Lloyds Metals and Energy Limited (512455) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Lloyds Metals & Energy Limited Q4 FY '24 Earnings Conference Call, hosted by Equirus Securities. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Gadekar from Equirus Securities. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us today. We at Equirus are pleased to host Lloyd's 4Q FY '24 results conference call. We have with us today Mr. Rajesh Gupta, Managing Director; Mr. Riyaz Shaikh, the CFO. Now I would like to invite Mr. Rajesh Gupta to initiate the proceedings for the result call.

Good evening, everyone, and good evening to that and congratulations to you. Thank you for joining us all for our FY '24 results conference call. I trust this message finds you well. I hope each one of you has had the opportunity to thoroughly review the detailed earnings we had shared on the exchange and on our official website. The results that we are present today mark a significant milestone in our company's journey. We have achieved a top line of INR 6,000 crores mark in revenue for this year. The achievement underscores the robust performance and growth we have experienced across all segments, namely sponge,, iron ore and power. FY '24 has been pivotal for us, with such milestones surpassing INR 1,000 crores in profit after tax, achieving dispatches of 10 million tonnes. Looking ahead, our road map to 55 million is going to be one of its kind in the Indian iron pace. We shall be single location mine operating in this scale. In terms of operations, our sponge segment has recorded its best yearly production as a result of the new Konsari plant, whereas the iron segment continues its strong performance and also produce 10 million tons also a record. Additionally, our power segment has witnessed a satisfying traction. In FY '24, we set for a comprehensive road map that charts our course for the future. Our direction is crystal clear and our execution team is fully dedicated to realizing our goals. We have set specific time lines, looking and diligently working towards that. Just to reiterate, let me again give you a brief snapshot to provide you with a glimpse of our plans. We are moving towards forward integration in our operation to become a value-added steel makeup with a 4.2-million-ton steel capacity in total. This includes a good mix of 3-million-ton flat products and 1.2-million of long product. Expanding our iron ore production is set into our plans, with beneficiation playing a crucial role. Furthermore, addressing logistics in steel making is vital, and we plan to do some through 2 slurry pipelines to both our plants from the mine. This not only reduces freight cost, but also aligns with our commitment to environmental stability. We believe that establishing such a capacity without resorting to debt will be a very big differentiating factor for us. I will now hand over to Mr. Riyaz Shaikh, our CFO, who will provide more details on our headline numbers and elaborate on our capital expenditure also. Over to you, Riyaz.

Thank you, Rajesh ji. Good evening, esteemed participants. Firstly, I thank all for taking the time to attend the company's earnings quarter 4 and FY '24 concall and also thanking the Equirus team for hosting the concall. So to begin with today, I'm delighted to share with you our operational performance for Quarter 4 FY '24. I will then provide an overview of our full year FY '24 results and update on our capital expenditure and dividend declaration. Starting with quarter 4 FY '24, our revenue witnessed an impressive growth of 74% year-on-year, primarily driven by higher volumes in our sponge and iron ore segment. Our EBITDA also mirrored this robust performance, increasing by 153% year-on-year in quarter 4 FY '24, with both iron ore and sponge segment contributing significantly. Moving on to the full year FY '24 results. We continue to experience strong growth with revenue slowing by 90% year-on-year, predominantly led by increased volumes in our iron ore segment. Similarly, our EBITDA for FY '24 witnessed a substantial growth of 101% year-on-year, once again, with the iron ore respond segment playing pivotal roles. Now on the operational front, our iron ore production stood at amenable to 10 million tonnes, while our DRI segments saw production of 260,000 tonnes. Additionally, our power division achieved sales of 188 million units during the quarter -- during the year. On a per-ton basis, our EBITDA for iron ore stood at INR 2,375 and for quarter 4 and INR 1,710 for the full year. Now regarding capital expenditure, in FY '24, we invested around INR 1,700 crores. We are pleased to inform you that we have been efficiently executing our CapEx plan. The 85-kilometer slurry pipeline project is already 50% complete, and our DRI and pellet projects are progressing at a breathtaking speed. We anticipate both projects to be completed by FY '25. Moving on to our balance sheet. I'm proud to announce that the company remains gross debt free, and we envision it to remain so even after executing a CapEx of INR 33,000 crores. Dwelling deeper into our returns, you will find that our ROCE remains north of 50%. However, if we adjust the CWIP number, our ROCE exceeds 100%. This indicates that our CapEx projects are strategically placed to be ROIC accretive. We have declared a dividend this year of 100%. That is INR 1 per share, that is how it is 100%. Looking ahead, we are optimistic that the company will achieve major milestones in the coming years. Now I'll open the floor for any questions you may have. Thank you.

