Sarda Energy & Minerals Limited (504614) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sarda Energy & Minerals Limited Q1 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pankaj Sarda, Joint Managing Director. Thank you, and over to you, sir.

Thank you. A very good morning, everyone. I extend a very warm welcome to all of you to the Q1 FY '21 Earnings Conference Call of Sarda Energy & Minerals Limited. Our press release and investor presentation containing details of performance has been uploaded. Today's discussion may include some forward-looking statements, which must be considered in conjunction with the risks that industry in general and our business in particular face, and actual results may vary materially. COVID-19 impact. The lockdown imposed in March 2020 to control spread of coronavirus has impacted all economic activities in the country, and ours was no exception. Also [ capital ] was comparatively less affected, and we could take steps to reopen the manufacturing facilities from 16th of April 2020. But due to various lockdown restrictions, the normalization took time. And we [ could ] full normal operations only by the end of third week of May 2020. Presently, all manufacturing facilities are operating at normal capacity. The company has got sufficient liquidity to meet its obligation and to face the challenges evolving from research of COVID. Financial markets across the globe, which had nosedived in March, recovered to some extent, resulting into recouping losses from sharp erosion in the value of investment. However, in view of surge in number of infections, lockdowns are being reinforced at regional levels. This may delay the economic recovery more than that -- more than what was initially estimated. Global steel production for the Q1 FY '21 was 433.651 million tonnes, down 9.74% Y-o-Y and 1.73% Q-o-Q. China produced 268.879 million tonnes, up 3.58% Y-o-Y and 13.08% Q-o-Q, constituting more than 62% of global steel production. Ex-China production saw de-growth to 164.52 million tonnes, down 25.41% Y-o-Y and 20.66% Q-o-Q. India's domestic crude steel production during Q1 FY '21 was 16.28 million tonnes against 27.88 million tonnes in Q1 FY '20, registering a degrowth of 41.71% Y-o-Y and 39.46% Q-o-Q. In the Q4 FY '20, India has produced 27 million tonnes steel. That was mainly on account of the lockdown. Finished steel consumption fell from 24.77 million tonnes to 11.14 million tonnes Y-o-Y. In a falling domestic consumption scenario, India exported 5.54 million tonnes of steel against 1.83 million tonnes in Q1 FY '20, registering a growth of more than 200% Y-o-Y. Imports during the same period declined from 1.96 million tonnes to 1.26 million tonnes. The government has announced various steps to boost the liquidity, demand and credit flow in the economy, which should have a positive impact on demand of steel in the medium term, particularly from semi, urban and rural sector. Sustained export will also help improve capacity utilization and stability of prices. Short-term demand depends on monsoon and return of migrant labor. The monsoon has so far been good. The details of production, sales and realization of products has been provided in our press lease and presentation shared in public domain. Ferro alloy prices had improved in the first half of the quarter, but corrected that in the later part to same level. Prices of iron ore, coal and coke have also seen corrections. As such, margins are maintained. We produced 26,801 metric tons of ferro alloys in Q1 FY '21. That's against 34,337 metric tons in Q4 FY '20 and 29,684 metric tons in Q1 FY '20. Hydropower. Better monsoon has been achieving better capacity utilization factor in hydropower generation during the quarter. During the quarter, we generated and sold 20.33 million units against 9.78 million units in Q1 FY '20, recording a growth of 108% Y-o-Y. Financial performance. The company has reported consolidated operating income of INR 347 crores during the quarter as against INR 438 crores in the previous quarter and INR 555 crores in corresponding quarter of the PY. The operating EBITDA stood at INR 64 crores as against INR 87 crores in the previous quarter and INR 117 crores in the corresponding quarter of the PY. Profit after tax, consolidated, stood at INR 36 crores as against INR 47 crores in corresponding period of previous year and INR 30 crores and quarter ended March 2020, resulting into EPS of INR 9.8 per share. Shut down of all manufacturing facilities due to lockdown has affected production volume, top line and bottom line for the quarter. And as such performance except hydropower is not comparable Q-on-Q or Y-o-Y. The company has maintained dividend of INR 5 This will be date after approval of shareholders and ensuing AGM scheduled on September 24, 2020, to the shareholders who hold shares on closing of September 14, 2020. Progress of Sikkim Hydropower Project. As explained in the last con call, the lockdown has affected worst on at sites due to restrictions on movement of man and material during lockdown. The project is in final leg of its completion. The team of foreign suppliers of equipment is expected to reach site as soon the international flight resume operations. Except for unforeseen circumstances, it is expected to be completed in the next quarter. Rating. The company continues to enjoy A+ rating for its long-term borrowings and ratings A1 for short-term borrowings from CRISIL. For commissioning of the Sikkim Hydropower Project, we expect improvement in the rating. Debt. At the stand-alone level, the company is net debt-free. And operating company's long-term borrowings stood to INR 600 crores and total borrowings at INR 800 crores. At the consolidated level, the total gross debt as at March 31, 2020 stood at INR 1,600 crores. The debt, net of cash, liquid investments and current loans stood at INR 1,100 crores. Loan repayable within next 1 year is INR 71 crores. The debt-to-equity ratio is well below 1, all obligations have been met on time. Now I request Sri Manish Sarda Ji to brief about emerging market scenarios in steel and ferro alloys and steps taken by the company, and also about near-term outlook. Manish Sarda?

