PT Bumi Resources Tbk (BUMI) Earnings Call Transcript & Summary

Okay. Very good evening, ladies and gentlemen. Thanks for joining us today on PT BUMI Resources 9 month 2022 financial results and earnings call. My name is Norman Choong analyst from CLSA Indo and I also have Stefan [indiscernible] from CRC will be your moderator for today's session. We are honored to have a management team from BUMI Resources; Dileep, Director and Corporate Secretary; Andrew Christopher Beckham, Director and CFO; Nalinkant Rathod, Director; and also Ashok Mitra, the CEO of KPC and Chief Operating Officer, to share some update on the business with us today. Without further deal, Dileep, I will be handing the floor to you to do your presentation. And thereafter, we will have our question-and-answer session.

Good afternoon, everybody. I am Dileep Srivastava. I am with BUMI Resources. I handled the corporate secretarial and the IR function, and we have 4 Board members here. On my left is Mr. Andrew Beckham, he is the CFO. On my right is our very Senior Director; Mr. Nalinkant Rathod; and on his right, on the extreme right is Mr. Ashok Mitra. He is the CEO of our largest coal acid, KPC, and he is concurrently the Chief Operating Officer, COO of PT BUMI Resources. Now, thank you very much, Norman and CLSA for arranging this call. This is Bumi. We are giving you our year ending September for 9 months, 2022, an update on our earnings results that we published on the 2nd of November this year. The results are unaudited. Next. The usual disclaimers, Yes, next. A brief overview for some of you who may not know that much about us. Now we are the largest coal exporter nationally and one of the largest globally. KPC is the largest school exporting mine globally. We probably have between 20% to 25% production share of national coal capacity. We have adequate reserves to last us for 20, 30 years without doing too much work. And there's still some potential for reserve expansion. All our mines are located very close to the sea. So they are ideally located to serve local domestic as well as markets in Asia and Europe. We do very safe open-cut mining and have the most envious safety record globally, and we have our own captive core processing facilities. We have our own dedicated infrastructure, whether it relates to coal loading terminals. We have our own deep-sea port facilities. We generate our own power. And all this gives us an unmatched all-around competitive advantage, including on costs. Now if we move to the next slide. Next, no, the one... Here is how we're structured at present. On the left are our energy assets. So the top 2 were former Rio Tinto, BP and BHP assets. The next 2 are the marketing arms. The fifth one was a gas asset, which is outside Indonesia. It's in the Middle East. It's in Yemen. So it's hardly a project we are pursuing anymore. The second last one is [ Hermana ]. That was an Australian mining operator, which we acquired in 2008, and we had a stake of 23% in it right now. The Australian unit was already doing work in KPC. So it was nearly a continuation. The last one is an asset which has coal in Sumatra. It is a very clean low calorific value coal, which is in a development stage. It has adequate reserves, and we have begun marketing some of that goal. On the next – on the right side, our former assets that BUMI had, which were then injected into BUMI Resource Minerals, which is a listed asset now, and I think many of you would be familiar with that asset. It also has former Australian assets such as copper and gold in Sulawesi. One is Gorontalo, which is copper, which will soon start operating. The second is Citra Palu, which is already in the gold area and expanding. And the third is the asset we acquired in 2008, which is in zinc and lead. And what you see is the blue box on the right. Now those are our future ambitions in the noncore diversification and cleaner energy areas. Next. Here are listing of reserves and resources. We are about the largest in Indonesia. And if we count all our 3 assets, we have about 2.4 billion tonnes of reserve and the resource, it combined is in the region of 8.5%. So we have adequate to last for several decades. Now just to move on to the next few slides next. Here, we have been very strong on ESG. We have also been following climate sensitivity measures. We're good -- extremely good on CSR. Our concessions are about 3 or 4x the size of Singapore. And we inherited these assets from highly pedigreed owners in the past, Monte nations, and we built upon those practices. So these are all listed here, which is a testimony to the very high quality and standards we adopt, and these are all part of Bumi's DNA. Now, these are highest echelon awards that we have got. The Subroto award, which is by the ESDM, the NSC and Mineral Resources Ministry. The second one that you see on the right is another one from them. We have got about 25 awards from them from our KPC and Arutmin. Moving on to the next slide is on corporate governance, is on ESG and CSR. Essentially, it's from the Institute of Corporate Directors