Thank you very much. [Operator Instructions]. First question is from the line of [Nikunj Lahoti], who is an individual investor.

Congratulation, sir, on your results. Sir my question is you mentioned in a video that in 4 to 5 years, you expect the revenue to be after the steel plant coming in full expansion capacity of 25 million tonnes, revenue of INR 35,000 crores to INR 40,000 crores. So what could be net revenue breakup between iron ore and steel?

So can you [repeat] last part of the question? What is the breakup of iron ore versus steel?

Yes, in future, like -- of revenue, what would be expected?

So on broad basis, the figure that you're mentioning probably was given in one of my interviews. It's a simple calculation of the current rate of steel and iron ore. Approximately our iron ore sales at that point of time will be around 6 million tonnes -- no sorry 9 million tonnes after our own CapEx plan is over. And steel pellet will be around 6 million tonnes. And semi -- other semis will be around 0.5 million tonne and steel will be around 4.2 million tonnes. So if you -- total all of that come to INR 40,000 crores or probably a little more than that. The percentage of revenue I would leave for you to calculate.

And sir, one more question. Like there was a report rate from Ventura Securities about this stock. And in that report, it was written like there might be one more...

Hello? We seem to have lost the line for Mr. [Lahoti]. We move to the next question. The next question is from the line of Nishant Bagrecha from InCred Inequities.

Congrats on the robust numbers. I have a couple of questions. So firstly, so when do we expect to receive all the clearance to expand our mine to around 55 million tonnes? That is my first question.

We expect this to -- in various phases, there are approvals such as the IBM plan approval and ultimately the EC, we expect all that to happen by the year-end '24-'25.

Okay. Okay. And sir, secondly, so I just wanted to check on the volume outlook. So how should we look at the volumes in FY '25, assuming we received EC by the end of calendar year '24? And -- so can we see 15 to 16 million tonnes volumes in FY '25 and then 25 million tonnes in '26?

We are -- as Mr. Gupta just mentioned, we are expecting the clearance by the year-end, that is mostly in the last quarter of the year-end. So we are as such projecting of around 12 million tonnes to 13 million tonnes in this year. 10 million tonnes is for sure. And if the approvals are in place, which we are expecting, so pro-rata accordingly we should be getting around 3 million to 4 million additional. So around 13 million is what we are expecting to be doing this financial year.

Okay. So I have one more question. So we have taken an enabling resolution for the QIP. So when do we expect to complete process? And again, how much are promoters going to infuse? So any color on that?

The process of the same is on. As you said, we have just got the clearance last weekend from the shareholders. The process is on and then once everything is crystallized, we should be coming back to you.

We also hope that we -- we're also planning that the dilution by the promoters will not be to a very large extent. There will be some dilution, but not to the full extent. The promoters would be investing something. The plans are not yet frozen.

Okay. And sir, one last one, a bookkeeping question. Like how much incentives are we likely to receive each year starting from FY '25 to FY '29? And how would the incentive structure look beyond FY '29?

Incentives?

Yes.

From the state government?

Yes, sir, from the state government.