Thank you, Pankaj.

Yes.

Thank you, Pankaj. Good morning, everyone. The increased export demand has balanced demand supply in the steel sector, enabling stable capacity utilization and improved pricing. Good monsoon, better condition in rural and semi-urban India and governments...

Hello? Not audible. [Technical Difficulty] I'll continue. Increased export demand has balanced demand supply in the steel sector enabling stable, capacity utilization and improving pricing -- and improved pricing. Good monsoon, better condition in rural and semi-urban India and government stimulus backed by focus on self reliance and infrastructure creation should push the demand further. On global supply concerns, iron ore is expected to remain firm. Since the company is sourcing part of its requirements from captive mines, any increase in price would be positive for the company. Ample liquidity into the system will bring down cost of funding, particularly for corporate, with good track records and financials. This will also create demands and investments into capital-intensive sector. In Chhattisgarh, grid power cost has gone up by more than INR 1 per unit. Increase in grid power tariffs and reduced coal costs bodes well for captive power producers markets. Because of low leveraging, our company is well placed to take emerging opportunities. Commissioning of Sikkim Hydropower Project will further improve the financial performance of the company. We estimate the credit rating upgrade, an interest rate reduction on completion of the Sikkim Hydropower Project. This is all about the performance and outlook. Now we leave the house open for questions from the participants. Thank you.

[Operator Instructions] The first question is from the line of [ Bharti Shah from Devon Capital ].

I had a question regarding your pellet production and the current blended cost of ore. Because if I'm not wrong, it's not 100% captive, right? You're sourcing it from your own mines, plus outside. So what would be the current blended cost of ore for your pellet production?

The -- we are using about 50% of -- meeting 50% of our ore requirement from captive sources. And current blended cost of iron ore furnace is somewhere about INR 3,600.

But the prices are existing. Blended rate is around INR 3,600, but the prices have gone higher. It has come in around INR 4,000, INR 4,500.

So it has increased. So the blended cost for you will go up from INR 3,600 to INR 4,500?

No. What I was saying, that was the cost of the purchased raw material. When they -- of course, still -- the ore still remains somewhere below INR 4,000.

Below INR 4,000.

Even after increase.

Okay. Fair enough, sir. And sir, since long, we've been allocating a pellet expansion of 200,000. By when can you expect that to come on stream?

Maybe in one quarter. In 3 months, we'll get the permissions. We are very hopeful.

Yes. Fair enough. And sir, also your other CapEx in terms of your billets going from 200,000 to 300,000. And also, eventually, the wire rods going up. By when can we expect all of this to start contributing?

