NMDC Limited (526371) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call of NMDC Limited hosted by Dolat Capital Market Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Suman Kumar, the Vice President from Dolat Capital. Thank you, and over to you, sir.

Yes. Thank you, Alibeque. Good afternoon, everyone, and thank you for joining us today afternoon for NMDC 3Q FY '25 Results Call. We have the senior management with us today, represented by Mr. Amitava Mukherjee, Director Finance, and Chairman cum Managing Director, Additional Charge. So now I would like to hand over to Amitava sir, for his opening comments. Over to you, sir.

Good afternoon, everybody, and thank you for joining in. Now I believe that this quarter results have been pretty good. Hopefully, it is beyond the expectations what The Street had expected. Both in terms of physical performance and financial performance, I think it has been a very satisfactory quarter. And even on a 9-month basis, we are doing fairly well. So if you see our performance in terms of production, it has been even higher than the Q4 of last year, which indeed is something absolutely unprecedented, if I may say so. Financially, of course, the prices we've been able to hold. We've been able to -- despite a turndown in the steel prices, we have been able to reasonably hold up prices for iron ore and which shows the results. CapEx also, we are doing fine. We have locked in approximately INR 3,112 crores of CapEx this year, which is -- already we have exceeded last year. And we expect to have a CapEx of around INR 4,000 crores in this financial year, which will almost be twice as much as we did last year. So overall, we have had a good run so far in this year, including the last quarter. Also, we had a major vendor conference as we call it the partner conference, where about 150 vendors participated and more than 250 people were there, where we unveiled our plan for CapEx of around INR 70,000 crores in the next 5 to 6 years to enable us to reach 100 million tonne target. So these are major happenings that has happened. And I think the response from the vendors were absolutely fantastic where we gave them the understanding of the technology that we are looking for and the major CapEx programs along the time lines that were there. So thank you once again very much for joining, and now we can connect to individual people to ask the questions.

[Operator Instructions] The first question comes from the line of Amit Dixit from ICICI Securities.

Congratulations for a good set of numbers, sir, in this quarter. I have 2 questions. The first one is, if I look at the royalty as a percentage of realization, it's around 46% this quarter, much higher than the last 2 quarters. So just wanted to understand if we have started making provision for the possible higher royalty in Karnataka? If not, what event or milestone would cause us to do that?

Is that the question? So can I answer now?

Yes sir, please.

Number one, I'd like to clarify that we have made no provision for the expected. I hope it is not expected -- but -- till that was passed in Karnataka. So it's clearly understood that we have not made any provision at all. [indiscernible] in the contingency -- in the contingent liability, where we have also mentioned that most of it will be recoverable. The higher royalty is on account of higher production that is there, which is almost 1 million -- sorry, about 86 lakh tonnes as compared to the Q3 of Q2, as you see. So it is about 86 lakh tonnes. And as you know, that royalty provision is made on production. So that is why if you match it to sales, it will give you -- it will not give you the sales at about 20% that you are expecting. So because of about 1 million tonnes -- sorry, 86 lakh tonnes, so that is where I think the production as compared to Q2 has gone up by 60%. So that is the factor for royalty, so if we match it with the sales, it will not necessarily be a straight division. Go ahead.

Very clear. The second question is on NMDC Steel. So what was the sales volume this quarter at NMDC Steel and how we are ramping up over there?

This quarter, we did production of around 380,000 tonnes, which is -- as in December, we did about 150,000 -- 146,000 tonnes, so which is almost near breakeven point, but the problem is dispatches. We are still instead of getting -- dispatching 2, 2.5 lakh rigs, we are able to dispatch around 1.4 lakh rigs essentially because of nonavailability of rigs in the circuit. Of course, the Indian Railways has now just allowed to back load cold rigs and light rigs that come in. So that would bring some relief. But overall, this was major problem of that, but we are trying to solve it by getting in some [indiscernible] rigs there. So our sales revenue, of course, has grown up to about INR 2,120 crores, but unless we have this sales quantity, we actually sold around -- just a second. Unless we sell around 155,000 tonnes, it will be slightly difficult for us to breakeven. So we are now at around 130 something. I'll just give you the figure. But we think 155 is the first milestone that we have. For that, we need at least 2 to 2.5 rigs a day. And this quarter, we have sold around 357,000. So that's in terms of monthly basis, that is not adequate enough. So we have to do around at least 455,000 to 480,000 per quarter to have something in the close vicinity of a breakeven.

Okay. So production-wise, there is absolutely no problem. You are just saying that sales-wise, we are not able to get rates and there the bottleneck lies?

