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

Ladies and gentlemen, good day, and welcome to the Sarda Energy & Minerals Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that the conference is being recorded. I now hand the conference over to Mr. Pankaj Sarda, Joint Managing Director, Sarda Energy & Minerals Limited. Thank you, and over to you, sir.

Thank you, ma'am. Good morning, everyone. I extend a very warm welcome to all of you to the Q4 and FY '21 earnings call of Sarda Energy & Minerals Limited. Our press release and investor presentation containing details of performance has been uploaded. Today's discussion may include 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. The consent to operate the enhanced capacity of the pellet plant was received in March, helping the company to increase the production. In spite of shutdown of the manufacturing facility for a part of Q1, continued shutdown of one ferro alloys furnace for refurbishing and shutdown of pellet plant in January for 22 days for periodical maintenance, during the year, we achieved a record production of pellet, steel billet, wire rod, HB wire and hydro power. I request Sri Manish Sarda to brief about global and domestic scenario of steel and ferro alloys.

Thanks, Pankaj. The infrastructure push at global level to boost GDP has generated demand for steel and other commodities. At global level, iron ore supplies are also affected because demand/supply mismatches have resulted into sharp price rise. Pollution restrictions imposed by China have further increased demand/supply gap in steel, boosting prospectus for Indian exports. India steel production and apparent consumption both were down by about 6%, but increased exports on the back of better prices maintained tightness in supply, resulting into improved price realization. During FY '21, India exported 17.38 million tonnes and imported 5.04 million tonnes against 11.12 million tonnes and 7.16 million tonnes, respectively, during the previous year, resulting into net increased outflow of 8 million tonnes of steel. Prices of steel products remained volatile during the quarter but stabilized at higher levels in March on account of improved demand consumption, both domestically and globally, and has been going up since then. Ferro alloys exports are increasing month-on-month after bottoming out in October 2020. During the quarter, the country exported 500,000 tonnes of ferro alloys against 382,000 tonnes in the last quarter. In the quarter, we exported 15,607 metric tonnes of ferro alloys against 8,473 metric tonnes in quarter 4 FY '20. Mining law has been amended to allow capital producers to sell up to 50% of the production on payment of specified premium linked with royalty rates. I would request Mr. PK Jain to brief about the financial performance and position of the company.

Yes. Thanks, Manish. Despite of lockdowns, the company has achieved higher consolidated revenue of INR 2,200 crores during FY '21 against about INR 2,000 crores in previous year. The company has reported EBITDA of INR 664 crores during the year against INR 339 crores in the previous year. During the quarter, we achieved revenue of INR 700 crores against INR 438 crores in Q4 FY '20 and INR 604 crores in Q3 FY '21. In Q4 FY '21, the company has reported EBITDA of INR 226 crores vis-à-vis INR 23 crores in Q4 FY '20 and INR 185 crores in Q3 FY '21. The company's profit after tax at consolidated level is INR 376 crores as against INR 128 crores in previous year, resulting into an earning per sale of INR 104. The Board has recommended a dividend of INR 7.50 per share against INR 5 per share paid last year. For the year under review, all the segments did better than previous year. At the stand-alone level, the company is net debt-free company. As on 31 March, bank balance and liquid investments included INR 312 crores term debt net of -- current investments included about INR 1,400 crores and net of long-tailed [ treasury ] operation at INR 1,100 crores. Loans repayable within next 1 year is INR 113 crores. Present cost of borrowing in the operating class is below 8%. Sri Pankaj Sarda will brief you about Sikkim Hydro project and the industry outlook.

Thank you, PK Jain. As already informed, the construction of Sikkim Hydro Power project has been completed and both the units have been successfully synchronized with the grid in April. The company has received all approvals for enhancement of capacity from 96-megawatt to 113-megawatt. The project with enhanced capacity is expected to commence commercial operation in next month, and we'll be able to take advantage of the rainy season. Talking about ongoing projects. The company is making efforts to start mining in Gare Palma IV/7 Coal Mine [ and riser ] Chhattisgarh in next quarter. Work on the Shahpur West Coal Mine is also proceeding as planned. That will come into operation in 2025-'26. We have also started work on the third ferro alloys furnace of 36 MVA in Vizag, which is expected to be completed before end of next financial year. The company also plans to start work on the 25-megawatt [ rear ] hydro power project post monsoon, which will be completed in 3.5 years from starting point. Outlook. The increased export demand has balanced demand/supply in the steel sector, enabling stable capacity utilization and improved pricing. On global supply concerns, price of steel is expected to remain firm. Ferro alloys prices have firmed up substantially from March. However, its full effects will be seen in the next quarter due to pipeline of orders. Due to stable price of raw materials on the back of improved availability, conversion markets in ferro alloys have also improved. Commissioning of Sikkim Hydro Power project will further improve the financial performance of the company. Projection of normal monsoon augurs well for hydro power projects. The central government and various state governments are also taking policy initiatives to incentivize fresh capital investments by the industry, creating demand of commodity. The company is well placed to take advantage of emerging opportunities. This is all about the performance and outlook. Now we'll leave the forum open for questions from the participants. Thank you.