Though they have already started contributing. We have installed.

Okay. Okay. Got it. And, the update about the Sikkim Hydropower Project. I'm just wondering, that's been a big drag for our company's financials and our capital allocation. So by when approximately, do you expect that, that will start contributing, and we'll start using those cash flows to start further deleveraging?

So, I already explained in our initial address, we expect this to complete by the end of next quarter. In the next quarter, it will be completed. So next year will be the full year. Basically, there are earnings from the project is in the season only. So there will be some contribution in the current financial year, but majorly it will be contributing in the next financial year, for the full year.

Fair enough. And sir, what is your outlook in terms of trend of the pellet prices? We heard Mr. Sarda very recently on television, commenting that INR 7,000 is a price that you feel comfortable with for the next 2 months. So -- but can I -- you see a trend where it can further go up thanks to the Odisha high auction premium that the companies have paid? And of late, what is the domestic demand scenario also looking like besides the export, which has held up very well?

Jain sir, I will take this question. Hello?

Yes. Yes, please. Continue.

So yes, I mentioned that INR 7,000 is respectable on a sustainable price. But looking at the current demand pickup on the smaller plants, which are now going on from on full stream after the lockdown has been opened, I think the prices should move to the levels of INR 7,800 because there is increased rains also, and it's difficult for iron ore miners to mine during rainy season. So there is a bit of a shortage of iron ore as well, which is leading to a price hike in terms of pellets prices. And I think for the next 2, 3 months, we should see the pellet pricing ranging between a INR 7,400 to INR 7,800.

[Operator Instructions] The next question is from the line of Jatin Damania from Kotak Securities.

Sir, just wanted to check on the Sikkim power, as you are saying that there would be -- we have seen impact on the commissioning because of the lockdown. I mean completion of the project. So are we seeing any escalation in the overall cost or our cost will remain in the range of INR 1,400 crores?

Noise from background, I think.

Hello?

Sir, is it audible now?

Yes, now it is audible.

Yes. Sir, just wanted to check on the Sikkim power side, we have seen that because of the lockdown, the completion of the project has not been extended. So are we seeing any escalation in the cost? Or are the costs still remaining in the range of INR 1,400-odd crores?

There may a slight increase on account of, IBT, some, but not materially.

So I mean we'll remain in the INR 1,500 crores or it will be lesser than that?

Yes, it will be, I think, is somewhere INR 1,300 to INR 1,500. Maybe around that.

Okay. Okay. And sir, can you brief us on your Vizag ferro alloys because last quarter, we had seen that because of the over-raining and relining was there was a certain of production. So how the operation has been in this quarter? And what is the trend line going in month of July and August?

No, now the plant operating it normal at full capacity. Last year, it was close on account of this relining and all those issues, so this year, there is no such. And it will be operating it from capacity, it should be able to produce here about 80,000 to 85,000 tonnes. 80,000 tons.

For full year?

Yes.

And in first quarter, what we -- would be how much is we produced from Vizag?

I think somewhere, 21,000 or so, I'll just let you know the exact figure.

The next question is from the line of Abhishek Maheshwari from Wallfort Financial Services.

Sir, recently, the company has received approval for fundraising for equities and debt instruments. It's also in your latest update. So can you throw some light on that?

Yes. That is only an enabling regulation we have been taking for the last 2, 3 years. But then in case of any acquisition opportunity which is sort of -- there is no limitation. As of now, we don't have any plan to raise any fund.

Okay. Okay. And secondly, I wanted to know one of your TG sets, the power sets. It's still closed down. So are you receiving power properly? Or is there a cost increase there?

Absolutely, you are correct. We are getting full power from our Vizag steel plant. They have an extra capacity there. So we are reading all the power from there at the moment.

Okay. And lastly, I just wanted to know if currently, all our plants are operating at full capacities, ferro alloy and steel plants?