Yes I have around 2 lakh tonnes of [indiscernible] working capital. I am not able to dispatch essentially because rigs are not there, so basically, my production is going more than the sales, so that is the problem. I have to last at least 155,000, so that's around 4 lakh something. So last month, for example, I sold about 130,000 and I produced 146,000, so that is the problem. I produced 143,000 in the quarter -- 359,000 in the quarter and sold only 357,000 in the quarter, so that deficit of [ 20,000, 23,000 ] and we are obviously carrying that huge backlog, so rig availability and dispatch is the issue here.

[Operator Instructions] Mr. Mukherjee, I would request you to come a little closer to the microphone as your voice is a little muffled at times and use the handset. The next question comes from the line of Sanket (sic) [ Saket ] Kapoor from Kapoor Corporation.

I also missed a lot part of your answers. So we will take it later from the transcript. Sir, if you could just firstly explain to us Note #8 of our results and its implication, and also for Note #12. The Note #12, which speaks about our investment in our subsidiary company, Legacy iron Ore, so what is there and what are we exactly eyeing? And Note #8, it's regarding our investment in RINL IL to the tune of INR 1,500 crores for setting up of various facilities. So this is my first question. And second question...

Note #8 is advance to KVSL. What exactly do you want to know? Are you asking about Note #6, which is outstanding on RINL or be -- kindly be specific what note you are asking?

Yes, sir. Sir, I'm looking for the note says that the company has entered into a memorandum of understanding with RINL for setting up various facilities. What are we eyeing? And this is a INR 1,500 crore investment that we are going to make upfront and a security deposit of INR 90 crores. So if you could just elaborate the project? And also there are receivables to the tune of INR 3,000 crores something pending from them also, so will this be adjusted from that or we will be needing to make fresh investments?

That is not #7. The INR 1,500 crores that has been paid is essentially for buying or rather leasing 1,167 acres of land, which was approved by the RINL Board, also our Board, Ministry of Steel and, finally, we had to get the approval of Ministry of Finance. Now that land, we have taken possession of that. We are now going to develop the India's biggest blending yard there. We plan to terminate our pipeline Phase 2, which is from Nagarnar to Vizag, we will terminate it in that line. We were not able to sanction that project because we did not know where this slurry pipeline will terminate. And obviously, when we are terminating a large slurry pipeline, we will also be setting up at least an 8 million tonne pellet plant there. So blending yard, pellet plant and, in future, if we do some what we call is the critical minerals like lithium, et cetera, we would keep some land for processing of the same. So we needed a large area of land, parcel of land. We have got it. This is just next to the Gangavaram Port. INR 1,500 crores have been paid to RINL and we are in the process of registering that land. But as of now, we have already taken possession and made the boundary wall. Now we are making plans to make investments, the 3 investments, as I said, blending yard, pellet plant and slurry pipeline. These are at least in the immediate term.

Okay. Sir, on the receivable front, sir, as of December '24, the receivable from RINL is to the tune of INR 3,400 crores.

Yes. I know.

What is the update on...

RINL recently has started paying for the supply around 1 week back. So as you know, what I understand that RINL has got a grants of around INR 11,000 crores from the Government of India. And we hope that it will facilitate liquidation of our outstandings sooner than later. As of now, the encouraging thing is that RINL is doing well and is doing better. And we -- that can be seen in the recent steps that they have taken in paying our outstandings.

Okay. And Note #12 is about our Legacy Iron Ore investment. For that we have done for some trading suspension to be revoked, so if you could just explain this INR 84 crores investment that we have done for Legacy Iron Ore.

Beg your pardon?

Note 12 speaks for our investment in Legacy Iron Ore to comply with ASX listing rules. So if you could just explain the thought process and...

Because we are burning cash there, so there was a liquidity issue. And hence, when we were pending rights infusion by us and by the other investors, we had taken a trading halt there because there were liquidity issues. And unless we had subscribed to the rights issue, and it would not have been possible for Legacy to continue with their operations. So accordingly, we have taken -- because this rights issue would have taken about a month to design and fructify. So during that period, we had taken, what we call, as trading halt. Voluntary trading halt we had taken. Once the rights issues were subscribed, I think, we subscribed around 22 million and the retail subscribers also had subscribed their part. So thereafter, once the subscription was completed, the trading halt was lifted. We requested for a lift of trading halt, which is now lifted and now trading has commenced in a regular fashion.