[Operator Instructions] The first question is from the line of [ Sachin Marta ] from [ Precision ] Capital.

Could you shed some light on the PPA for the Sikkim Power project? What rate do you expect to get for it?

The PPA has been done and rate will be decided by the Commission after the project is commissioned. So for all the hydro power projects, the regulator decides the rate after commissioning of the project, that is after COD is done.

Okay. Any expectations that you might have at this stage?

So for small hydro power projects, the rate for last year was around [ INR 6.15 per KWs ]. So we expect it to be a little bit higher than that.

Great. And how many units do you expect to generate per year as standard? Yes, I know it's hydro, so it depends on water flows and levels. But ideally, as per, I guess, your DPR, what is the expected generation annually?

If the power project runs for the full year, the expected generation is around plus 400 million units.

[Operator Instructions] The next question is from the line of [ Raj Nahar ] from [indiscernible] Consultants.

Congratulation for excellent results. I have 2 questions. One is about the iron ore mine capacity. In one of the last year presentation or last quarter presentation, it was mentioned that you have a mining of 240 million tonnes. So is that mine -- when that mine is likely to be commissioned? That is one -- point number one. And the second point is about your capacity of -- for ferro alloys. How much it will increase quarter capacity will be including at Vizag and [indiscernible] will be how much [indiscernible]?

This -- additional iron ore mines, as you are aware, the central government has amended the law where all pending cases have been closed. And now all the mines have to be acquired only through auction process. So whatever pending cases are there, those have been closed by the central government by changing the law. Second is ferro alloys capacity concerning Vizag, there is about 50,000 tonnes per annum additional capacity.

No. I wanted to know basically what will be the total capacity of ferro alloys after commissioning all your expansion.

After the complete expansion, as we said, the capacity will be 1.5 lakh tonnes. And in Raipur, we have about 80,000 tonnes of capacity.

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

Sir, my first question is I want to understand, have we seen any problem in terms of production because of recent restrictions by different state governments?

So there were a lot of restrictions imposed. And as you know, Chhatisgarh was also under completely lockdown. So there was little effect, but our team came together very positively. And so 3, 4 days of little production hampered that was there in ferro alloys was immediately ramped up again. So hardly because of labor issues, little production came down for 4, 5 days. Really, it came back to normal. It was near normal.

Okay. Okay, sir. Sir, currently, the spot prices seem to still be higher than what we have get in 4Q. But I just wanted to understand what is our assessment in terms of market since the local demand is kind of absent. So how are you coping up? Or what are the reasons the prices will stay firm like you said in your opening remark?

As you see -- Mr. Manish can also elaborate more than -- more later. But as you see in most of the steel plants in Gujarat in south that's completely facing a lot of issues and production -- production is hampering there, raw materials would be going towards western and southern region of the country and a lot of steel is getting exported because of very positive export demand from the country. So that is also keeping the prices firm. So almost [indiscernible] extra export is there in terms of steel. So that is also keeping the steel prices firm.

Okay, sir. So our near-term assessment is that the steel prices would remain firm. Is that a correct understanding at this point of time?

Yes.

Sir, I want to ask you one more question [ that a couple of folks ] from where you usually export here are ferro alloys has recently declared force majeure for 15 days. So just wanted to understand whether they have resumed their production or any of the exports got impacted from our company. How is the situation in our ferro alloys business?

Manish?

I don't think there is any restrictions at Vizag port or the [indiscernible] port or the Visakhapatnam container port. So there are slowdowns in terms of getting containers, but exports are happening and are going on. Only [indiscernible] port has declared force majeure.

No. [indiscernible] port has also declared force majeure for 30 days. Basically, just last couple of weeks back on the end of [ April ], basically.

We have seen...

Have you seen any dispatch-related problems or slowdown in there?

Not until now we have not faced because we are also doing business with [indiscernible] port. We have not faced issues of any -- there are delays, yes, but we have not faced stoppage or anything of that nature right now.

Okay. And one thing for Manish please. Basically, with the Chinese focusing more on their internal requirement meeting faster, are ferro alloys -- also, they have reduced the import duty and actually levered some export duty on that. So have we seen any pricing or the demand scenario improving because Chinese are vacating ferro alloys business also in the export market, which would eventually benefit us, or just to say it won't change much as these remain...