Absolutely. In ferro alloy, we are taking major upgradation of 3 of our furnaces. So one by one those furnaces will be shut down for 2, 2.5 months. And we do complete because these furnaces are very, very old. So we have taken complete -- we are taking new equipment for all the lower left load columns, et cetera. And we are revamping all the furnaces one by one. So these 3 productions will be taken shut down one by one in the current year. And one of the furnace...

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

Hello?

Yes, Vikash.

Sir, any update on the Sikkim Power Project (sic) [ Sikkim Hydropower Project ] rates at which we would be transferring power?

No. As we informed in the last con call also, rate is subject to approval by the regulator. It's a project-specific rate, which is approved by the regulator, and there is a long run regulatory process for approval of the rate. So it will take its own time to get the final pricing.

So by when we can expect the final pricing depending on the previous timeline.

Maybe 1.5 to 2 years.

Okay. So in between when the power project would start then the supplies would -- so how the revenue would be accounted for? Just wanted to understand.

The provisional rate to be given by the regulator. Initially, they will give some provisional rates. Accounting will be based on that.

Okay, okay. And sir, secondly, usually, monsoon season, we -- can be -- historically has been a little bit weak. But now what we have seen in the last month, the prices have been increasing. Sir, if you just could elaborate a little bit more on the demand-supply scenario currently? And how is your expectation on the pricing side?

Pricing of what?

So basically, billet products, sponge prices have been increasing from the last 1 month, beside being in the peak monsoon season. So I just wanted to understand that is it because of the impending demand of the -- or the actual demand has actually picked up on the ground level or the supply is constrained. So what are the factors contributing to it? And how do you see it going forward?

Manish ji? Hello?

Can you repeat the question again, please, I couldn't hear you clearly. Can you repeat the question?

Sir, usually, monsoon season has been weaker for us sponge iron players. This time, it's a little bit different. So what are the factors contributing to the recent price hike? And how is the demand-supply scenario currently in, let's say, in your operational area of Chhattisgarh also?

Okay. So you need to understand that we have been the lockdown for the last 4 months. And a lot of plants were under shutdown because of labor issues and because of various other factors contributing to this lockdown. So people were not operating their plans. Currently, we are seeing a very different monsoon this year as the prices of all the steel products have picked up, primarily because we have seen a pent-up demand, which is going to be unlocked now. Also a lot of smaller plants industrial furnaces, which are there in various sectors in Odisha, Raipur, Chhattisgarh and across the country, they've started opening up slowly, slowly. And the demand is coming out from there. Apart from there, the construction activity is also picking up back. And we have seen labor returning back to work. So overall, what we -- the difference, what we have seen in this monsoon is that the lockdown is opened up and activity has started picking up, and the exports have risen very sharply from India into the world markets of steel products. And imports have fallen down because of various government protection and duties which have been levied. So overall, we are seeing a demand pickup. We are seeing the plants coming back into action. And that is the reason why this monsoon was a bit different than the previous monsoons.

Understood, sir. Sir, just one thing, on the industry perspective, the sponge iron manufacture. So what kind of utilization rate according to you they would be running at currently?

Pardon. Can you repeat the question?

What is the sponge iron capacity being utilized across the country? That is what the question is, right?

Yes, sir.

Yes. So it is very difficult to assess right now, as most of the plants has started back operations and some of the plants are starting up also. But I would think within the given parameter and coming months or so, I think most of the plants would be back and running up to the full capacity utilizations. We are running our plants at almost full capacity.

Understood, sir. Sir, just lastly, this INR 1,665 crores of debt, which is giving in our presentation that -- can we assume that is the peak debt level, which has been explained? Or there is another INR 100 crores or INR 150 crores can be added because of the pent-up for CapEx on the Sikkim project?

No, no. I think this is the peak level of the debt. Whatever [indiscernible] will be coming in to that extent, there will be repayments also.

Understood. And sir, what is our current consolidated average this rate of interest?

Rate of interest?

Yes.

Rate of interest for operating plants, it is well below 10%, but for [ others ], it is about 12%.

