expertise and with technical capabilities and produce more and more value engineered products than a commodity product. Then after that, we are the only company today in the travel sector who produces sales -- and fortunately, today, out of the 22 metro rails in the country, at least 18 to 19 metro rails, they are already buying rails from us. These are called had added rails. So nobody else supply these rails to country. In a way, it won't be much harder to speak that we are 100% supplier to the Indian metro rail services in the country, had arterials, which is a specialty of ours. Then we produce round billets, which not many people producing in the world and these round billets are especially used for wells, basically, the forging of the rail bills. Government of India is putting a full the first so that we become self-reliant. So we produce around bidders, which only 1 more company produces in the country. And this is a great business in terms of consumption and also for seamless pipes and tubes. So this is another product, which is a wonderful product. then over and above, we have the products like sheet files, which nobody does in the country today, and we are the only people, those who are doing it. And then some of the specialty environs heavy section and glaring, which we do. So the purpose is that wherever we have the technical superiority and the product mix parity. So those products are to be benefacted on top priority so that this can add value to our system, which can add value to the bottom line, and this can also be treated as value engineered product. Thanks to Government of India, they have -- Government of India has given a full focus and thrust on the defense industry. So what we are doing, we are producing today the specialty plates which are tendered made for the defense industry, especially for these submarines for the war ships or the oxygen stories for the nitrogen storage, for the hydrogen stories. So these are the specialty steel products. So our aim is to keep on adding more and new special steel products through the -- not only through this normal great mill, but there is a next process call that is heat-treated plate that quench-and-temper place. So these places used to be imported in India. Now Government of India has given a instruction. And I would say it has banned these kind of products coming to the country. So we are thankful to Government of India. As far as some imports are concerned, yes, there is a concern, declared products, which is, I say, as a commodity. because hot rolled coil is a commodity today. So the Hot rolled coil, since it is a commodity, yes, many players in the country, they import to 1s, especially through the advanced licenses. So when they bring against the advanced license, they export also. So basically, it doesn't affect the overall scenario in the demand and supply. But yes, it is better if they can also utilize the Indian products an outrolled coils, not only as a specialty auto cull, but as a commodity gets. But whenever the prices or the imports are affected, they are reflected as a commodity or opis -- but whereas we are we are fully insulated. -- from such kind of products because we are value engineered and value-added products. So industrial, I say that the company's future is excellent, and the team is excellent in place. There had been some repos in the past, but today, the road and with the decision taken by Board of Directors. So we have brought the gems in the origination, and I'm sure the company will fonis, and we will see that the results are coming and will -- our journey to reach to 100% capacity utilization with minimizing the cost level, et cetera, everything, we have been a position to be, again, very vibrant company, though we are being today also, but it will be much more vibrant in times to come. So now I stop my speech. Thank you very much for listening very patiently. In case of any question, we, myself and my team or my other colleagues, they'll be happy to answer your queries. Thank you very much. Now I'll request my colleague, Mr. Modi. He will address the meet and thank you very much, Mr. Modi, over to you.