here. And the other one is also from a premier media house, which was independently assessed. The next slide for various gold awards on CSR and sustainable development by credible authorities. The next slide is a testimony to our safety record is about the best globally from a level of 23 million tonnes and we acquired the assets in 2001 and ‘03, we have a capability of 90 organically from just the overseas assets. Capability at [ Pendopo ] is even -- is there as well. The lost time injury frequency rate has dropped by 2 or 3x even though our production levels have actually escalated by about 4x in the last 15 to 18 years. So essentially, we are very strong on this, and this is firmly embedded in the DNA of all employees. It is also included in the incentive and bonus structure in our 4 banks. Now moving on very specifically to the 9 months update. Next. I'll give you a snapshot. I'll stay right down into it. This year has been influenced and impacted by very heavy lag in our rate, and that's reflected in the output numbers. The production this year is 54 million tonnes versus 59 million, so it's a drop of about 9%. It's largely due to heavy rain. We also had some issues on mix. Prices, though, as we all know, compared with last year, in 9 months, we were at a level of 19 -- sorry, we were at a level of $62 per tonne. And already in 9 months, we are as good as double that. So essentially, revenue has more than overtaken any shortfall in volume. In fact, it's more than overcompensated. Production costs have gone up largely because of fuel and I'll come to that later in more detail. It's gone up by a level of about 25% to 30%. And we will give you a chart later on how the movements have taken place. The most significant development at the corporate level has really been the landmark progress on our debt restructuring efforts. BUMI is as good as debt-free, and that's largely because all our balance bets of $1.5 billion to $1.6 billion were repaid on the 19th of October. Following a $1.6 billion non preemptive issue without price approved by shareholders in an extraordinary general meeting on the 11th of October. And the full proceeds from there were used to clear all remaining debt and any expenses relating to the issue. 200 billion shares were issued at a negotiated price by the controlling shareholder at INR 120 per share. And this basically means that we are converting NCBs today at INR 80 per share if so essentially a 50% premium on top of that. Now our impression so far is that the market has welcomed the moves. The share price has kept -- is higher than what should have been a lower price. It is 50% or 60% higher before the issue price. The market cap has gone up by 32x from $1.9 trillion before the restructuring to EUR 63 million or EUR 64 trillion right now. And the share price has gone up by 3.5 to 4x since the restructuring. We are very happy to say that the market has welcomed the moves, and we ourselves are debt-free. And since the last year, we have turned around to a significant profit. And this year, we are improving on that profit. And every quarter, we are going -- we are showing an upward path and upward growth. So we were at $433 million in quarter 1. Quarter 2 was $124 million and quarter 3 is 50% higher than that. Now how do we see prospects for the full year? We'll move to the next chart. Production would be upwards of 70 million tonnes, and it really depends upon how best the rains behave so we can produce more. Our KPC is at 50 million, 51 million tonnes. This compares with last year's of 57 million tonnes. They've been hit by a range consistently throughout the year. And in fact, whether it's [ KPCorRFmen ], some mines have been funded as well. Arutmin is at 20 million to 25 million tonnes. And again, they have been hit largely by rail. Prices, you can see, have significantly gone up at the combined level, we are looking at $120 to $140 per tonne depending on the mix and also how much we supply domestically. KPC is at 140 to 160. That's our guidance, and we are on the top brand in the 9 months for exports. And Arutmin is between 80 and 100 and Arutmin compares with what used to be $30 and $35 just 1 or 2 years ago. Cost is largely fuel linkage. And we think that, that level of 45 right now is something that we are working on in continuation for this quarter. The next slide will show you the price movements. I think it does not really require much explanation from levels of -- depending upon the grade from levels of about 30%, 35% for the 4,200. The GC new, which is at the benchmark level had even crossed 400. The HBA follows in sympathy, but at a slightly lower level. But they've been more or less tracking – tracking at the same level in previous years, but there's been a difference that's come down. Now if you look at the 4,200 and the 5,000, you can see that there's a dip and the dip is largely due to a dichotomy. And the dichotomy basically is that the high-rank coal is in short supply globally, and that's the global new castle index. China and India are having their issues of the China has got the