And that can be renegotiated once the power project has started, right?

Yes. Once the project is commissioned, that will be drastically brought down.

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

Yes. Sir, a very good presentation. I should appreciate normally the presentation shared by you for last 2, 3 quarters. That gives detailed update on the overall business. Just a question on the follow-up after seeing the presentation. If you can quantify the amount of price hikes, I think pellets, you mentioned, but if you can mention on the sponge iron, billets, wire rod and HB wires, which are the main part of your business. Last 1 month after the quarter is over, how much is the rough price hike which has happened in this? Second, my question was since you capture different value addition via different products. So as of now, which product is giving you higher value addition or a higher-margin or PBT? Because what we heard is that wire rod looks to be in a massive shortage when we did some dealer checks. So if you can throw some light there. So is it that possibility that you can also change your product mix where the profitability is also higher because you have different product ranges here?

First of all, we have a lot of people who have TMT as well as wire rod. We have, in our rolling products only wire rod and the only facility that we have. So we are running only wire rod, and we don't mix around with wire rod and TMT like other people do. So that's the only mix we have. And you are absolutely right, whereas it looks like there is huge demand for wire rod that's pouring in. And the demand is higher, and it looks like it will continue for the next quarter as well.

And regarding quantification of price hikes, we are hearing to INR 3,000 to INR 4,000 change since June 30. So can you give some number there? Specifically for billets and wire rods, what kind of overall realization change has happened in the last 45 days?

Now billets are presently hovering around INR 29,500 to INR 30,000.

Okay. And wire rod would be?

Wire rod, we may add another INR 3,500 on that, INR 4,000 on billet.

Okay. Wire rod is another, you said, INR 3,000 to INR 4,000 on billet.

On billet, INR 3,500 to INR 4,000.

INR 3,500 to INR 4,000. Okay. Regarding the iron ore thing, next question, is the Odisha auctions have happened, which has completely changed the scenario. So I believe that the old miners are still selling from their inventory, which I believe they are allowed to sell till 6 months, right? So I think still the Odisha iron ore is available. So have you seen those old merchant miner's quantity reducing, exhausting their inventory? So what's the situation right now because I believe the winners are mostly the captive steel players. So obviously, that volume doesn't look to be available for the merchant guys. So if you can update on the Odisha iron ore situation first 5 months experience after the merchant mining has got over, if the monthly run rate has reduced? If any guidance you have got from those guys of the iron ore volumes, if you can say something?

I get it. Yes, only -- till now, only 2 miners have been able to start the mines in Odisha, one is JSW and the other is Arcelor. Other people -- as you just mentioned, 4 months are over on the line, so another 2 or 2.5 months, they would be entering into the mines to start the mining facilities and operations. So definitely, there has been a shortage of iron ore lumps and iron ore fines to the market as on today, but the situation might change after 5 months down the line, 6 months down the line, when all the miners would start operating their own mines and the production will start and will start going to the captive plant. So there will be a result of iron ore and -- lumps and fines prices then. But to date, there is shortage of iron ore fines and lumps, and the prices are on the upward trend because of this.

Right. And regarding your pellet merchant sales, do you export also? Or you just sell in the domestic market?

The domestic market has gone up very well since last 1, 1.5 months. So the domestic market is giving very good returns. So we are focusing on domestic market at the moment.

Okay. And is there an export duty on pellets also? Or there is no export duty on pellets?

There is no export duty on pellets.

Okay. Okay. And my last question on the Sikkim Project. So what is the total CapEx on that project? I see -- I think your presentation shows borrowings of around INR 800 to INR 830-odd crores, term loan under execution, right? So how much is -- how much you're totally spending on it?

Total will be somewhere about INR 1,450 crores to INR 1,500 crores, less than INR 1,500 crores.

And how much you have spent till day?

I think maybe around INR 1,400 crores.

You have almost spend the full amount, right?

Yes, around INR 100 crores maybe left. I mean, less than INR 100. Yes.