So these incentives are on capital basis and capitalize -- actually, when we start the processes. So by that time, we will have FY '25, which is the current year, we would not have much of the plants operation. They will all start operating in the last quarter as predicted. So there will not be any major incentives. Apart from what is balanced from previous periods, we won't be anticipating to receive much incentives, for FY '25. Post that, the figures are going to be approximately based on again the turnover, et cetera, and various rules. The cap that we have got is 150% of the CapEx for one of the plants and 110% for the other plant. And at the end of the period, say 2030-31, it will be INR 2,500 crores approximate. So it's going to be a phased manner of incentives.

[Operator Instructions]. The next question from Martin [Parthiv Shah] from Tracom.

Congratulations for a set of numbers. Sir, I just had a query on both your slide, Slide #19, where you mentioned the year-wise iron ore output. And it mentions that first full year post all approvals, year one, 25 million tonnes, mine DSO and then subsequently year 2, year 3 year, year 4 onwards, you have the BHQ element. So sir, I just want to understand when we talk of a statistical mining capacity of 55 million tons, is that like total, salable iron ore output, or out of that in the BHQ share, not all will be saleable? How to look at it?

At the peak, our iron ore mining would be 55 million tonnes with 10 million tonnes of DSO and 45 million tonnes of BHQ. The BHQ would be beneficiation down to 15 million tonnes . So 10 Plus 15 million, 25 million tonnes will be the usable or sellable ore that we have at the end of the period. This will be -- the beneficiation will be done through 3 plants, which would be done -- the processes are on right now to put up these plants. The investments and the planning and the testing et cetera, started and the pilot plant is on. So that the first beneficiation plant we hope to have in '28 -- '27, '28.

And in terms of ramping of the ore capacity. So you mentioned in FY '25, probably who you're looking at 12 to 13 million tonnes, right? So then FY '26, '27, '28, any such roadmap you can give that, till the BHQ thing is up and running and proven...

25 million tonnes EC is approved and received. It would be producing 25 million tonnes of usable ore on that time. Based on the -- depending on the beneficiation, the usable ore would have a mix of direct sales ore as well as beneficiated ore, which I just explained which is there in the slide that you're talking about.

And sir, regarding the current fines, so are you -- I am assuming you are selling the current fines in the market right now? Or maybe you're providing to some pellet players till your pellet plants comes?

So we are selling all of our fines to pellet or sinter plant users. That includes -- but it's not -- I mean that's what finding. So we don't have our own pellet plant as of now. That will happen next year, where we will use some of the pellets. Does that answer your question? Or did I miss some nuance of the questions?

Yes, sir just trying to understand. You had some trading agreements with some pellet producer?

Okay. So we do have agreement to sell all Mandovi, MRPPL is a company in Goa, which is one of the oldest pellet plants in India -- in the world, in fact, and all the iron ore is being sold -- being purchased from him by us -- from us. So all their ore were consumed from our mine. That given stability of ore, all the exports and some quantities are being purchased by us back. This is giving us 2, 3 advantages. One is it ties up a little small chunk of our iron ore sales. Number two, it also gives us the experience to do pellet seed marketing. We have established a brand called LMELPEL, and we hope to be selling that high-end pellets used for gas based DRI, which is called DR pellets to the MENA market particularly over the next -- over this year.

Sir, just for my simplistic understanding, your quality of pellets, how close will it be to Vale pellets?

Vale pellets, so there are 2 stages to this answer. Right now, we are not beneficiating our ore. We are designing in and using it. We have a small or 66% Fe material, which we are using to make these pellets in MRPPL, around 1.5 million tonnes, what maximum we can sell,, whatever we require for export, we are giving that to him. That's number one. Once our -- and so the pellets are, the quality that MRPPL is making is nearly equal to that of Vale. I would say in a range from 0 to 100, it will be in the range of 85% to 90% is how near we are to Vale. When we go to our own pellet plant, the same schedule will arise, still our beneficiation plants starts. Once the beneficiation plant starts, our ore will get upgraded to around 66%, 67%. And at that point of time, our pellets that we make in that plant, in our own plant at in any other plant -- in our plant or in MRPPL would be equal to Vale quality.