No. It will benefit us in the long run because China has recently imposed export duties on all products which are consuming high electricity and high coke. So they have imposed duties on ferrochrome and ferrosilicon, which they were importing in a big way. And there are curbs which are announced for the ferro alloys industries because of many reasons. And this, in the long term, will also be beneficial to India.

But any pricing-related benefit which was visible since then or as of now?

Yes, yes, yes. We have seen some pricing-related changes after the imposition of the curbs. The prices have not gone down. It has gone up only. And the immediate increase that we saw was around $20.

Okay, sir. And if I may ask one last question. In terms of our coal mine, so at current coal prices, if you could just let us know what is the target in terms of ramp-up and what kind of cost savings we can expect from them.

Jain, sir?

Can you repeat the question, please, pardon?

The coal mines which we are going to start. So basically, what is the -- by when it can be ramped up to the full potential? And at current prices, what kind of cost savings we can expect from it?

This mine, we have a permitted capacity of 1.2 million tonnes per annum. And we can start to achieve within the current year itself. So once we start the mine, we should be able to produce pro rata output from the current year itself. And it's -- the ramp-up from 1.2 million to 1-point million -- 1.8 million will take place soon after getting the necessary approvals for which process has already been started. And so far as the price savings are concerned, we expect about EBITDA addition of about INR 1,000 per tonne from that coal mine.

So per tonne of coal, are this per tonne of steel production which we are building in? Just for clarification.

A tonne of coal.

The next question is from the line of [ Anand Shah ] from ICICI Prudential Asset Management.

Congratulations for the results as well as for Sikkim Hydro. My question is more around Sikkim Hydro Power plant. Would there be a seasonality? Would it be run-off-the-river hydro power plant? And to that extent, would there be a seasonality in terms of production and revenues?

This is a run-off-the-river hydro power plant. And yes, it is -- it depends on rain mostly.

So it would be largely a Q2, Q3 production because even if you see currently this March quarter also, we had quite a fall in the hydro -- in the existing hydro power plant in terms of production.

Are -- all the hydro projects are [ were in effect ]. And that's why you see fall in units generated in the Q4.

So largely, we would see most of the production revenue and EBITDA in Q2 and Q3. Is that correct?

Correct, correct. Perfect. Yes, absolutely.

Yes. And against 129 million units of hydro power plant which you have generated, you say you will be able to add around 400 million-plus further units in the next financial year. Is that correct?

Absolutely.

Yes. And coming to steel also, if I see the various -- in your presentation, the realization of pellet was around INR 10,000, if I'm not wrong, for the quarter and current prevailing pellet prices are far higher. So -- but we also understand that it has not -- the steel and the billet prices and sponge iron prices have not responded. So just to get a sense of last -- most of the profitability is in the pellet. How are we operating? And what is your outlook in this year in terms of the profitability from the steel operations?

Last year, it -- our last quarter realization was about INR 11,000. It's given in the presentation.

Correct. But what I'm saying is that the billet prices have actually struggled to move up. And to that extent, while the pellet prices have gone up, the profitability of sponge and billet would be lower.

Slightly. Valuation is always there that we have given in our presentation. Valuation slide is there where you can see our effect on the billet relation. Billet relation, if you see, LatAm, it was -- valuation was about 13,000 tonnes -- a tonne. Now it is about INR 12,400 a tonne, which is also given in our presentation, though, in certain segments, margins have expanded and in certain segments, it is slightly [ compared ].

Sure. And the last question is with the Sikkim Hydro Power plant, overall cash flows will be very healthy in coming years. And you already announced one small expansion of ferro -- sorry, on the Vizag plant. How do you expect -- where would the next set of CapEx will go into? Whether it will go into further strengthening the entire value chain or whether in the expansion?

It's for basically strengthening the value chain is already you see we've already planned for the coal mines. In due course -- already for the strengthening of the value chain, one of the expansion is in the coal mines. At the appropriate time, we may go even for the further iron ore mines to strengthen. So definitely, that is one of the focuses here.

Also, sir, the addition of the ferro alloys furnace is strengthening our back -- front integration because the power plant runs at a 70% capacity. Now with the addition of the third furnace, the power plant capacity can be fully utilized.

You spoke of expansion of iron ore. You already have approval for 1.5 million. Is this correct?

Yes, yes.

So -- and given that the -- where the iron ore prices are, do we have a plan for the CapEx for this FY '22? Or have you shared that?

FY '22 is already -- and so we have a ferro alloys expansion. We have coal mine expansion and definitely certain spending on the second project. And then we are going for the [indiscernible] hydro power project. So these are the 4 expansions which have already been taken up.