Thank you very much, Sharmaji. Good afternoon, everyone. I'm delighted to join Jindal Steel at such an exciting phase of its journey. Over the past few weeks, I've had the opportunity to interact with our teams across the plant location. What stands out is the exceptional quality of our people the speed of decision-making, strong capital cost discipline, deep adoption of the core of content and the growing use of AI and digital tools to improve operational and financial performance. Jindal Steel today has 1 of the strongest integrated business model in the Indian steel industry, supported by world-class asset captive raw material resources, disciplined capital allocation and a clearly defined long-term growth strategy. . The successful commissioning of our expansion projects has further strengthened this platform and positions us well for sustainability and profitable growth. As I assume this responsibility, my priorities will remain maintaining capital discipline, improving return on capital employed, strengthening cash generation peeling one of the strongest balance sheet in the sector and creating sustainable long-term value for all shareholders. And with that, let me provide you with a brief update on our financial performance for Q1 FY '27. Consolidated revenue sequentially was around 8% down. It was largely due to the sales volume resulting from the planned maintenance shutdown, as Mr. Sharma had said, this was partly offset by around INR 7,500 per tonne improvement in our average ASP. That's the average realization, supported by stronger steel prices and the riser product mix. The share of value-added products has increased from 61% in Q4 '26 to 66% in Q1 '27. As our newly commissioned downstream facilities continue to ramp up, we expect the share of value-added products to increase further, enhancing both profitability and resilience across commodity price cycles. Despite a 15% sequential decline in the sales volume, EBITDA remains resilient, reflecting the strength of our product mix, higher realization and disciplined cost management. Consolidated adjusted EBITDA stood at INR 2,667 crores, consolidated adjusted EBITDA per tonne increased by INR 1,843 per tonne, taking it to total to INR 11,937 per tonne. This improvement was driven by increase in ASP, partly offset by $23 per tonne increase in coke coal consumption cost, which is in line with our guidance of 20 to 25 per tonne of coal and the lower fixed cost absorption due to lower volume sequentially. Finance costs charged with the P&L increased to INR 548 crores, primarily due to the capitalization of the major expansion assets during Q4 '26. Consequently, interest costs related to these assets are now being recognized through the P&L account for the first full quarter. These assets include the 150-megawatt captive power plant both CRM and other associated facilities. Similarly, depreciation expenses focused during the quarter following capitalization of these newly commissioned assets. Consolidated profit after tax for the quarter stood at INR 854 crores. Our balance sheet remains 1 of our key strengths. Net debt stood at INR 5,927 crores, translating to a net debt-to-EBITDA ratio of 1.7 with the ongoing ramp-up of new facilities and continued focus on the cash generation, we remain confident of achieving the ratio below our stated threshold of 1.5x during Q2 and continue to help with the overall cover the cycle, reinforcing our position as 1 of the strongest balance sheet in the industry. Our capital allocation continues to remain disciplined against our FY '27 CapEx plan of approximately INR 8,500 crore. We have invested roughly INR 2,000 crores during Q1 commodity spend under our expansion program now stand at INR 37,457 crores out of the announced of INR 47,043 crores. Overall, I would say, as we enter the second quarter, our financial priorities remain unchanged. -- driving profitable growth, maximizing return for our expanded asset base, maintaining disciplined capital allocation, generating stronger free cash flow and preserving our balance sheet strength. -- we remain confident that this priority will support sustainable value creation for our shareholders over the long term. With that, I will now open the floor for questions.

[Operator Instructions] The first question comes from the line of Amit Dixit with Goldman Sachs.

First and foremost, I mean, I would like to welcome the entire leadership team, and it's great to have Mr. Sharma and Mr. Modi. My question to Mr. Shane would be, sir, last time when you were there, we actually had -- I mean we went through debt reduction, the deleveraging happened during that time. So also the ramp-up in the blast furnace, the first blast furnace. Now when you are there, the second time, what would be your key focus areas let us say, 3 to 4 focus areas that you might have thought of. If you can quantify them as well, that would be great. And also, any thoughts around further expansion at Angul in terms of crude steel capacity. That is my first question. .