Sir, I'll just take that next question on cost line. But the point was, sir, what are the benefits we are currently envisaging from this investment? And secondly, sir, when you mentioned about our -- we are eyeing for 100 million tonne 5 years target of output, and we have spoken to our vendors. And also, have you made any presentation being uploaded to the stock exchanges also for our investors to know exactly where are we going to put the money and how are things going to shape up because INR 70,000 crores in 5 years is a large number. So the vendor meet and update of the same, where can investors find the details of the same?

As of now, plus the Board sanctions each of the individual projects, it will not be possible for us to give it to the investors and others. But that is the direction that the company is moving towards that we have mentioned in various interviews and various press releases and various things. Yes, the nuts and bolts, as and when the Board approves and as and when the competent authority approves and we go ahead, you will be intimated.

Okay. But can you give an outline for what kind of CapEx we are envisaging for the next financial year and taking into account this INR 70,000 crore number. Our run rate is INR 4,000 crores for this year. So the averages should go up significantly from...

This is around INR 4,000 crores, next year it will be slightly more than that.

Okay. And sir, what could be our volume for Q4, considering what we did for Q3, this was the same number we did for last year Q4. So if you could just give some understanding on how the volumes will shape up for the coming ensuing quarters? And also how have been the realization trends as of now?

I think the Q4, we should be doing much better than last year. I think we should be doing at least 16 lakhs to INR 17 lakhs. In last month, January, we have done around more than 5 lakh plus. So that leaves us to do around 11 lakhs to 12 lakhs in the next 2 months of February and March. Hopefully, we should be able to achieve that.

I'll join the queue for the follow up. And lastly, sir, this pellet and iron ore product services line item wherein we are making losses, what steps, sir, are in the anvil to mitigate these losses? I know the Panna diamond mine is a drag. And last suggestion was, sir, earlier also, we have alluded to the request that the CapEx what we have spent, the projects, which are under implementation, the projects we are going to complete in 1 or 2 years' time, we needed the details of the same in our investor presentation. So kindly look into our request sir. Earlier also we requested during the conference call so that we get an idea of how much we have to spend for the quarter, for the 9 months or 12 months and what are we eyeing going ahead in terms of the completion, also the time line, that would give a better idea and we will save a lot of time during the call, sir.

Okay. I would request the moderator to limit people to 2 questions please. Please ensure that.

Sure sir. I've made a note of that. [Operator Instructions] The next question comes from the line of Satyadeep Jain from AMBIT Capital.

Just a follow-up to the previous question. You've outlined INR 70,000 crores CapEx for increasing to 100 million tonnes, whereas the current gross block on the book that you have for 50 million tonnes is much significantly lower. And previously, you had mentioned INR 50,000 crore CapEx to get to 100 million tonnes in one of the earlier calls. What has led to this increase from 50 to 70? And maybe can you outline why such high CapEx compared to the current gross block that you have?

See, this figure will keep on changing until the time we get all the projects done. Most of these -- a few of these are at desirable stages. So this figure -- this -- [indiscernible] about this figure, this figure 70 might become 80, might become 65. This is what we are targeting as of now. When we make a deep dive to each project, then we decide that whether this project is required or not and the project cost that we are now doing is essentially ballpark estimate. Obviously, we need to make detailed DPR, et cetera, et cetera. The project cost themselves go on changing. Sometimes they change in method of execution. For example, we can do it on some, what is called, partnership mode with the private investors. And we now have a Board-approved policy for NMDC partnership division policy. So it can change more of execution from EPC to partnership basis. So we are trying to get a few dispatch facilities on the partnership mode. They invest and we pay on a per tonne basis. So these are right now -- there's a lot of fluidity both in terms of concept, both in terms of cost and, finally, in terms of execution method. So as of now, it was -- the first draft for 50 when we made a little more deep dive, it is now 70. Maybe when we do it, it could become 65 or it could become 80. So -- but we have made a long list of items that possibly needs to be done. We have gone through that quite several -- a few times with the toothcomb. We feel that, that list is exhaustive, but we might add or delete a couple from them as we go ahead.

On that question of why this is much higher than the current gross block, I can understand there will be changes. But what is causing this such high CapEx -- new CapEx, assuming -- and I'm not sure if this assumes that you'll give out some MDO. It seems like you're saying some can be contracted. So this INR 70,000 crores, already assumes some MDO and why is this CapEx so high? And tied to this would be last question, all of these questions together that when you look at CapEx, you mentioned next year, but you're looking at 2030 as the guidepost for 100 million tonnes, which means possibly from FY '27, there's a significant step-up in CapEx. So what kind of annualized run rate CapEx do we look at? And does it mean you may have to look at -- relook at your dividend if the CapEx is going to be so high in '27, '28? So all of these questions tied to the CapEx. These are my only questions.