[Operator Instructions] The next question is from the line of [ Venda Khandelwal ] from [ Dash ] Investments.

Yes. I have 2 questions. The first one is do you believe there will be financial viability for coal mines at around 66% premium? So will that be value-accretive? Secondly, what are your debt reduction plans over the next 2 years?

Yes. Coal mine is definitely value-accretive. In the given scenario, this is exiting of operating mine. It was earlier operated by us only and because of that, our cost of acquisition, we were already hanging the [ land back end ], et cetera. Everything -- cost of that acquisition is lower for us. It is both -- we just -- both on ground and underground, open cast and underground. So this is definitely a value-accretive mine. And this also gives us -- do the commercial -- this is a commercial mine, not a captive one. It has got huge [indiscernible]. As compared to the present permitted capacity of 1.2 million, I think we have expected rates of more than 140 million tonnes. So that way, it's a very good mine and located at a very strategic location surrounded by many power plants. Second, so far as debt reduction is concerned, as I told, we have planned up the expansions. Whatever is left out after meeting the -- our expansion projects will definitely go for the debt repayment.

The next question is from the line of [ Niraj Mansingka ] from [ Brightlines ] Investment Management.

Yes. I want to know the CapEx that you have planned, whatever CapEx you planned. Can you give the quantum of that in amounts to be spent over the next 3, 4 years for each project?

As already communicated the this is -- which got CapEx is about INR 135 crores. Then hydro power project will be about INR 250 crores. Then coal mine project will be somewhere about between INR 400 crores to INR 500 crores over a period of next 4, 5 years. And these are the 3 major projects which we have taken up.

Okay. And sir, this coal project of INR 450 crores, this will be mostly the [ sharp decline ]?

This includes both the coal mines.

Okay. And the other question is, sir, iron ore capacity that we have mined is 1.5 million tonnes, but I know grinding capacity you have at [indiscernible]. Can you throw some light on that for your plan to increase that capacity and...

I couldn't get your point.

So I know pellet capacity is 8 lakh tonnes and I know that mining is 1.5 million tonnes. So is it fully [ dependent on ] mining? Or is it the pellet can be increased for the [ fund ]?

Sir, as you know, this is a low-grade mine. We are sizing around 25% of our requirements from our iron ore mine captively, whereas 50%, 55%, we take -- we procure from outside, right? So that is why this is scenario that you just asked. I think if I am able to answer your...

I understand. Basically, what you're saying is to look for the entirety of unit capacity until that you won't need the more mining capacity on the [indiscernible]. Is it right to assume that?

Sorry, your voice was breaking. I think so. Can you come again?

What I was asking is do you see in short-term future in, say, next 3, 4 years, you're increasing the capacity of iron ore mining in the Chhatisgarh?

No. I mean, maybe 10% to 15%. Jain?

Really, from this mine, but if we [indiscernible] other mine, definitely it will increase then.

Okay. And last question on the -- some mining royalties. NMDC has been -- there's a possibility of NMDC royalty increase in Karnataka. So do you see any impact on the royalty payments that you'll have to do for your mining activity?

No. Royalty is fixed one. Both captive projects, there is no change in the royalty.

The next question is from the line of [ Jason Shah ] from [indiscernible] Asset Management.

Yes. Sir, my question has been answered.

The next question is from the line of [ Mohit Jain ] from [ JT Paper ] Products.

Yes. I just wanted to know regarding the power project, total project is completed. So do you have any, what do you say, income this quarter, for Q1 I mean to say?

Not materially. We may get some but not materially.

Okay. You mean to say only Q2 -- from Q2 we'll be getting?

Yes. We will get some income but not much.

Okay. And same quarter also?

No, not in this quarter. Second quarter, we'll be operating fully. This is normal of [ fee income ].

The next question is from the line of [ Amit Shankar ] from RBL Bank.

Good to see a strong Q4 performance. I have 2 very specific questions. First, on the Sikkim projects. So just to confirm that, as you mentioned, the tariff is still to be determined, but the PPA is signed, right? There is no operational delay in any of the section signing in the period.

Yes.

I mean nothing is pending on the PPA, right?

Nothing is pending. Nothing is pending.

Okay. And what was the cost -- if there was any, then what was the cost overrun for the Sikkim project?

Pardon?

The cost overrun, if there was any.

There is.

Sir, what was the total quantum of the cost overrun for the Sikkim Hydro project?

Now the completion cost will be somewhere about INR 1,600 crores.

Sir, but was it higher than the initial estimated cost? I'm sorry if that question was already answered. But was the initial estimate lower than INR 1,600 crores? Or is it in line with the estimate?