pandemic and other weather-related issues and they have a slowing demand. So they are buying less there and China and India are both buying from Russia as well. So there's a larger discount to the benchmark on the lower grade goals. The next slide gives you the details, split, quarter-wise, so up to the first quarter of next year. Now these are the forward curves for the calendar year '23 and '24. API 4 is Europe and [ unparcel ] is the benchmark. So even if we are looking up to 2024, we are still seeing forward curves for the new castle index at around 350. Now moving on to operating performance, which is the next slide. Let's go to the bottom first which is combined -- you will see that overburden has improved. We have actually done more overburden, it's gone up by 10%. However, we have not been able to mine largely because of the rain. So we have exposed the coal, but we have not been able to move our equipment to remove the coal. And once there's better weather, we can take it out and up the mining rate. And that is reflected in a 20% higher strip ratio, where we've removed more overburden and been able to extract less coal. That has resulted in a mix anomaly. So that's resulted in lower sales as well. But the prices have more than made up, they are about 90% higher. And we are in the process of trying to see if we can build up inventory to protect sales. Now as we look at KBC and Arutmin, they have their own story to tell. Our KPC overburden is pretty flat in spite of their challenges. The strip ratio, as I explained, has gone up. It's probably temporary, but that's affected coal mines. It's also impacted sales and the mix, and FOB prices have been significantly higher. They are about 95% higher. But if you look at exports, they will be higher still. And inventory, they're trying to see whether it can be built up, it's showing some signs of increase. Arutmin, however, has been really impacted with a lot of rain, and there have been some issues with them as well. Overburden has dropped. Strip ratio has dropped as well, largely because of issues with the higher-ranked [ phones ], which had problems of rain. The coal mine has been somehow maintained largely because the strip ratio was low. Coal sales have been -- I mean they are better. The FOB prices have doubled almost, but the inventory is more or less flat. So if you look at quarter 1, if you look at quarter 2, if you look at quarter 3, you will see that we are improving output in spite of the rain, which is very unpredictable. You will see quarter 1, we did 16.5 million tonnes. Quarter 2, we've done 18.5%. Quarter 3, we have done in excess of 19%. Now we are praying for quarter 4 that it can be even better than quarter 3. Price-wise, we do not see any letting up as far as quarter 4 is concerned, and we are keeping a very close watch on the lower-ranked and the medium-ranked market. Now the next slide. Next is the rainfall chart. And you can see the red is the monthly chart. The green is the average long-term. The blue is the previous 5 years. And except for just 1 month, actually, the rain has been significantly far higher in KPC, and it's been so for Arutmin as well for at least 3 months out of that, where it has been a little more benign. But overall, almost a full year so far is rain and October still has been affected and so has November. Now getting on to the next slide next. Now these are graphic depictions I'll explain them very quickly. We've explained the burden. It's up. We've explained the coal mines, it's down. The gold sales are down. So next slide, please. Coal sales are down. Stripping ratio, as I mentioned, we've done the overburden the hard work, but we've not been able to [ extract table ]. Next our costs, particularly production cash costs, and that's excluding royalty and royalty basically and operating expenses. Basically, that has clients. Lastly, because of fuel, but the FOB price has been far, far higher compared in line with the rising global coal prices. The next slide is a tabular depiction on price. I invite your attention to the higher range goals, which have more than doubled over last -- over the previous 9 months and are at least 3x higher – are about 3x higher than 2020. And if we are looking at the lower rank calls on an average, you are seeing $28 per tonne in 2020 doubling. And I think it is pertinent to state here that BUMI is the largest supplier to PLN and the largest contributor to the DMO. Therefore, what we supply domestically is mostly at prices which are controlled, but that's the national priority that we repose in an obligation that we have to the government. Next slide, or the production cash costs touched upon them already. Overall, they are up by 28%, 28.5%. And if you look at the slide below, that's largely the gross fuel prices. That's what we pay. So if you are looking at 2021, the average fuel cost per liter is really $0.67. And if we are looking at the 9 months this year, we are almost double that, which is 1.26. And I think it will be important to note that fuel is a major component. We consume about 900 million