Thank you very much. Thanks for remembering the previous dialogues, a long back. And there's a reminder to me what is to be done. So you asked the question, so I'm applying you one by one. First of all, our -- now the main focus is on the capacity utilization. Like for example, we have 15.6 million tonne of capacity already installed at the grow steelmaking capacity. So how to reach to 15.6 million tonnes, this is one. Now 15.6 million tonnes, our team, myself, we are not going to convert this 15.6 million tonnes in a commodity. Commodity means just making rebars or making hot roll wells, we are not interested in that. We want to do something new, something different. . Of course, rebar has to be produced as rebars except for some corrosion resistance, steel or something like that. But as far as the hot rolled squares are concerned, we are not pushing our mills to produce a product which is non-value-added grade product. We want to fetch the best of the best market, and we want to sell this hotrod coil not as a commodity but as a product. So that is our next focus. My colleague, Mr. Rajiv Kumar has been in Tata Steel and he has developed more than 500 different grades in Tata Steel, which are truly valuated grade steel. So now the agenda is how to utilize his skill and how to make all those grades, which are available in the world and they are treated not as a commodity, but treated as a value-added product to a very engineered products. So the capacity -- the total capacity today, as I told you, 15.3 that is installed steel -- crude steel capacity. But there are some gaps because we are not going to make 15.6 million tonnes in the current financial year. We are going to end somewhere about 11 million to 11.5 million tonnes. So where is that gap of 3.5 million tonnes, you will ask the question maybe today or maybe next year. So I'm replying you right now. So what we are aiming for, that we will be because we are short of metric today. So we will be bringing metallics in the form of HBI, DRI and also in the form of scrap. So then we will utilize our assets fully so that we can reach to the level of 15.6 million tonnes as we have the crude steelmaking capacity. So now from our own internal resources means internal blast furnace and electric car furnace and also DRI, right? We can reach to maybe 1.5 million tonnes, and we with the honing over with the readjustment of the blast furnaces as the capacity is concerned, then we manatee to 12.5 million tonnes. And now the focus area 3, one make only valuated products; two, how to reach to 15.6 million tonnes with a step in between in the letter. And that step is 11.5 million than 12.5 million tonnes and maybe 13 million tonne and that will be done from the existing resources available. existing blast furnaces, electric car for this India, right, so that we can increase the production there. Then the next question you asked me that what is the next future, what are the expansion plans or something like that. So as I told you, we have strict formula last time also, if you remember, I used to speak, E and I, earn and invest. So we have decided that the management has decided that we will be working only on reinvest. We are not going to burden our balance sheet with the borrowings. We do not want to take loans. We don't want to borrow the funds to expand in the commodity area. We will expand -- we'll do all those expansions, which are required in value-added products, value-added steel, value engineered products. For that, if any investment has to be done, we will do -- but we don't want to be a part of blood. We want to be a part of specialty products where people come to us, buy goods, they are happy. We are also happy -- so our focus is the -- what we -- myself, my team, everybody is aligned on that, that we want to grow not at the rate of tonnes but at the spending rate of about INR 7,000 to INR 8,000 crore or maybe INR 10,000 crores per year. So how many tonnes will be that I cannot tell you today because if it is value-added product, maybe tonnes are less. So we -- our aim is spend management. So we have a budget to spend whatever the earnings we have, we are sure we'll be having a good is kind on us. It will very much more running than this. So part of that earning we'll be spending on the CapEx. And wherever we see that we are tight, we will not spend on CapEx. So we are not in a race of 30 million, 40 million, 50 million -- and every morning, we get happen we declare the project, we are not in that. We want to utilize the hard-earned money in the best way, and my colleague, Mr. Modi will definitely keep a check on this so that we don't spend extra anywhere, extra regenesis not done. So these are the long-term plan for all of us, and this is what we have taken an oath that -- or you can say this is the commitment that we do not want to and commodity capacities. We want to be only and only and only value engineered products. And for that, we are going to spend about INR 8,000 crores to INR 10,000 crores year-on-year basis. So I hope I answered you. Thank you.

The second and the last question I have is on the current blast furnace utilization and then we can ramp it up fully and the status of slurry pipeline. That's all from my side, sir.