Initial estimate was lower than that. There have been 2 revisions because of time delays, because of geological conditions [indiscernible].

Hello? Am I audible?

Yes, you're audible.

So just -- I want to clarify that initially, this was a 96-megawatt project and now it is actually at 113 megawatts. So that also we have to factor in.

Sure. Understood. My second question is on your expansion for pellet and billet and wire rod, as you have put in your presentation. So what is the corresponding debt that you have added or you would be adding corresponding to these expansions?

No addition. Water pellet expansion is there. That was based on the basically available capacity but effective utilization of that capacity. There is no -- and there is no further borrowing. Water has been expanded. That is already there in the balance sheet.

Okay. So -- but you have any -- but you have some expansion for metal and alloy segment as well, right.

Yes.

So that I wanted to know what will be the corresponding debt number that will be added corresponding to the metals and alloy expansion.

That will be the -- appropriate call will be taken, depending upon our [ juxtapositions ]. But there won't be any level -- addition from this level present well because there are repayments also, even if loan is taken and that will -- the overall debt is not going to increase on that account because the repayments are also going out.

Okay. So in summary, the estimate is not available right now, but overall, you are saying that there will be no major addition to the debt, right, if I understand you correctly?

It will go down based on the present projects and based on the present earnings, that will reduce from this level.

[Operator Instructions] The next question is from the line of [ Ansuman Mata ] from [indiscernible] Technologies.

Congratulations for a great set of numbers. What is -- sir, what is the realization price we are -- can we achieve for iron ore pellets for this quarter and the quarters ahead? Because as the prices are very high and average price realized by us is around 11,000.

Yes. Projecting for the next quarter will be very difficult because of the volatility. It's very difficult to give any number, but currently -- current quarter will definitely be higher -- substantially high from the -- what we achieved in the last quarter.

Okay. And sir, going ahead, the volatility, at what prices do we see the prices stabilizing in the near term or some time in the future?

Manish?

Yes. I think we have entered a bullish metal cotton commodity cycle. But the prices which we saw 15 days ago were quite high. And right now, we are seeing a stabilizing pricing mechanism, which will be in play. But India will continue to export, and India's domestic demand will also be strong. So I think more or less, we'll see a bit of softening, and then we'll see a stabilized pricing for all products. And it looks, in the near term, for the next 6 months, the market looks to be quite bullish. On the back of raw material prices also and on the back of international freights, if you have all the freight prices, crude prices, commodity prices, whether energy prices, coal, coke, coking coal, everything has gone up.

So there's one question. Like everything is going up. So the international demand is there. What if the inflation rises internationally? And like what are the themes for that.

So we've seen that the curbs have been put in place in China. And from $255-odd, iron ore slipped to around $200 right now. We expect that iron ore to stabilize if you look at the futures also. In Shanghai futures, if you look at it, it's hovering at around USD 160 and USD 175, depending upon the grade of the iron ore that they are going to import. So futures also tell us quite a bit of story. So we are expecting it to stabilize at around $175-odd. If crude remains about $35, I think the freight markets are not going to go down. And here, as you know, as a large energy importer, we'll have to continuously import coal. There's a back of raw material pricing as well as domestic and export demand. We, as a group look at it, that the next 6 months will be quite stable and quite strong from the steel and alloyed products that we are into.

Correct, correct, correct. And what about coking coal? Coking coal prices also will remain...

So coking coal prices have been the most subdued in the entire steel DNA raw material chain. If you look at it, it was hovering at around $116-odd. And then on the back of crude, freight and seasonal problems in Australia, it has moved up to $135, $140-odd. But as long as it's under $160-odd, I think beyond that, coking coal will not be rising up because China's demand has been curtailing, and they have been trying to utilize their own coking coal in a major, big way. And Colombia has -- is a good producer of coking coal. Their coking coal is also being exported in global markets now.

So you said 1-6-0, 160?

Yes.

1-6-0. Okay.

Yes. So coking coal prices, if they are around those levels, $140, $160 levels, I think that should be fair for the next 3, 4 months.

Currently, it's at $130, $140 levels.

Yes. Currently, it is hovering at around $130 to $140 levels.

$130 to $140. Okay, okay, okay. So if coking coal prices rise, then -- and if iron ore stabilizes, so steel prices can further still escalate because of raw material getting [ nearer ]?

It also has to be in combination with the demand internationally as well as domestic. All the steel prices have to be on the backbone of the raw material price increase as well as the demand scenario in domestic and exports as well. But there will be a bit of scope of price rise, but I think people would like to have a stable price rather than having a quick spot and a quick fall in pricing.