Sir, in your PPT you mentioned -- sorry, yes sir.

Obtain similar kind of premium, Vale, like you know, uses 100% of the beneficiated ore only. So we are able to achieve that quality without beneficiating, which is a rarity in itself in today's iron ore scenario.

Valid point, sir. Sir, you have mentioned in your PPT that...

Go ahead.

Yes, sir. You have mentioned in your PPT that along with iron ore you also had coal. Now am I assuming correct? You don't have any coal mine right now, right? So your coal sourcing will come from where and how will you manage the cost of coal?

So coal we are buying for our DRI plant either through auction route from WCL or improving it. And later on, we start our blast furnaces, coking coal will be imported.

Okay. Do you have any plans to bid for any coal mines in the country?

We haven't bid for any coal mile at the moment.

Sir, just lastly, regarding your value-added steel and talks of the 4.2 million tonnes per annum steel plant, flats and long involved, just to understand, you will have better grip on your numbers because of your current backward integration nature, the type of quality of the ore that you have and your future plans and everything. So you know, if currently say Tata Steel domestic EBITDA by tonne is like the benchmark in terms of they can deliver a good cycle, even a INR 20,000 EBITDA by ton, what are you expecting? What sort of EBITDA by tonne in a good cycle your plant will be able to deliver?

So we would -- you very correctly mentioned about our cost control, especially without our any premium. So our mines will fetch no premiums till 2057, which is a big differentiator from every other steel makers in the country today except one. Apart from that, we are not going to have -- so we have -- 1 or 2 players will only be left with no premium mines in 2032, '31-'32. That will further add to our competitiveness compared to every other steelmaker. Our iron ore is well stabilized. We have done good surveys and good resource calculations and exploration, and we are confident that the qualities are what I just mentioned, especially after beneficiation. Our -- for the 4.2 million tonnes around -- approximately 15 million tonnes of pipeline route will be used. So though the plants are not at the pit head, for all practical purposes, the cost of transportation of iron ore is as good as that because of the pipeline route, and of course it also makes it greener. Again, with the beneficiated ore, our iron ore will be very high quality, lesser coke also greener. Apart from this is our IPS root. Maharashtra is one state, which gives very robust investment incentive. Our average incentive between the 2 plants is around 125%, which is the cap over 12 years. So approximately like I mentioned earlier [INR 2,000 crores to INR 2,500 crores] coming -- flowing back to us once that peak flow happens. So with all of this, we believe that on the cost front, we should be amongst the most competitive players, not only in India, but in the world. Of course, only time can tell, but we are very content of our numbers. Regarding EBITDA, steel is a cyclical business, yes. In March -- between March and April, the prices have gone up by INR 2,500 to INR 3,000. Why? Difficult to answer. So it's a cyclical business. I cannot answer about what would be the EBITDA numbers per se. But of course, with us EBITDA and profit after tax will remain -- profit before tax will be the same number. But we believe that because of all this, the EBITDA number will always be stronger than every other steel company in India.

That's good. One more point regarding the choking of the current infrastructure. As I understand that only 10 million tonnes of iron ore mining, all the connecting roads and whatever rail infrastructure you can use are highly choked up. So now we are talking of ramping up our ore mining. How supportive has the government been in terms of giving you both the road and the rail infrastructure or you are looking to develop the roads on your own? What is the like thought process in that? Because I hear from every mining company that mining output is not an issue, but the logistics is a nightmare in our country. So how are you tackling that challenge?