So the current -- we have 2 blast furnaces in Angul, and we have 2 blast furnaces in rate. And we have 10 DRI plants in Drager, and we have on DRI-ber. Now the state is and then apart from that, we have electric car furnace in Angul -- and we have 3 electric car function die. So this is the overall setup. Now your question is the new blast furnace. There's a state of the art new blast for this, which we imported. And a similar blast furnace was commissioned just about 10 months ahead of us by Tata Steel. Though Tata Steel took about 5 years to complete that blast furnace. Thanks to our team, the project team and thanks to the overall guidelines given by Navin Ji, our Chairman. And we could reach to that the commissioning time we could do in, say, 28 to 30 months' time. So this is a great achievement. And this particular blast furnace can produce up to 13,000 tonnes per day hot metal. So we have already reached to 11,000 tonnes per day. Our plan is that after this monsoon season, we'll be in a position to ramp it up to 12,000 tonnes per day. And by end of December, we'll make it 13,000 tonnes per day, which will be 100% capacity utilization. Now you may ask a question that why 10,000, 11,000 then 12,000 and why monsoon season and then 13,000. Because during monsoon season, there are certain challenges, like, for example, about a week back, there was a very heavy rain and this rain was more than 100 millimeters in 1 or 2 hours' time. So this has disrupted the complete water management and also this has made the failure of the electrical grid and electrical system. So these kind of hiccups, they do come when we are passing through a very rough weather, it is like flying in at of weather. So I think by August 10, the monsoon will recede. And from September, we'll start ramping up. Our team, led by Mr. Rajiv Kumar and by Mr. Biju Nair and our ED project, Mr. Damodar Mittal, they are the expert of steelmaking, iron making and everything. So they are committed bring it to about 12,000 tonnes in the month of September and 13,000 tonnes by December. The blast furnace #1 is doing again extremely well. The capacity is 10,000 tonnes per day, but we are doing about 11,000 tonnes per day from that plant also. So put together, 13,000 tonnes per day of from the blast furnace #2 and 11,000 tonnes per day from blast furnace #1, total be 24,000 tonnes per day. So team is all on it, and we are sure that 24,000 tons of hot metal we have been doing every day from these 2 blast furnace embed. Already 4,200 tonnes of from 1 furnace and another 2,600 tonnes of the furnace #1 in Drager, there is 6,800 tonnes, that is being done under the leadership of Mr. Debjit, who is the Head of our Raigarh plant. And the 100% capacity utilization. So if you see it put together, the Raigarh at 3.6 million tonnes is stable. And when we have 24,000 tonnes hot metal, this will give us 24,000 tonnes of steel also because whatever the yield loss is there, that would be substituting by scrap. So maybe 24,000, 25,000 tonnes per day steel we will be making. -- and this is going to support the sport will be from our DRI plant, which is at 5,000 tonnes per month per day and the other electric car furnace. So put to wherever aim is to -- these 2 level of about 27,000 tonnes steelmaking after the monsoon, and then finally, we'll reach 1 day to 30,000-tonne steelmaking. And this is where we will be saying that we are crossing the capacities. So put together, so 3.6 million tonnes from age -- and our aim is 9 million tonnes from Angul. -- before we add the scar or we import the HBI or DRI. So this is what our overall plan. So I hope I answered your question.

Yes, sir, the slurry pipeline status. That was the last one. sorry, clarify.

Sorry I missed that. Yes, yes. Slurry pipeline. I'm pleased to inform you that it is all set end-to-end. The sale pipeline is laid. Now trials are going on. There is -- there are some special trials. We call it in taking a real big mid of metal, it is passed through. And then we'll go for the we'll call our collaborators and the technical equipment suppliers, they are from Germany. -- and then we will take a trial first by water and then by slurry. So end-to-end, everything is in line. Hopefully, you will hear this news very soon, maybe in first half of August. So we'll commission it. And once it is done, it is 20 million tonne plant and 20 million tonne capacity, this 20 million tonne capacity means this will reduce the overall burden of the logistics. So once this is done, then the load on transportation, local transportation will be reduced substantially. So now the -- today, we are aiming maybe in the first half of August. But in the rainy season goes on and there's some problem, this may delay also, but that is not in our hands, these are uncontrollable factors in life. So -- but end-to-end line is laid, end-to-end pump house receiving station is made end-to-end communication is in place and the equipment, the pumps trial, et cetera, are already done. So maybe if too much of rain, then maybe end of August. So in nutshell, this quarter, which is going on the quarter of July, August, September. Hopefully, the grace of God. We will give good news to the nation is the longest pipeline perhaps in the country and the largest capacity. 18 million tonnes abecapacity with 60% of fe and 35%, water. But if we can manage with less what to say about 30%, 32%, then this can even go to 20 million. So it depends upon the water and the iron ore ratio because it depends upon the iron ore specific et density and how iron ore behaves in a particular pipeline because we are going to buy iron ore from the outside parties also. So thank you very much. Hope I also this time.