Yes. We can get to the -- we can think about popping the bridge when we get to the river about '27, '28. Obviously, one thing that you must realize that the production jump comes in when these CapEx are completed, not -- so if I'm putting a 12 million tonne, let us say, screening plant worth, let us say, at least INR 8,000 crores. So only when this screening plant is completed that I get a 1 tonne, 1 sharp jump of 12. It will not be staggered. So a lot of this growth of 50 to 100 will come up in step and jump rather than being a smooth curve up. So this must be realized. It will be project-specific. A lot of this investment [indiscernible] in our company is related to dispatches where we need to build up a lot of dispatch capacities, both in terms of loading and in terms of evacuation. So we have to focus at least 1.5x or at least 2x of our production capacity in terms of evacuation. That is very important. Evacuation methods have to be fungible. You must have major set of rig capacities for dispatch through slurry pipeline as well as through rigs as well as through conveyors. So it has to be a multimodal, if I may say so, dispatch capacities, which are fairly in excess of our production capacities because we have seen and we have learned the lesson that if 1 more, for example, if there was a landslide in K-K line and then our entire production gets affected by 1, 1.5 months. So we have learned that lesson over the years, and we believe that we should have flexibility so that we should have enough capacity so that we have flexibility in dispatches. And a lot amount of this CapEx is related to dispatch and loading capacity enhancement.

The next question comes from the line of Prateek Singh from DAM Capital.

Just had a hypothetical question. So as you know, the Karnataka Bill talks about 1.5x extra royalty or 3x extra royalty depending on when the leases were granted. I would assume that bulk of our leases were granted before 2015, just that there were renewals happening post 2015. So do we have a sense as to what percentage of our Karnataka production would fall under 1.5x or 3x? Or is it all under 1.5x as of now?

Beg your pardon. Can you ask the question -- last part of the question once again?

Yes. So what kind of tax increase are we looking at if the Karnataka tax bill kind of is passed completely [indiscernible]. So they had asked for 1.5x royalty more or 3x royalty more? Do we fall under the 1.5 slab, which means that it's status quo? Or do you think that some of our mines were before 2015, so we fall in the 3x royalty slab right now?

Let's say it is 1.5 tax type for the -- going ahead into the future. But yes, retrospectively, at some period, we are also taxed on 3x the royalty. But personally, I hope that because this bill is likely to have a repercussion beyond the borders of the state of Karnataka, I hope the central government takes note of this and our burden of the mining -- the future and the past burden is relooked at. That is what we are hoping that it would be done.

Understood. So just to summarize, the only impact in the worst case would be retrospective impact no -- on a run rate basis, there is no incremental royalty impact because we are already paying 1.5. Is that the correct understanding?

There is an incremental royalty of INR 100 per tonne of the mineral bearing land and this 1.5x, I think, is over and above our 1.5x that we are paying. So what we are paying is 22.5, it will become 45.5 plus 20, it will become 65.5. This will have prospective effect as well.

Understood. Understood. And sir, if you can shed some light on the current demand -- supply-demand scenario in the country, given that you have been able to keep prices elevated despite steel prices going down. How do you see it going ahead? Do you think that the supply situation would continue to remain tight and we'll be able to hold prices in -- over the next 6, 7 months?

Well, I'm not looking at the 6, 7-month horizon at all. I'm looking at the next 1 month, 2-month horizon right now. Every day, of course, the steel prices are not very encouraging. We have taken a small price cut about a month back. There are severe headwinds in terms of prices, but we are trying to see what best can be done. So -- because the profitability of the company. And we'll have to take a call after this -- about the next 6 months, of course, we can take a call only around April. But right now we are having a very close look of what to do on 31st March. So I hope that even if we have to take a cut, it will not be very substantial. And I hope that we'll be able to stretch this pricing as long as we are able to. As of now we are managing our dispatches despite these prices, so we are now -- that's what we are looking at on a day-to-day basis. It will be difficult to speculate right now.

Mr. Mukherjee, I would request you to come a little closer to the microphone and preferably on handset mode, so that everyone could hear you a little clearer. The next question comes from the line of Sumangal Nevatia from Kotak Securities.

A couple of follow-up questions. One on the time line as far as this uncertainty and the final decision on the Karnataka state government tax is concerned, any sense do we have, I mean, as far as time line is concerned?

So your guess is as good as mine. We are -- as we gather from the newspapers that the bill was returned back, it has again been resubmitted to the Governor. Overall, what we are hoping is that this -- because this is likely to have a domino effect beyond the state borders of Karnataka, I hope that in the interest of the entire mining community, the central government will possibly have a look at the entire situation that is now developing. So beyond that, I'm not privy to any more information on this.