So I always say one thing, my friend, that steel is more of a logistics game than steel itself. For logistics out of the mine, we are developing our mines to the extent of -- every year, we are spending up to INR 100 crore, INR 150 crore to develop the roads and maintain the roads at our end outside the mine also, up to the stockyard and up to the railway siding. This has ensured that we've been able to ramp up from 0.5 million tonne dispatch in '21, '22 through '23, '24, that is 2.5 years to 10 million tonnes. Our monthly averages have gone up to -- on a run rate of around 18 million to 20 million tonnes also in some of the months. In January, we had -- in March, we produce very less iron ore because of reaching the capacity of 10 million tonnes. So I do not think that to achieve 10 million tonnes, we were ever choked up to use your word. Railway facilities from the 3 sidings that we are using right now is quite adequate to all parts of the country. We have also over a period developed a lot of road network outside the state also. So we are sending our material from the mine area to Raigarh, Raipur, even Orissa now in some cases, to West Bengal in some cases by road, taking advantage of incoming coal that comes in for a various reasons or other inputs that are coming from the port. So we are continuously on the watch out for looking at best logistic practices, and it's a very, very important part of our business.

The next question is from the line of Ritwik Sheth from One Up Financial.

Sir, just 2 questions from my end. Sir, what is the capacity of the slurry pipeline when it will be completely be commissioned?

So we have 2 pipelines planned. One is the pipeline from the mine or Hedri to our Konsari plant, both being in the district of Gadchiroli. That's an 80-kilometer pipeline with a 10-million tonne capacity. That pipeline has 2 grinding units, 5 million tonne each. The first one will be commissioned in December-January and the second griding unit will be commissioned next year. Both these griding units are in sync with the pellet plant. So at the end of that period, we would be transporting 10 million tonnes on this pipeline, 85 kilometers. The other pipeline that have planned is a 5-million tonne pipeline from Hedri again to our Ghughus plant, which is in Chandrapur. The length of this pipeline is 185 kilometers. The survey of this pipeline has started. And we are applying for permission as we speak. And that is a little bit further down the line, maybe by March '28, '29, I'm getting confused. March '28 is when that plant will be -- when that pipeline will be ready, again, linked with the pellet plant in that plant -- in that location. So total 15 million tonnes will be transported by pipeline out of the 25 million tonnes sellable product that we will be doing, leaving 10 million tonnes will be transported by other means, which is equal to what we are doing right now. So in the long run, we are very confident of achieving our logistic needs.

And what would be the approximate logistic cost savings in both these pipelines will be commissioned?

So in the first plant around INR 700 crores to INR 800. In the second plant, around INR 1,100 to INR 1,200.

Got it. Okay. And sir, my next question is regarding the CapEx that we are undergoing. Can you tell us what is the pending CapEx for all the expansion projects? And when are these projects expected to be completed?

It's a very long, drawn out up question -- long runout answer because the CapEx plan is very, very extensive. Let me go location-wise. The total CapEx plan that we have is around INR 33,000 crores. The first location that I will talk about is Chandrapur, which is our first plant. There we are -- in the first phase, we are doing 2 DRI units, 2 x 500 DRI units and a 2 x 30-megawatt power plant. The power plant is mostly from waste product. This should be ready by March ‘'25. In the same location, 1.5 years down the line, we will go in for a steel plant. A steel plant will envisage 1 blast furnace, 2 arc furnaces, casters, radial furnaces and 2 rolling mills to produce 1.2 million tonnes of wire rod mill -- wire rod product. The total plant expansion in this is around INR 6,300 crores with both these phases put together. The third phase is to this plant, which is the pellet plant that we just talked about earlier with the pipeline. That pellet plant is 4 million tonnes. That 4 million tonne would be utilized 2 million tonnes for the steel plant in this location and 2 million to sell to other steel plants next door to us. Even the pellet plant and the pipeline, they will become more viable. And all this put together, INR 6,300 crores -- INR 6,400 crores. And that is location number 1. Location number 2 is Konsari, which is in the district of Gadchiroli. In that location, we have started a DRI unit, 2 x 100, 2 x 95-tonne DRI unit in a period of around 13 months after we got the EC clearance for that. Subsequently, now we are constructing the first pellet plant. The long-term plan of this is 2 x 4 million-tonne pellet plant. The blast furnace based -- blast furnace BOF based flat product mill and downstream for making hot rolled galvanized coils and cold rolled galvanized coils. The 2 pellet plants -- out of the 2 pellet plants, we already have 1 pellet plant under construction along with the pipeline. That should be ready again by March ‘'25, what I mentioned earlier, similar to the DRI unit. And the second pellet plant should be ready one year after that by June ‘'26. And the steel plant targeted by September ‘'28 to March ‘'29. The total investment in this location along with the slurry pipeline that I earlier mentioned is around INR 21,000 crores. The permission for this steel plant is yet to be applied. All of the permissions are with us. The third location is our mine...