And one last question regarding the gap between the prices of Indian steel as well as vis-a-vis imported steel. How long will this -- like how much and how long will there be a major gap, which has been seen currently?

So the major gap which you are seeing basically is in Finnish products. If you look at it, there is a gap, and this is basically because of the supply restriction and supply disruption that has happened in a few parts of the world. Like Spain is a large producer. Germany is a big producer of good-quality steel. But there have been supply issues in terms of raw material there and also in terms of production facilities. So we have seen a lot of curtailment and a lot of production hampering happening in global parts of the world. And that is why if you look at India's export, which has gone up quite significantly, that has happened because Indian products are cheaper compared to Chinese, and the quality is also highly regarded in the international markets. I personally feel that for the next at least 3 months, this thing is going to go on. The difference between the international pricing of Chinese products than our products are going to be clear. We will always be a little lower than their pricing. And that's good. As a country, it should be good also because we are more price competitive.

Yes, yes, yes. And you said due to supply constraints from Spain and Germany, is it because of COVID or some other aspects?

COVID has definitely played a big role. COVID has definitely played a big role.

Okay. Okay. And our supplies are not impacted because of COVID because we are more and more affected as compared to these countries as our recovery...

So we have also faced those problems. We have also faced shutdowns. We have also stopped our plants. We have also had supply disruptions. We also had logistics issues. But we -- the plants in India, I think, were quite aware and quite forward-looking in terms of taking precautions and taking issues at hand. That's why the industrial activities continues to happen. Yes. There were issues faced by each and every plant. That [indiscernible]. Lack of oxygen is also there. It's also there. So everybody is trying to manage. See, a lot of people who have integrated their plants with newer technologies. Like, for example, I'll tell you, in ferro alloys, people have adopted drilling. So where drilling is there in bigger plants and larger furnaces, what is happening is that the oxygen requirement goes lower. And the old plants, which are there in the country, which are traditional plants, their requirement is quite higher for oxygen. So they have lost production.

More and more. And what is the traditional, [ 30 ] years?

Yes, yes, yes.

The next question is from the line of [indiscernible].

Yes. While most of my questions have been answered, the only 2 questions are there. First is, because I've joined late because of some issues, can you tell me how much -- when is the Gare Palma will be operational? And I believe this message has been answered, but actually -- and what will be the cost-saving [ for them ] afterwards?

So we'll be trying to start Gare Palma in the next quarter.

Okay. And savings per tonne, sir? And what will be the saving per tonne? This is for my...

Savings per tonne would be INR 900 to INR 1,000 a tonne.

The next question is from the line of [indiscernible] from [ Keynote ] Capital.

Firstly, congratulations on the very strong performance for the last quarter. I have a question which relates to sort of the strategy of the company, especially in regard to the hydro power business. Now I think you've already got 50 megawatts of hydro power operational plus your implemented the 113 megawatts. Going forward, are there thoughts around segregating this business from the existing business cost metals within the group? Or do you sort of in the near term look at having this as a part of the same entity? And any thoughts around that? My second question is more relating to the Sikkim Hydro Power project. Do we have any taxation benefits in the Sikkim Hydro Power project? These are my 2 questions.

So far as your first question is concerned, that will be evaluated at the appropriate time once the largest plant of 113-megawatt [indiscernible] and it is refinanced definitely, then we will evaluate the pros and cons, and at the appropriate time, if it is considered to be appropriate, then the hydro business may be -- become into a separate entity. And so far as second question is concerned, second question [indiscernible] tax benefit, there is no special tax benefit for this hydro power project.

The next question is from the line of [indiscernible] from [ SSB and Company ].

Yes. And sir, my question is regarding consolidated cash flow. So there is an outflow of around INR 147 crores, loans and advances and other assets. Can you just throw some light on this, to whom this INR 147 crores have been given?

No, that includes [indiscernible] also. If you see the balance sheet, it's about -- there's no [indiscernible]. That's specific because we will provide you offline, but the advance has been for the procurement raw material also. In the given situation, we have given certain advantage for procurement of iron ore [indiscernible].

So we -- I mean, is it to secure raw material or we are gaining money earlier and getting it at a lower price?

We request the participants to please stay connected as the lines of the [indiscernible] are disconnected. [Technical Difficulty]

Sir, my question was that if you have given money as advance for raw material, is it to secure the raw material? Or by giving money in advance, we are getting some at lower price?

No, basically to secure the raw material, not the low price [indiscernible], et cetera. You have to provide an advance [ that way ]. So securing [indiscernible], some advances were given [indiscernible] of about INR 50 crores. If you see the consolidated balance sheet, it increased year-over-year to about INR 50 crores.

Yes, but the cash flows are showing INR 147 crores. So that's why the question. Sir, my second question is how much is our normal maintenance CapEx per year on an average?