[Operator Instructions] The next question comes from the line of Alok Deora with Motilal Oswal. .

And warm welcome to the new management and the best which is ahead. So sir, I just had a couple of questions. First is on the NSR movement. So if you can just indicate what's the pricing like now versus the 4Q average? And versus the 1Q average? And where do we see the prices moving for the second quarter? If you can just indicate on that because we have a sharp correction in the long prices. So just your thoughts on that, please.

My colleague, Rupali Mehra, will answer you. And in case anything else required I'll come back -- no problem. I hear with you over to you, please. .

Thank you. Thanks for your question. So as we all know, deal works in a manner which is kind of seasonal. So currently, if you look at the flat prices for HRC, we have only looked at INR 800 per tonne lower pricing with quarter 1, 2 -- and if you look at TMT, we are looking at almost 8,000 on the index. But as I said earlier, this is a seasonal weakness, which should recover cost.

Just wanted your thoughts whether we could see further correction or they should kind of settle because it's been a pretty sharp correction in the long steel. That was the question actually.

Yes, actually, this season, it happens. But we fortunately we are insulated to a great extent why because when the TMT prices go down, we start increasing production in the other areas. So these segments because we have multiple segments. We produced 9 different products. So if 1 product is a little weak, then definitely, we can find a place for the -- for that material to be sold to the other channels. But yes, you're right. The monsoon season is very less construction. But this also brings a lot of opportunities in future there are although I should not be happy on it as a very situation is because one cannot say on this, but there are opportunities like if you have a lot of floods, then more construction is likely to come in future. If there are no floors, but still, there's a water logging, then the government, they spend a lot of money so that next year, there should not be any water logging. So that means more steel, more cement is going to be consumed in times to come. So -- but this is recoverable, we can recover it.

Got it. And also on the coal cost, if you can just indicate the coal cost for 1Q and what is the coal cost assumption or guidance for the second quarter?

So I'll tell you. The coal is basically -- there are 2 different things. I think you're discussing coking coal or you Right. right. Coking coal. Yes, okay, coking coal. So coking coal is, again, a demand supply. If the -- today, we are seeing that maybe $15 will be the total increase so INR 1,500 in coking coal. But the -- it also depends upon the Chinese sector. For the China sector. If the Chinese consumption or Chinese steel production go down, then immediately, the coal prices also come down. So -- but yes, you are right, there is a pressure in India because most of the state mills in India, they are through the blast finest steelmaking. So they are buying a lot of coal. And nowadays, more than cold, people are importing coke. If you see the data in the last 3 to 4 months' time, the Indian steel mills, they have imported a lot of coke from Indonesia and from some other different countries. But yes, $15, you can factor it. But we will see that how we can minimize the cost in terms of blending it properly. And the coal is available, it is also available in different forms. So different blends are also available. So the blast furnaces are very capable and flexible in using different code. -- we'll try to blend it so that we are totally -- we are not outpriced in the market. So that is what we feel.

Sure. And just last question, sir. So volume, we -- based on what we have done in the first quarter, the full year guidance remains the same of 10.5 million to 11 million tonnes of sales volume in FY '27?