So this will be IRR kind of a project, right? So can we expect 15%, 16% debt? And you said the rates would be finalized later, but I'm sure there would be some agreement on the IRR thing when you implemented this project. So can we assume a 15%, 16% IRR or that would be aggressive on it?

No, 15%, 16% is basically on the approved project cost, there are certain components, which are not considered by the regulator as well, so 15%, 16% IRR is given on the approved project cost.

That was how much, sir?

No, no. It isn't subject to detailed examination of the...

Regulator.

Project cost by the regulator, that's why it takes about 1.5 to 2 years' time.

Right. And how much is the equity component because IRR would be calculated on an equity component. So what is the equity component on the project?

IRR -- equity, now INR 900 crores is the term-loan, INR 927 crores or something, rest is equity.

So roughly, INR 500-odd crores would be your equity into the project, yes.

Yes, yes.

The next question is from the line of Bhavesh Chauhan from IDBI Capital.

My question is really strategic. Sir, how do you see our company in 5 years -- 3 to 5 years, whether you want to expand or take up more new projects? Or do you want to deleverage?

No, leveraging-wise, if you see, our leveraging is below 1:1. So far as leveraging is concerned, we have been making our repayments on time. Once the hydropower project starts, then the repayment of that will also start. So automatically deleveraging process will be going on. So definitely, we get some opportunity for acquisition, that is brownfield, the expansion might -- there will be certain brownfield expansions like we may expand in the ferro alloys in our [ redevelopment ] project. There may be some capacity addition in steel in Raipur. But majorly, we are looking for some inorganic growth opportunity. But definitely, there will be some capacity additions in both Vizag and Raipur. Then we will also going for 25 megawatts another hydropower project. So these are the pipeline projects. But inorganic opportunity, also we are looking at.

All right. And sir, what will be your maintenance CapEx?

Pardon?

Our maintenance CapEx, so annual CapEx?

Maintenance CapEx won't exceed INR 50 crores per annum.

[Operator Instructions] The next question is from the line of [ Shubham Agarwal from Equitas ].

Yes. Hello?

Yes.

Sir, my questions are regarding the ferro alloys business. So you said during the first half of the quarter, the prices were up, but now it is back to the normal. So what would be the prices of silicon, manganese as of now?

Presently, it is in the range of INR 60,000.

And what -- how do you see the trend going forward of the prices?

Manish ji.

Sorry?

Yes. Mr. Manish Sarda will respond on this. Just hold on. Manish ji?

Hello?

Hello?

Presently, there is -- I think prices may go down slightly from this level, but we're looking to the overall steel demand. It ultimately depends on how the steel production goes up in the country, which has to continue like this. So prices materialize weekly, otherwise slightly weaken from this point.

Okay. And so demand side, how are you seeing that?

Hello? Am I audible?

Yes, you are audible, sir.

Okay. So currently, the prices of ferro alloys as of today is NR 60,000. And I think the prices will move up further from there. And manganese ore prices have also started rising a bit. Apart from that, there is a good demand now, which is coming in from the domestic industry as well -- steel industry as well. And I think the prices will be touching roughly another INR 1,000 or more and then it will stabilize.

Okay. And how is the demand from the export side?

Export side also, the demand is good, but it's not up to the mark, which it was. But I think another 2 months or so, the export demand will also pick up as most of the country has started unlocking now.

Okay, sir. And sir, you also said that there will be some realignment of furnaces in ferro alloys plants?

Yes.

Yes. So how would it impact the production, just to understand?

So in Raipur, we have 5 furnaces. One furnace we take for revamping at a time. So the revamping of the furnaces generally take 2, 2.5 months. So after 2.5 months, we'll take the second asset, revamping that, we'll take third.

Okay. So at that time, only one furnace will be out of production?

Correct.

And what would be the total -- quantify -- if you can quantify the production loss?

I think maybe 12,000 tonnes.

12,000 tonnes.

12,000 tonnes. Okay.

Yes. 10,000 tonnes to 12,000 tonnes.