Normal CapEx?

Yes, maintenance CapEx.

Normal maintenance CapEx, you can assume it's [ probably ] INR 50 crores.

The next question is from the line of [indiscernible] from [indiscernible].

Congratulations on a great set of numbers. My question is on the ferro alloys pricing. Can you tell us what is the average realization...

[indiscernible] your audio is not [indiscernible].

Hello? Hello? Congratulations on a good set of numbers. Real question on the ferro alloys pricing. On television yesterday, Padam Jain said that the average realization for silicon manganese was INR 91,000 per metric tonne. Could you tell us what was the average realization over the last quarter, Q4?

Last quarter, it was INR 66,500. It's given in our presentation also. [indiscernible] INR 90,000 a tonne.

Second question was we have some other -- we have some manganese ore mines which were allotted to us by the MP government. Any progress on the exploration of those mines? Or are those closed like our iron ore mines?

No, no, no. There is none. This is -- all pending cases have been closed.

The next question is from the line of [indiscernible], an individual investor.

I have a couple of questions on your Sikkim plant and diversification plan. I was noticing that the Sikkim plant was initially expected to be started by December '20, then deadline was even in Jan than March then May. So just wanted to understand what has caused the delays and how much confident you are to start commercializing it in June.

COVID has definitely affected our operations. That is one of the regions is nonavailability of the foreign equipment supply technicians. Those things have been happened because in last one year, there have been COVID issues, [indiscernible] has been very, very fringe in these matters about the entry and exit of the [indiscernible]. And in this already informed, we have completed the project. The plant has been synchronized with a great generation. At second place, those have been paid. Now commercial operation, before that commercial operation, after synchronization, whatever small shortcomings were how not those are being attended, but as again told because of all these rates are now coming a bit of the European technicians and all those things. So it is taking a little bit longer time than what we expected, but now it has already been commissioned [ pace ] generated the power.

Sir, just to expand this question. Synchronization took place on 22nd of April. So it's already been more than 30 days. And now new deadline is for June. I'm just curious because, as you mentioned, Q2 and Q3 is a major revenue portion for this new line. So if there is an expected delay, we will be losing on the Q2 earnings. So that is my only concern, if you can address that.

No. This will be commissioned in June, in the present.

Okay. Any idea, first half or second half?

Giving in a specific time frame within COVID scenario, it's very difficult because we are working in a very, very different situation.

So what exactly is left to the commercialize [indiscernible] question. But what exactly is left to commercialize the project?

Pardon?

What steps are there left to commercialize the project since the synchronization is already [indiscernible] 1 month back?

Jain, can I -- I will answer this question. See, we have done all the testings and everything, and the grid synchronization has already happened. See, because of the various lockdowns in different parts of the world, also domestically, we are seeing a lot of issues in terms of movement of goods, materials, manpower, everything which has happened over the last 3, 4 months. Now the international flights are also not operating. There is a procedure of commercial operations or commercial production to start off, and we are already ready with that. To give a very definite answer to that will be very difficult. But as Mr. Jain has already mentioned that in June, we are doing it. So that will be in the month of June that we are going to do it. We're just waiting -- we are just waiting because we don't want to commit something right now for that month, like first half or second half. It's very difficult.

And second question would be on the diversification plan. I understand the value of having annuity-based revenue stream. Just would like to have your thoughts on if you have a solar power plant in your plan going ahead because there are a lot of power plants, hydro plants in your pipeline.

We have a 2-megawatt solar plant, but it is not in this company. We have a very small solar plant [indiscernible] 100-kilowatt 2 solar plants, very negligible in terms of solar generation.

Okay. Sir, my last question would be I heard that you are planning to invest in coal plants going ahead. I notice that the industry is going a structural change where the big players are moving to green hydrogen going forward. So probably in the next 10 years or 15 years, there will be a thing to do. So is -- a company while taking a decision on the next acquisition of coal plant, are we going to consider that as a scenario for a future perspective?

As of now, we'll be diverting a lot of coal to our captive power plants, which are -- which burns coal as a fuel. So we'll be reducing our import of coal to these plants, to responder and everything, and we'll try to mitigate those quantities from our existing coal mines.

The next question is from the line of [indiscernible] from [indiscernible] Investment Management.

Sir, just a small observation that the revenues for the power jumped up on a quarter-on-quarter scale, and you consolidated from INR 54 crores to INR 179 crores. Any specific reason that -- was there some one-off or something that because the EBIT numbers did not change much.

Can you repeat your question? There was a distortion in the voice.