Understand. Understand. And do we have -- in case this 150% is being imposed from a prospective basis, do we have any clause under our supply agreement where this is an automatic pass-through? Or this is something, which we will have to...

Yes, it will be a pass-through. It will be a pass-through. We are very sure about that. All of these are pass-throughs. Even the retrospective what it is, it is a pass-through and, of course, getting it recovered from the customer is a different administrative issue. And that is what we have written in our note also, if you see in the significant -- we have said that our -- in terms of LPAs and option notices, every statutory levies or taxes introduced in future are recoverable from customers and bidders. So we are very clear that this will be a pass-through. But nonetheless it does affect the market. Individually, it might not affect us, but overall, if the market crashes and the steel producers are there, if our customers have disadvantages, it will sooner or later show on sales and our dispatches. So that is our point of worry.

Okay. Sir, because last time when in 2020, '21, there was an additional 22.5% premium. We had to absorb it and only gradually depending on the demand supply situation, we were able to occasionally pass on. So this time also, it will be same, right? I mean it will depend on demand supply situation rather than any contractual pass-through of these...

Last time, our pricing policy was that it was not all inclusive, so we did not book it as a separate line item. But that we can change at any given point of time, but this is a pass-through. Definitely, we can convert us I think to a pass-through mechanism. So that's not a problem at all. The way we used to do it earlier, we used to do it for royalty and DMF and NMET, we can do it for this also. So that's not a major problem that we have. All we need to do is change our pricing structure. We declare our base price and add on a line item and it will be shown. Today, we have all-inclusive pricing, so there are no separate line items, so you can't see that. You presume that -- so that's not a problem.

Got it. Got it. Sir, on our customer...

Sorry, Mr. Sumangal, those were your 2 questions. If you could rejoin the queue.

One was a follow-up, so can I ask one last question?

Excluding that, you are done with your 2 questions. The next question comes from the line of Tushar Chaudhari from PL Capital.

Sir, in last few quarters, you had given us an update on a few of the projects at mines, basically Deposit-5, Deposit-10, where we could increase the capacities -- EC capacity by 10% without public hearing. Any incremental info on that?

So that Deposit-5 is not up. We are expecting it by end of February. We are expecting it by end of February. Hopefully, the approval for Deposit-5, 2 million tonnes extra would come by end of February. It should be at the end of this month or somewhere around middle of next month. Similarly, for I think Deposit-14 also, we are expecting that it will be coming, but those are in final stages of approval -- of the various statutory approvals that are required, but they have not been received yet. We are pursuing this hard. Hopefully, that is why the tax rate for next year, we are factoring in these approvals, and we hope to do around 53 million tonnes next year.

And fourth quarter, you said around 14 -- 15, 16 million tonnes.

16 should be easily done. We'll into 17, but 16 should be -- we have already done 5 plus in the month of January, as you know, we have declared. I think 5.15 or 5.25 got done in January month. So that leaves us around 11 to 12. That should be possible. It's not -- it should not be possible.

The next question was on the commissioning of the pellet plant, which you were confident of finishing by end of FY '25. So you're saying that from 2, we will be -- we are configurating this 6 million tonnes per annum. So any update on that at Nagarnar?

I expect the pellet plant to be commissioned by the end of this calendar year. But what we are executing now and completing is a 2 million pellet plant with a provision of upgrading it to 6 million tonnes. All the facilities are common, et cetera, et cetera, it's the plug and play. But the upgradation to 6 would also depend on back-to-back our upgradation if any of the Nagarnar facility or steel plant and also for the market. So that we, as of now -- it is not a sanctioned piece of CapEx. It is included in that INR 70,000 crores that we are talking about. It is included with that. But as of now, it's not a Board approved investment to be made. It will be sanctioned hopefully in the next 3 to 4 months, then we will decide of size of improving it from 2 million tonnes to 6 million tonnes.

For the 2 million tonnes, you are saying by end of FY '25?

For 2 million tonnes I think it should be getting done by end of this calendar year.

The next question comes from the line of Raashi Chopra from Citigroup.

Most of my questions are answered. Just could you provide the cash balance as of December?

What was the cash balance [indiscernible]. Net cash position as of 31st January, I have was around INR 7,696 crores on 31st of January. December, I'll have to recheck. I had the position on me on 31st of January. So as far as -- we will check and give it to you.

The next question comes from the line of Ronil Dalal from FI Com Family Office.