liters to 1 billion liters of fuel per year. Now, this is one factor which has impacted costs. The other was what we supply domestically. And here is the third one that is coming on the next slide. Next, please. The royalty rate for us because KBC and rogue secured IUPK status well ahead of the others. And from 1st January 2022. Here is the new structure of royalty and tax. So what was 13.5% domestic and export is now 14% domestic. And because prices are higher, we've been paying 28% royalty on exports. So 14% is domestic, 28% is exports. What technically this does is that we have paid a royalty in the first 9 months of, let's say, approximately $1.5 billion, out of which $690 million is the extra royalty. Now that's an approximate number. Rain has further impacted output by 10%. And I've also touched upon the fact that we are the largest supplier and domestically, and we fulfill our DMO commitments of in ahead of export priorities. So it has significantly impacted costs as far as we are concerned. But moving on to our performance financially. On the next slide, here is how we report our accounts. We follow the IFRS equivalent of the Indonesian Accounting Institute standards, which is KPC, which is our largest coal asset is owned 51% by Bumi, 30% by [ Tata Power ] and 19% by CIC, and there's a binding joint venture agreement, a shareholder agreement between the 3. And therefore, we attract the provisions of PSAK 66 on joint venture accounting, which basically wins that we cannot consolidate revenue from KPC on the top line, we only are able to equity account PPC for the 51% stake that we own. So that is given below in that column on the left, which talks about net income and loss attributable to. So what is attributable to BUMI is actually $366 million. That $366 million compares with $63.7 million in the 9 months last year. So we've actually had an attributable net income increase of a record nearly 5x over last year. So when we look at the right side, you can basically see that we are net equity positive. And I'll show you a pro forma at the later part of the presentation that if we can also assess the impact of the non-preemptive rights issue, what additional impact that has had on the balance sheet. Now the next slide is really for the benefit of investors and for analysts and for security houses for an apple-to-apple comparison. In our notes to the financial statement, we also showed what if we include KPC revenue 100%. We will get the same attributable net income number, but you also get the full revenue and box. So this is what we have shown here. So if you look on the revenue side, largely because of the very high coal price even-tempered to buy what we supply domestically, it's gone up by 67%. The costs have also gone up but less than what the revenue has gone up, including a higher royalty by $690 million that I mentioned before. The gross profit has doubled. The operating income has gone up 2.5x by 116%. Interest costs have dropped and should become 0 from next year. Income tax is [ high ]. The net income is given below. And on the right side, you can see a picture -- a truer picture of the consolidated balance sheet of BUMI. And again, you can have -- get an idea on how our net equity is moving. As our profits increased, they have been moving up. Now if we move to the next slide. This is just a comparison of the consolidated P&L and balance sheet, including [Audio Gap] and on the second column is really how we report our current numbers, which is on the current reporting standards using PSAK 66 to give you an idea on what can be the difference. So you can see for yourself what difference KPC makes to the fortunes of the company. And on the right side, you can see also that the net equity while the number remains the same, but it gives you an idea of size. The next slide is a qualitative comment on the previous slides that we have said, I'm using the 100% consolidated numbers. Revenue, as I already said, has gone up by $2.5 billion or by 67%. The cost of revenue has gone up by $1.6 billion. So revenue has gone up by 2.5%. Costs have gone up by 1.6%. And out of that 1.6% royalty is a significant jump, where the increment itself is about $690 million. Gross profit in spite of all that is almost double. We tried to control operating expenses and limit them to 6%. The operating income has gone up more than doubled. It's by 116%. And operating margin has gone up by about 17% from 20%, that has gone up to 26%. So basically, it also reflects efficiency. Profit before tax has gone up from $600 million to $1.5 billion or by [ 145% ]. The income for the period on a -- has increased to $819 million or an increase by $576 million on a total basis. And what's attributable to us has gone up almost 5x to $366 million. And I think in previous discussions, we have said that quarter 4 looks better than quarter 3. Those would be the prospects for quarter 4. Now BUMI's financial highlights on the next slide. Equity we have touched upon has gone up by 70%. The last 12 months adjusted EBITDA has gone up by almost 80% from $690 million, it