Sir, the revenues in the power plant business segment went up from INR 54 crores to INR 179 crores on a quarter-on-quarter scale from December to March. But the EBIT hasn't changed. In fact, EBIT is lower. So any specific reason why the revenues were higher, but they're not so -- flowed down to the EBIT numbers?

Yes. The reason is that whatever debt is cost and revenue includes a captive consumption of the power, which is transferred as cost. Actually, we are generating only from hydro power activity, whereas the power business includes the captive transfer of the power generated because sometimes we sell thermal power also small quantity. That's why thermal power is a separate segment. But mostly, thermal power is captively consumed data. The power revenue includes the capital transfer of power, which does not have any profit on that. That is the only reason for this.

Okay, okay. But sir, just a observation that the production of thermal power was higher by only 10% on a quarter-on-quarter scale. But the revenue reported are higher by more than 2x.

What's the question? The offline will [indiscernible].

The next question is from the line of [indiscernible] from [indiscernible] Investments.

Yes. And firstly, I would like to congratulate the entire team of Sarda for delivering such a good Q4 number. I have 2 questions. Firstly, I wanted to understand what is the total captive requirement of coal at company level in Sarda. And secondly, what is the reduction in cost of debt that we expect after commissioning of hydro project in June?

Our captive requirement of coal is about -- [ average ] tonnes in Raipur. And totally, if we consider both of the Raipur and Chhatisgarh, it is more than 1.2 million tonnes. You have a second question?

Secondly, I wanted to understand what is the reduction in cost of debt for the hydro project that we expect after commissioning in June?

It will be quite substantial. It should be -- giving definite number will be very difficult, but it will be very, very substantial. It would be somewhere about 4%.

4%. Right now, what is our cost of debt there?

Cost of debt is the -- more than 12%.

The next question is from the line of [indiscernible], an individual investor.

Just one question. So you mentioned that our maintenance CapEx currently is around INR 30 crores per annum. And once the hydro power plant commissions, what will be the additional maintenance CapEx per annum?

No. That does not materially affect because in hydro power projects, generally, there is not much of that a maintenance CapEx is.

The next question is from the line of Abhishek Maheshwari from [indiscernible] Wealth Management.

I have one question regarding your debt repayment plan. So how much debt do you expect to repay the year?

It's briefly in our initial address. Our [indiscernible] is INR 113 crores in the current year.

Okay. And going forward, we can expect this [indiscernible]?

It is slightly more, but depends upon our cash flow position and the accessibility of the prepayment by the lenders. All those things are there.

Okay. And lastly, do you expect to take any further debt for any future OpEx expense?

We don't. Based on the present material CapEx that we have already approved, overall debt position will not go from the present level up.

The next question is from the line of [indiscernible] from [indiscernible].

Yes. I would just like to [ reiterate ] that same question, which as for the Sikkim plant. Sikkim plant, approximately how many units? And as you told, June, April mostly be synchronized. So how much extra units we'll be getting from the second quarter?

Pardon? Can you repeat?

How much million units can we get extra from the June, the second quarter from the Sikkim, which is already [indiscernible], and maybe in June, it will be totally operated.

Now giving the generation for the month-on-month will be very difficult. This is a seasonal and depends upon the rainfall then spread of the rainfall. There are multiple factors. It is not a stable product center giving the monthly or the small period of generation. It's not possible in the hydro power generation. We have to take the well generation basis. And maximum as we already told peak generation in the second quarter. The third quarter is a little less than that. And fourth and first quarter is very minimal. This is the general trend of the hydro power project. But sometimes if [indiscernible], there is a rainfall in off-season also some -- then it depends on the spread also, spread of the rainfall. If there is last year spread raining spread over a longer time, then there is a much more generation of spread. Spread is not there, all the rainfall is there, but the spread is there over a period of time then. So this is basically depends on the late so giving the specific number, as already told our general -- we are considering 50% of PLS that project should achieve within a year within -- for the year, on average, it is somewhere about 50%.

Okay. And can we expect the same kind of results what you have given in the last quarter for this quarter on approximately, not exactly?

Could be because the market conditions are more condition are favorable. So there is no reason result the current quarter should definitely be better than what we have seen.

Y-o-Y basis?

Y-o-Y, this is -- we're talking about the quarter. For the -- you're talking about the current quarter, no?

Yes, current quarter. April, May, June.

Current quarter. Definitely, Q-on-Q also should be better.

That was the last question. I would now like to hand the conference over to Mr. Pankaj Sarda, Managing Director, Sarda Energy & Minerals Limited, for closing comments.

Thanks, madam, and thank you all the investors for participating in the phone call. I hope we have addressed the queries to their satisfaction. If anything is left out, anybody can always connect offline, and you all are most welcome. Thank you.

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