Sorry, sir, to interrupt. The blast furnace flat product is the 3 million tonnes?

Yes. Okay. The third location in the mine, where we right now are mining 10-million tonnes. We will upgrade that to 55-million tonnes, like I mentioned earlier, at an investment cost of around INR 800 crores. This investment includes basically the basic infrastructure and like I said, road, et cetera, everything. Apart from that, we have plant next to this, which is already being constructed as we speak for the grinding unit of the pipeline. But apart from those grinding units of the pipeline, we'll be putting up 3 beneficiation plants with a throughput of 15 million tonnes each and an output of 5 million tonnes each. That is around INR 5, 000 crores investment. So total investment put all -- put together is around INR 33,000 crores. And again, that what Mr. Riyaz said, we have spent INR 1,600 crores to INR 1,700 crores in the last 2 years. And right now, the plan -- the expansion plans are very, very on and full swing.

The next question is from Abbas Punjani from InCred Equities.

I have a couple of questions regarding the ore. So what will be the royalty rates for the low grade ore?

Can you be a bit louder?

Yes, so I have a couple of questions regarding the ore. So what will be the royalty rates for low grade ore?

So when we're talking about low-grade ore, you're talking about the BHQ?

Yes.

Okay. Currently, the BHQ -- the Indian IBM rules give iron ore grade up to 45%. This is 35%. So if a pro rate from 45%-35%, royalty will be around INR 45 a tonne for that ore.

Okay. So what would be the approximately cost mining?

The mining cost, including this royalty, the mining cost itself and the beneficiation cost would be in the same range that we have right now, which is around INR 2,500.

The next question is from the line of Anand Kumar who is an individual investor.

Yes, very nice to see the presentation from you, sir. Having said that particular thing, I think I see a lot of dynamism in the organization. For example, in the last PPT, we saw only one pipeline of 89 kilometers. Now we see another pipeline that is coming up on that.

That pipeline is under construction -- okay, in the quarter-on-quarter.

Yes, quarter-on-quarter.

Yes, sir. We are very live to the occasion...

So that's very good, sir. So there is a lot of dynamism that is coming on that one. And execution is going on very well. So first question is related to the -- related is that, what would be the savings with the current DRI plant operation-wise by when this pipeline is complete?

So like I said, we'll be saving our INR 1,300 a tonne. We use 1.8 metric tonne per -- metric tonne of iron ore, 1.8 x 1100 is INR 3,065.

Okay. It's approximately 10% is what we are going to take more efficient with respect to...

Yes, logistics is always a very, very big cost in our business.

The second question is that when we recently completed one DRI plant, I think, a few quarters back, are we getting any incentives from the Maharashtra government on that one or there's no incentive for that?

The incentives are due. We are not yet claiming it for some strategy reasons. The incentives are due, but we are not claiming it.

Okay. So that is also covered under that one. Now are we going to get incentives for this slurry pipe or we are not going to get incentive for this slurry pipe investment?

Yes. All our capital...

We are going to get...

yes, will be applicable for incentives.

We are going to get that one. The second one question, sir. Previously, you were talking about power plant expansion. If you really look at your previous presentation, you spoke about expanding the power generation to only 90 megawatts more or something like that.