Yes, it's Ficom. So is there any impact of the iron ore consumption due to the recent budget announcement on reduction in steel import duty to 15% from 22.5%. That's my first question.

Can you ask the question again? I could not understand that, please.

Yes. So is there any impact on iron ore consumption due to the recent budget announcement on reduction in steel import duty to 15% from 22.5%?

So what has been reduced from 22.5% to 15%?

I believe it was announced in the budget, right, unless I'm mistaken.

What was announced from 22.5% to 15%? I could not get that.

The steel import duty.

The steel import duty. The steel import duty, I think it's a different thing. That was the maximum rate of steel import duty, not the effective rate of steel import duty. So the steel import duty, I think, currently is around 5% or 7.5%, that stayed. So as such, that has not affected any steel import and, consequently, our production as such, the production -- domestic production and prices of steel as such. I think that's a completely misnomer. That is the maximum permissible and we are actually much lower than that. So that having an impact on increased domestic steel production, which consequently has an impact on iron ore, I don't think it is correct. There is any correlation as of now. None whatsoever.

Sure. My second question is that one large private player has announced possible investments of INR 1 lakh crores for 25 million tonne steel plant in Gadchiroli and also some iron ore mining investments. And there is another player also, which is expanding its capacity in iron ore mining in Maharashtra as well. These are large kind of capacity increases and investments. Would this have any bearing on the demand-supply dynamics, pricing or even your CapEx plan over the next 2, 3 years? Have you reviewed this development and any impact on the same?

Number one, I would not like to comment on the plans of any other company, so that's beyond my competence to do. But if something big is coming up in Gadchiroli, Gadchiroli is unfortunately a place that is beyond our service area. There are no evacuation facilities as of now. So I'm sure even if a mega steel plant comes out there, our possibility of making supplies there appears to be rather remote as of now. Future, I do not know. As of now, it looks nonviable for us.

Sorry sir. Sorry to interrupt you, sir. The line is not clear, sir.

Is it clear now?

It's still less clear, not very clear.

Moderator, can you hear me?

Yes, it's much better, sir.

I was absolutely speaking with the handset and everything, I don't think I can be more clear than that. What I'm saying is that in Gadchiroli, if the mega steel plant comes in, I don't think NMDC is going to be affected by that because NMDC is not likely to be a source of supply for such a steel plant. Rest, of course, of the other things that are coming in from Andhra, the more the steel plants come in, the better it is for us as merchant iron ore miners. Bigger customers, more customers are always more welcome.

The next question comes from the line of Shweta Dikshit from Systematix.

Most of my questions were answered. Just could you give some outlook on where are we looking at our volume numbers for FY '27? Like we are expecting EC limit enhancements to take our volumes to 53 million tonnes this year, but that was something that was expected in FY '25 itself, but we did not achieve that number. So what's the outlook for FY '27 from here?

FY '27, we should be doing our SP3 comes in around 60. Next year, it should be around 53 and FY '27 should be around 60. Because 1 major project, which is SP3 is going to come online, that is going to substantially increase our capacity for processing our ore. And by that time, of course, the EC has to be also enhanced in terms of mining required. So we are looking at that.

The next question comes from the line of Siddharth Gadekar from Equirus.

Sir, my first question is on the coal blocks that we were looking to start maybe this year. Any updates on that?

Yes. I hope that by next year, we should be able to start that. I think Tokisud should start somewhere around April next -- not this April. And -- sorry, I think, in December next. And Rohne should be following. Section 7 notification of the CBA has been already done. And the next Section 8 and 9, I think we are in line of going with the statutory requirements of Section 9 and then 11 would take us to the end of this year at least. Those are the statutory time lines that we have to give for each notice. And I think we should be able to do small-scale mining by -- and start the mine operational, I think, by somewhere around mid-next year.

Sir, secondly, on the Kumaraswamy, have we received the EC clearance of 10 million tonnes?

No, it's currently 8.86 or something like that, something very close to that. I don't remember the exact figure, but it is 8.86 or 8.92, something like that. I'll just give you the exact number. That is what -- because apart from the EC clearance for which we have for 9.5 or something like that, but there is also another cap in Karnataka, which is the MPAP cap, Maximum Permissible Annual Production, which is there in the Ballari region where we operate. So when you cap that, it comes to around 8.87 or something -- or 8.92. The exact number I'll give you slightly later. But that is the problem. So this year, we should be doing about 8.62, which is the permissible limit for this year. And next year, we should be able to do about 8.92 or something like that. In just a second, I'll just give you the number. This year, it will be 8.2 Kumaraswamy. Next year, it will be 8.91...