Okay. So for the -- and you said, for the 5 furnace, how would -- total time would be 5 into 2.5 months. So on an average, 12,000 tonnes of production loss we can consider?

Two furnaces we have already revamped. The remaining 3 we are talking about, only 3 furnaces need to be revamped. It's already under revamp.

Yes. It's already undergoing.

Revamping.

Yes.

[Operator Instructions] The next question is from the line of [ Idiba Korba from Safari Capital ].

Sir, you spoke about billet pricing as compared to what we see -- we saw in the first quarter about to INR 2,000, INR 2,500 higher realization as well as wire rod about INR 3,000 higher realization. You're also talking about palletization being better. So any comments on the margins, basically, so how do you see going forward in terms of sustainability and improvement?

Margins have definitely improved compared to the first quarter on the, all the signals. Partially, worker increases they partially would be compensated by the increase in the raw material prices and the iron ore prices have also shown rising trend.

But you will also get operating leverage advantage, right?

Yes. Yes. We'll get the operating leverage and the advantage, definitely, we have got to -- partially we'll get from our captive iron ore mines that is -- that advantage is always there.

Because at basically, Y-o-Y, 30%, 40% lower revenue base, we have been able to achieve about 24% EBITDA margin, which is quite fantastic.

I think from here margins will improve in second quarter.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

We thank all the participants for joining the con call. We hope we have clarified all the questions with satisfaction.

Sir, sorry to interrupt. We have one participant in the queue. We have the participant with the name, Sunil Jain from Nirmal Bang.

This was more on clarity about Sikkim power. You said that it will be start in next quarter end. And so the hurdle is, the foreign technicians are not able to come and start the project. Is there anything else you see spending in this process? Or that is the only for -- do you think spending?

Regular left over work is also going on. This is one aspect, which is important because earlier they were planned to -- in August. Now I think likely start from September. So other left off work is there that is getting completed in due course. That should not be any problem. Nothing as such is, which you can say to be contingent or which may critically affect the progress.

And just to set a clarity, iron ore prices, you had said that it has moved up to around INR 4,000 at current point of time.

Pardon? INR 2,000?

In the open market, the iron ore prices has moved up to INR 4,000.

Yes.

That is what you have said. And how much it has increased in last 1.5 months?

In last 1.5 months, they have moved up from around INR 3,200 to -- INR 800 to INR 1,000.

The next question is from the line of Abhishek Maheshwari from Wallfort Financial Services.

Sir, my question is regarding your metallurgical coke requirement, which is used as raw material. So sir, are you facing any problems in its sourcing? I mean as far as [indiscernible] import -- sorry?

No, there is absolutely no problem in sourcing metallurgical coke. We require roughly 60,000 tonnes annually, and we have ample supplies in the market today, from -- even RINL is also -- that is Rashtriya Ispat Nigam Limited Vizag steel is also selling its undersized coke in the market. So there is absolutely no problem in metallurgical coke imports or domestic supply also.

Okay. But we are sourcing it domestically, right? Or are we importing?

I think we import and we -- domestic -- also dependent upon the price viability at which coke is cheaper because primarily both the coke -- the policy is the same.

[Operator Instructions] The next question is from the line of [ Shubham Agarwal from Equitas ].

Sir, in the ferro alloy business, the EBIT margin for the quarter was 18.3%, which was an increase from 15% and last quarter from 12%. So do we see this margin trend stabilizing at this level? Or how do you see the trend going forward?

I think the overall margin levels will be stable at these levels and might increase only if there is a sudden spike of spot in international pricing of manganese ore, which directly leads to the prices of manganese alloys. So I think these EBITDA levels will be stable going forward for the next quarter also. It may increase a bit.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Thanks to all the participants for sparing time, and we hope we have clarified all the questions to their satisfaction. In case of any doubt, they can always reach out to us. We shall be happy to share or clarify on the points. Thanks to all, once again.

Thank you. On behalf of Sarda Energy & Minerals Limited, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.