Our -- sorry, my speed on investment, I missed out on power, my apologies. All the plants, the power plants will be captive. In the first location, it will be around 150 megawatts and the other location will be around 300 megawatt. Hedri will not be captive. That will be buying power from outside.

Okay. But sir, is it right to go for -- is it going to be coal-based power generation, right, sir?

Sorry?

It would be coal-based power generation, right?

I was just coming to that. Out of 450 megawatts, around 300 megawatts we envisage to be waste heat recovery or waste coal recovery, waste products recovery, basically, and around 150-megawatt would be coal-based -- direct coal-based thermal power.

Is there any thought about using the solar power for generating and using locally? Just like Godavari power had done in that particular thing substantially in the recent past and they saved a lot of money on that.

The plans are not yet closed. We are looking at investing in through the captive route that are available in the market. We are looking at investing some -- for some solar power in that route. The plans are not yet frozen. We are looking at it very actively.

I think that will be important because otherwise you establish whole plant and after that, again, you will have to go green. So you get into solar. It would be unnecessarily, power plant you will have to keep it idle on that one. So that was the question that was there.

If the power is not there, there is no power plant, I mean. So in the long run, we envisage that to be totally solar. We hope to go there very shortly.

Sir, it would be very helpful. In terms of projects, which are going to become on by the end of this year? If some kind of information is provided, that would be good. I know things are happening at a break-neck speed. But as an investor is not being aware about what is happening on that one, it would be helpful if you can actually put a slide saying that what is expected to happen by the end of the year and next year. So that we have some estimates what is happening further on that?

So I have mentioned earlier, this year, '24, '25, we should have a 2 DRI plants ready.

that is 0.36 MT...

0.35 million tonne ready. And we will have the associated power plant ready. And we will have one pellet plant ready and with that one pipeline for that. And the mine should be ready to produce 25 million tonnes.

A out of this pellet plant, whatever we are going to produce 4 million tonnes one? That would also be supporting the DRI plant, sir, or is it going to be completely sold out differently?

So that's [indiscernible] the market, because first, we've been producing for the first 1.5 years, we have been producing around 800,000 say -- 650,000 tonnes of DRI. We'll have the option during this period because we'd be selling the product out. So depending on the market requirement, we'll be flexible either DRI or pellet, I mean either iron ore DRI or pellet-based DRI.

Okay. So that's going to depend upon that cost economics at that point of time? Is this my understanding right, sir?

Sorry?

It depends upon the market pricing in that point of time.

On the market pricing, because at that time, I'm not consuming our own DRI. Then our results, our thought process will be much crystal clear.

The other one that is -- another question that I have is that previously, you were talking about increasing the mining capacity by 20%, that is 10 million to 12 million, because you need very little EC clearance process for that.

I have talked about a year back or so, or around 9 months back, I remember. When we went into the detailing of that process, we realized that we do save on the public hearing process. But the other processes of the approval are very, very same. So we decided to go in for the big bang approach rather than a small approach of 20%, 20% and then the beneficiation plan. And also, we have -- we've got very encouraging results from the beneficiation studies that we have carried out. We also produced -- not produced -- I have set up our pilot plant for the beneficiation in record time. So with all that activeness on the beneficiation, we decided to go the big bang way.

Okay. So that means this year mining capacity is going to be 10 million is what we should be -- that's what -- yes.

Actually, it depends very much on when exactly we get it, because after that we will have to do it pro rata. So let's see how it works out.

Yes. But anyway, even if you get it by March, I think there would be extraordinary speed for getting the EC clearance. I would definitely look forward to hearing the positive news on that.

10 million would be the minimum. Anything over and above that would do.

Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.

So thank you everybody for all the very interesting questions, and we hope we have been able to be lucid in the answers and our Investment Relations desk will always be open for any further questions. Thank you.

Thank you very much. On behalf of Equirus Securities, that concludes the conference. Thank you for joining, ladies and gentlemen. You may now disconnect your lines.