The next question comes from the line of Sumangal Nevatia from Kotak Securities.

I just wanted to know overall volume, say, around 45 million, 50 million tonnes, what is the breakup of a few large steel companies, say, JSW, JSPL, Essar and RINL?

It is generally all taken together is around 75%, 80%. But the exact breakup of customer-wise for the first 9 months, you'll have to give me some time to get back to that. Exactly, the customer-wise total, I don't think I have right now.

Sir, approx percentages -- range also is fine.

So this 4 taken together, the 4 big ones, the whole -- I have 1 number. For the 9 months, AM/NS would be 56 lakh tonnes, Vizag is 47 lakh tonnes, JSW is 84 lakh tonnes. So that is 18%, 15% and 26%. And JSPL is 21 lakh tonnes, which is 7%.

Understood. Understood. And sir, with respect to the NMDC steel plant, I mean, when do we expect the recovery of all the outstanding receivables, the investments and also any monetization time line for the 10% equity stake do we have there?

The 10% equity stake will only come as and when it is proposed to be disinvestment on which I don't have much of idea as of now. So that is something as of now on a hypothetical question.

And the receivable and advances and investments, other assets that we have?

So the receivables are -- will be liquidated once, I think, we go to breakeven plus situation. And that will only come when we do 2 to 2.5 rigs a month, not earlier than that.

The next question comes from the line of Sanket (sic) [ Saket ] Kapoor from Kapoor Corporation.

Sir, when we look at our finance cost, that has gone up from INR 29 crores to INR 61 crores for this quarter. And year-on-year, the number is up from INR 32 crores, so what explains this increase in finance cost?

Are you talking about NMDC or NMDC Steel Limited?

I'm talking about NMDC Limited consolidated accounts.

The consolidated accounts NMDC, of course, one has -- is increase in grade. The increase in this has been quite substantial.

Your voice is breaking.

And we have decided now that the finance cost has gone up, we are -- our surplus, we are not investing in FDs as well, rather now liquidating our previous outstanding. So it is essentially because of working capital limits that we have, we had a substantial increase from that. So that increase, yes, cost has gone up by around INR 55 crores.

Sir, come again sir. Last point, I completely fumbled. What you were...

Yes, that is essentially because the working capital requirements have gone up. And as you know, now that we are trying to get this down by instead of investing in FDs, our surplus cash, we are now liquidating our working capital loan that has accrued. So that -- we are taking care of that.

The next question comes from the line of [ Atharv Gupta, ] an individual investor.

Sir, my question is on NMDC Steel Limited. It was reported in the news that you terminated the contract with MECON. So I just wanted to understand now the operations are being handled internally by NSL? And secondly, regarding the rigs, the problem of rakes, have you spoken to the ministry, like what is being done to address that? And do we have any insight on when this will get rectified?

Yes. First of all, the first question is that, of course, MECON's contract ended on 17th of December. And thereafter, we have been on our own. We are doing pretty fine without them as well, so we are running the ship now. We have a new Executive Director who we have recruited and who is now already joined us. So we have an expert who is now heading the plant. So that is some good news. The second question about rigs, so obviously, we are talking to the Indian Railways and they have been trying their best to help. But alternatively, we are also talking to the private rig supplier for the LSFTO scheme that is there. There are 5 or 6 vendors in India where we are trying to get them to supply us rigs. So that is something that we are looking at. Hopefully, once we do the tenders, et cetera, we expect that these LSFTO rigs, at least per day will be available from the various suppliers. We are targeting to get this somewhere around mid-March or 1st April. I think by that time, we should be able to have those private rig suppliers supplying us rigs. 1 or 1.5 from Indian Railways is fine enough. The other one has to come from these private suppliers.

Okay. So once that's done, perhaps in quarter 1, we target breakeven if this happens by March or April, quarter 1 of financial year '26?

Yes, definitely. Definitely. We are -- there are only 5 or 6 suppliers we have in there, but of course, we are calling and we have just called a limited tender from them. So once we give the order also it takes them around a month to organize those rigs and supply it to us. So we should be able to give them the order by the end of this month. And then we'll pursue with them how fast and how soon they can possibly...

The next question comes from the line of Vikash Singh from PhillipCapital.

Sir, I see that our production has been pretty good, but our sales volume has been a little bit laggard. So just wanted to understand our evacuation or the logistics in place right now? And how do we see this improving over the next 6 or 12 months down the line, especially from the Chhattisgarh region?