Yes, you're right. We are -- we will maintain the run rate, rather we'll increase the run rate because we have taken the shutdown in the quarter 1. While we have taken the shutdown. Because the shutdown basically, it is not in our hands. We see that what is the -- how many heads we have taken out from a particular vessel like BOF vessel. So the Brussel gives a heat life of about 9,000 heats to 10,000 heads. So whenever it is more than 9,000 heat, we have to stop it to avoid any puncture in the vessel that disaster. So that there's no safety by past. . So we found that in this last quarter, we had to take a shutdown because we produced more number of seats in a less number of time. So that means because it depends upon the number of heats, each heat is 250 tonnes. So you can see about 2.5 million, 2.2 million if you reduce and we had to change the refractory. So the reflected timing came in this particular first quarter. So we cannot wait for the second quarter, so we had to do it. And this is how we are going to do in the future. So now we have 4 in Angul, if we are discussing. We have 4 multipotent language. One is electric or furnace, then there was a OFI, which is existing since 2011, '12. And then we had 2 more thoughts. These are called BOF 2 and BOF 3, oxygen furnace 2 and basis. These 2 are very new. We commissioned on 6 months back and the other is again over 6 months back before March, we did it. And these 2 ports are continue. So they are 10,000 heads or 9,000 heats will take more time. Until that time, we don't have to take also down. So I'm sure we'll be in a position to recover whatever 300,000 tonnes of hot metal loss we have done in the quarter 1, that we will recover in the subsequent quarters.

[Operator Instructions].

I don't want that -- some of the colleagues say that I've not answered, we can sit for another 5 minutes, not pro. But if there's any question, please ask.

[Operator Instructions] The next question comes from the line of Amit Murarka with Axis Capital. .

Welcome back Mr. Sharma. So -- just a first question on NSR movement in Q1. How much was the movement in flats and longs? And was the sale of metallics that you did -- just could you just specify that.

Sale of metal we are not done whatever mechanic sometimes we produce also that is in-house. So it is consumed. The another point what we always see that a ratio in between price and cost. The steel prices, they go up, go down. And within a gap of 4 to 6 weeks' time, you find that if you price the 1 up, the input price also increases. So that bank is only over the 4 to 6 weeks' time. So losing or gaming. Sometimes, we say that the prices are going up, whereas the input prices are not going up. So that band is also for about 4 to 6 weeks. And sometimes, you see the prices are going down, but the input cost, that has not gone down. that particular window is also go 4 to 6 weeks' time. So this is a normal behavior of steel business. But yes, you're right, INR 1,000 to INR 4,000 was a reduction and different products. But not in the products like rail, grounds, specialty anal channels, being structural revenue structures prefabricated structures and the specialty plates, the value-added rates mention temper, it was not there. So I would say, by and large, yes, we took a, I would say, hit in terms of TMT. And whereas we could maintain and retain the price in the other segments. So the price change, if you see the permit tonne, so that was running on INR 5,000 a tonne

So Sandeep here, just to conclude, the NSR movement in case of the flat was around INR 7,000 per tonne in case of long around INR 4,500 per ton. I think that's what your question on the quarter-on-quarter basis.

Mr. Amit, I will take question to please come back in the queue for further questions. The next question comes from the line of Jashandeep Singh Chadha from Nomura.

I hope I am audible. And first of all, say, welcome to the team and welcome back Samad. So my first question is largely directed to Metals and also image -- so given that the industry typically benefits from stable leadership and long-term management tenures, these relatively sequent changes in the senior management a stands out from general, right? So should investors be concerned about the impact of these transitions on strategic continuity and long-term value creation? And how do you ensure that execution against your long-term objective remains unexpected? So this is my first question. .

Sorry, I missed your Pesquestion. Can I request you to a repeat .

Yes, sir. So largely, the industry normally benefit and industry is known for a long tenure stable management, but there have been frequent changes at the top level at general -- so should the investors be worried about the impact of these transitions on strategy continuity and long-term value creation? And how are you ensuring that all the long-term objectives are remains unaffected despite these changes that are happening, so. .