has crossed $1 billion, it is now $1.2 billion to $1.25 billion. The next slide, give you quarter-by-quarter movements of EBITDA. Now when we talk about the quarter-wise EBITDA, you can get an idea that on a fully consolidated basis, that is if you take 100% of KBC and outing. You actually get an EBITDA for the last 12 months up to September of $2.2 billion. And what gets attributable to us is $1.2 billion because we have 51% of KPC. And if we move on to the next chart, let's get on to the market factors and the share price factors and the earnings factors, I think this might be of interest to some of you. We are basically showing what has happened in the last 12 months attributable earnings per share. Now as of 30th June 2022 compared with last year, we had a loss -- a loss of $252 million versus the profit that we had in the last 12 months of June 22, which is $334 million. So there has been a positive swing on earnings of $586 million. Now how it translates into EPS, a negative 49% became a positive 38% or a positive swing of 87% per share. And as we look at what has happened in September, by applying the same logic, applying the same methodology, the outstanding shares, of course, have gone up. But when we look at 2021, we have an EPS of 26.7% per share. And what has happened in September this year is 49.7%. So there is a positive swing of 23% per share. The basis for that is actually given in the explanation below in the notes. LTM is last 12 months. It is the attributable last 12 months income that we have used. We have used the actual outstanding shares at the end of each period. We have used exchange rate, which was lower last year versus the exchange rate of 15,200, which is conservative, so presently. The EPS swing up to June was 87%, the EPS swing up to September year-on-year is 23%. And the basis of how we worked out the price earnings can be done from here. We are running at a price-earnings ratio of less than 2 in June 22. And in September 22, we are at a level, which is about 2.5%, which is less than 3. And I think one can do the industry comparisons on where we stand. Moving on to the next slide. I think that's important, and that's something that we would like to emphasize. But this is what we have achieved. Prior to our restructuring, 2015, '16 were very bad years for the coal sector, the coal price had hit $48 per tonne. We had debt which we could not service. And if we add everything together, including the interest on the debt we could not pay, that total amount was $4.3 billion. Now that was restructured in 2017 through a PKPU process. So it was restructured were out of $4.3 billion, $2.6 billion were restructured. Basically, they were a conversion from debt to equity. And there were also some mandate fee convertible bonds that were issued at [ 9 26.16% ] per share, which have a majority up to December 2024. So the remaining debt really was the Tranches A, B and C, and the contingent value rights is to an incentive for lenders to sign on to the restructuring agreement of about $100 million. All those, we have start to pay up to the time that we have repaid our debt on the 18th or 19th of October. And whatever was left, the residual amount of between $1.5 billion, $1.6 billion has been settled. Now we are in the process of converting some more mandate-convertible bonds. So we should wind up very soon with as good as 0 tax. So just to explain what has been said is that the lower is in the notes. The non-preemptive issue without rights was to our controlling shareholder led upper to give us $1.6 billion so that we could settle all our [ gets ]. And as you all know, in today's context, the way the green hysteria is moving, it is very difficult to get refinancing and funding from banks. It is almost next to impossible for the whole sector. So we are very happy to receive this offer. The $1.6 billion non preemptive issue without rights obtained shareholder approval on the 11th of October, 200 billion shares at a premium of 50% on the MCV conversion price of 80 were issued. This was announced in September 22. This was implemented on the 18th of October. And now BUMI has joined controlling shareholders, which are 2 very large groups. And the full PKPU debt payment has been made on 19th October. And just to put the benefits of this in perspective, it's basically that we incurred an interest cost of $200 million in 2021. So really, from November, much of November and December, an annualized $180 million, $200 million is what will accrue to BUMI on the bottom line in addition to whatever is our operating performance. Next. Now here's the chart that I was referring to. This is a performance that if we take the benefit of or the effect of the non-preemptive issue without rigs, on super imposed ban on our 30th September numbers, which is the earnings call. This is how it will look. Essentially, short-term liabilities dropped from $2.7 billion to less than $1 billion. They are basically about $900 million and [ 1.76 billion ] are the short-term liabilities in total that fall. Now which when it comes to shareholder