Yes, evacuation has been a problem. We have actually now opened 2 new more sidings, but these are manual sidings. But one of our old sidings is giving us a major mechanical problem, so we are -- which has been singularly responsible for our numbers being lower than expected. Yes, it is higher and possibly it will be much higher than last year, but we could have done better, except 1 mechanical siding in Kirandul is giving us some problems. We are looking at that thing. We are trying to get that in order. But with 2 new, that's line #4 in Bacheli and line #13 in Kirandul, both of which are basically on manual dumper load system. We expect that we should be able to move 52, 53 because even if we take 4 rigs, that is an incremental loading of at least 6 million to 7 million tonnes from these 2 sidings. So we hope to actually achieve better going forward.

So FY '26, basically, we could be at 52 million, 53 million tonne range?

Yes, it should be. It should be.

Understood, sir. And sir, any update on the doubling of railway line?

I think except for 2 sections, one between Bacheli and Bhansi, and one between [indiscernible], the entire line is ready. Even from Kirandul to Bacheli, it should be ready this year by March. So that will leave 2 sections, about 20 kilometers left out of the 151 kilometers. That is likely to take another 6 months. So nonetheless, as you know, in railways, it is possible to take benefits even for tax doubling. [indiscernible] our capacity has gone up for these 2 sections, I think, they are -- one is 10 kilometers, one is 11 kilometers or something. So this 21, 22 kilometers, I think it will go somewhere around end of next year. We are following up with railways very -- as you know, railways is executing the job. We are following it up with railways very intensely, so that is a question that we need to address.

The next question comes from the line of Ruchita Maheshwari from Ace Lansdowne.

Yes. Just want to understand what's your sense on iron ore price movement, which is currently hovering around $100, $102 per tonne. So for next 6 months, what's your sense, whether this price will move up or it will stabilize or there will be some decline? If some guidance is provided, that will be great.

I don't see it increasing too much. I'm not very optimistic on the medium-term prices on iron ore. At the current -- I think at the current scenario of the global production of steel, I think, that even at $102, it is a fair -- it's a robust price. I think given this situation of steel production worldwide, $102 is a fair price. If it holds for some time, I think people should be happy rather than complaining. I don't think that in near or even in the medium term, much -- I don't think it's going to move up north at all.

Okay. And today, there was a news that U.S. imposed some 25% kind of a tariff on metals. What's your understanding on this? And how it's going to impact the steel prices, iron ore going forward? And do you feel that Trump might revert this stance or he will maintain this?

Well, I'm nobody to comment on President Trump, what he's likely to do or not, whether he's going to reverse that or not. I don't think I'm the right person to be answering that question. Yes, there is an import duty of around 25%, but I have not had a good look at the countries exporting to U.S. I'm sure that from India, there is hardly any steel export to U.S. Even it is more sporadic, but I don't think there's a very regular steel export from India to U.S. So far as the Indian market is concerned, I don't think that's going to impact immediately. I have limited knowledge because I've not read the exact breakup of countries from where U.S. is currently importing its steel. So that's the thing that I cannot answer that much.

But do you feel that, that will increase the imports in India because if the other countries are not able to export to U.S. because of the tariff, then the imports between already...

Indian imports, we are very clear that it is from where it is coming. So we know how much is coming from FTA countries, how much that includes Japan and Korea and others and how much is coming from the trade. So unless we get -- unless I have a clear clarity from where U.S. was importing, I don't think we will be able to have a view on that as of now. So with an hour now we can take 1 last question and finish off.

That's the last question for today, sir. I would now like to hand the conference over to you, Mr. Amitava Mukherjee for the closing comments.

Thank you all for being there and asking the questions. I believe that NMDC is poised for a good Q4 this year, a good FY '26 and beyond. We are -- the company is poised for a quantum leap. And I hope that the investors will be happy with our performance not only in the coming quarter, coming year, but also in the short term. We are having very aggressive growth plans, and we are also doing pretty well as you have seen in the recent past. You must realize that this financial year in the month of May, we had a 30 days strike. So what we are doing, what we have done last year in 12 months, we are doing in 11. And had the strike not happened, so we would have easily crossed 50 million tonnes this year itself. But nonetheless, what has happened, and we are comfortable to -- I think we should be able to comfortably lock down 53, 54 next year given the inputs that we are making in terms of operation, in terms of the machineries that -- which orders have been placed and are due for delivery and which are in pipeline. I think the future of NMDC is bright, and we are hopeful that we'll take the company to the new heights in the future. Thank you so much.

Thank you. Ladies and gentlemen, on behalf of Dolat Capital Markets Private Limited, that concludes this conference. You may now disconnect your lines.