equity, you will notice that from $1.1 billion of shareholder equity, it increases by $1.6 billion goes up to $2.7 billion. All it goes up by almost [ 60% ] -- it almost goes up by $1.6 billion. So that's about 60% equity increase. Now, this is what are the benefits. And I think from quarter 4, I think some of those benefits will add through in the numbers that we announced in March after audit. And next year, we should have the benefits of this being displayed very prominently on the bottom line in addition to our improving operating performance. The next slide is on governance. Now we lay the highest importance is not just governance. We are also doing the same for ESG. We are doing the same for CSR. And definitely, we are doing the same on lined sensitivity, and we are also developing a long-term energy transition plan. and moving into our noncore diversification areas for the future prosperity of the company in line with national priorities and international requirements. Now improved governance, I won't take too much time here. But essentially, we have shareholder representatives on the Board, and I'll come to that when we come to the management chart. We've inducted lenders onto our Board. No capital-related decision is taken with our full board consensus. We are the best really and considered best by independent bodies on CSR on safety, environment, reclamation, replanting, conservation. And I think we show a lot of initiatives shortly. We are recognized as being the best on sustainability by the Indonesian government year-on-year for the last 5 to 7 years. We have an unmatched safety record, as I mentioned to you that even though production has gone up by 3 or 4 times, our safety record is hard, if not even less. And we are winners of various awards, including green elites from abroad on emission reduction and other responsible measures that we take proactively. We are strong on risk, and we are strong on technology, and we have been recognized for our competencies. On the right side, you can see that we are independently assessed. We comply with ASEAN standards. We comply with OJK. We comply with global better GCG standards and practices. We have independent ESG rankings and assessments by the Ministry for which we are recognized. We are transparent on Bloomberg. We have been assessed by SMP. Financial Times offshore, Refinitiv have assessed us as well. The responsible mining index out of [ Allen ] have done assessed us and various independent body fluid, and we are in touch with the investors and large funds on their requirements on how they would like us to report our progress. And we are trying to comply – trying to be in as much compliance as we can. We are engaged with institutions on ESG emission reduction, compliances, and we are looking at developing our long-term energy transition plan. Just to give you an example on the next slide is the ESG data that we report every month. Full details are available, and we have very detailed sustainability reports by KPC, by Arutmin and BUMI, which actually explains this in great detail. You can see that emission reduction is very much part of our targets. Now if we move on to the final slide, which are on the management. Here is the current management Sharif Cicip Sutardjo, he is independent, and all the commissioners on top are eminent people. Now Sharif Cicip has been a former cabinet minister in Indonesia. He has been head -- he's been Chairman of the Indonesia China Business Council and he's been an investment banker with Credit Suisse. So he covers a lot of experience and the others, they all have their evidence and backgrounds. And below, you can see on the left is the shareholder representative as Commissioner, Mr. Adhika Bakrie. And the next 3 were from the lending community. On the final right, the 2 right is China Investment Corporation and a middle was from [ Land ]. Now moving on to the next slide. Again, just to display the grip of the controlling shareholder on the company. We have Mr. Adhika Nuraga Bakrie, [ Agra ] as we call him. He is the President Director for the last 2 years to drive his vision for the next 20, 30 years in the noncore respace, Mr. Nalinkant Rathod, who needs no introduction, he's on my right. Andrew on the left, Mr. Ashok Mitra comes with a wealth of experience in India with [ Tatas ] and with KPC and [ audio ]. And below, we are marketing our Marketing Head, Director and the other 3, we have CIC – we have 2 CIC and the middle gentleman is the one who is pursuing and responsible for our noncore diversification projects and moves to China Energy. What we have next are slides on KPC and RP. So these are already displayed in the presentation. So I'll really request Norman that if there are any requests for our presentation, if you could pass it on to your clientele. And I just thought I had mentioned that we have also posted our presentation on our website for any members should they wish to access it. And now Norman, over to you. We'll be happy to take Q&A. We welcome names of the people who are asking and we'd be happy to respond.

Thank you very much, Dileep for the very comprehensive presentation. So actually, [ Steve ], you will be step up. We'll be helping us for the Q&A session. [Operator Instructions] [ Steve ], please go ahead.

Thank you, Norman. Thank you, Dileep prior to the presentation. We have a question coming from [ Kimbo ].

Can you guys hear me?

Yes. Sure.

Yes. I just wanted to ask you, I think you mentioned during the presentation that you're currently still in the process of converting some [ MTVs]. Can you please tell how many more stocks are you expecting to issue and when you expect it to settle them?

Sure. May I request Mr. Andrew Beckham could respond to that?

Yes. We actually have -- what we've done now is the redemption notice has gone out, which will be settled on the 17th of this month, which is about $7 million to $18 million worth of CPs that haven't converted. And the balance, which will be around 27 million to 28 million shares to be issued once we get our full circular resolution signed up by all our directors and commissioners and then if I estimate that will be towards the end of November, beginning of December by the time it gets done. But that's about the position we're in at the moment.

Okay. The next question, we have from the Q&A box from [indiscernible]. Should we expect a change in management the VOC as a new investor [ Saingroup ] just joined recently?

Can I request Mr. Nalinkant Rathod?

I don't think there will be a change of bank went again continue to be a present director. There is a possibility that the new shareholder will appoint the directors, and we intend to work closely with the new shareholders. And as Dileep mentioned earlier, most of the capital decisions are taken jointly by the Board unanimously. So [indiscernible], we'll closely work with [ this group ].

The next question coming from the line of [ Nitin Arora ].

I guess just quickly on the management thoughts on priorities for cash users. I'm just trying to understand given that the NPR is now concluded. What are your thoughts on prioritization for use of cash? Obviously, great operating performance. But in terms of broadly, let's say, returns to shareholders versus non-coal diversification CapEx. Curious to understand how the Board is thinking about that. And I have a short follow-up.

Well, I think we do have negative retail earnings until then, we are not but a lot to declare any dividend. But at the same time, at this point of time, we're currently implementing the downstream projects for coal gas nation, which is mandatedly required. Any other than that will be with the company and at an opportune time, board will recommend to the shareholders for an appropriate dividend.

Understood. I appreciate that. I think I was also curious in terms of share buybacks, but I think you've partially answered my question already. I guess the other one that I had was more on a broad market-level basis, I think there has been some softening in prices. I guess some of it has to do with the less-than-severe anticipated winter in Europe. Just curious if you see that as any a headwind going into next year on prices generally speaking?

Well, we believe that it all depends upon how severe the issue that's going to be between res and Ukraine. As products that award is there and the sections are there on [ BUMI ]. The high CV core will continue to have the current impact of the current marginal or it was happening. But if you look at the type of coal that Indonesia produces, we are -- our core has mostly moved in line with ICI, which is significantly lower than the [ JC Nuc ] [indiscernible] minus. But we don't expect a significant change in the high TV coal prices.

Yes. So just if you look at what is happening in the market, the Indonesia coal mainly most to Japan, the high [ CV you ] move to Japan and Philippines. And if you look at the latest [ Tokur ] settlement, which is taking place, it was at $95. We take this above that is from October 1st to March 31st. So it can format [ 1995 ] then depend by price because that's the broad price park set for ICI. [ CIC ] doing together produces such IC over 6,000 core of about 11 to 12 tonnes, and most of them moved to Japan and Philippines. The rest are all linked to ICA EUR3 million.

And in a small volume, we started moving the code into Europe also but yes. But I think Europe will slowly pick up. So for us to send that 10 million tons of ICE coal and a decent prices will not be difficult.

Next question coming from [indiscernible]. Given the import balance sheet, do you have any plans to increase your stake in KPC or Arutmin? That's the first question. And the second is, what's your view on coal prices for the next few years besides the European energy situation? Are there any key structural drivers for oil prices?

Well on the coal prices, we have just responded in the previous question comes to the cash availability and whether we will buy additional stakes in KPC, I think it's a matter to be seen. It is speculative to answer at this point of time at what price other shareholders will sell or want to sell. They are also whole consumer. We do not know whether they want to sell or not. But yes, there is no investment, I think the idea is to keep the cash at the company.

Just to add, we have a very good relationship now with Tata and CIC. So there's no concern from us that they remain as shareholders of the company.

Yes. In fact, if I remember right, during this NPL process, we did offer to CIC to buy out the shafts that they have, and they came back and said no, they are long-term investors.

Yes, management team, I just wanted to double confirm. So we only have 2 minutes left for our session. Do you intend to extend it by a bit more, say, maybe 15 minutes or we should just close the session?

No, let’s extend. It’s fine. We open questions. Sure, sure.