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

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '22 Earnings Conference Call of Sarda Energy & Minerals Limited. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Pankaj Sarda, Joint Managing Director of Sarda Energy & Minerals Limited. Thank you, and over to you, sir.

Thank you, ma'am. A very good morning, everyone. I extend a very warm welcome to all of you to the Q3 FY '22 earnings call of Sarda Energy & Minerals Limited. Our press release and investor presentation containing details of performance has been uploaded. Today's discussions 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 quarter gone by and has been a quarter of consolidation for metals industry. The company has recorded the highest-ever production of ferro alloy. From November 2021, all 5 ferro alloy production in Raipur have become fully operational, which is reflected in improved production. Full effect of this will be reflected in the current quarter. Average price realization of all products, except iron ore pellets, was better than previous quarter. Because of lower price realization from pellet and increased cost of coal and coke, operating profit from steel segment fell, which was offset by increased profitability of ferro alloys segment. We have exported 23,500 metric tonnes of ferro alloy during the quarter against 12,000 metric tonnes in Q3 FY '21. The Rongnichu Hydropower Project operated satisfactorily and generated EBITDA of around INR 52 crores during the quarter. MBPCL has received all amounts due from the customer till date. The Gare Palma IV/7 coal mine commenced operation on 14th of December 2021, 3 months ahead of time granted by the government. Production of coal started from the mine on 6th of January 2022. The company has achieved the rated capacity. The coal washery beside the mine has become operational from yesterday. This will help us in getting desired quality of coal for our manufacturing facilities and save on transportation costs. We have initiated steps to get approvals for increasing production from this mine from 1.2 million tonnes to 1.8 million tonnes. The process of approval is going on for Shahpur West gold mine in Madhya Pradesh. Auction of iron ore mines in the state of Chhattisgarh has been stayed by the honorable high court of Chhattisgarh. We are participating in the auction process of iron ore mines. Work on the ferro alloy expansion project at Vizag is progressing well, and the third furnace is expected to be operational ahead of scheduled commissioning time line of March 2023. Construction work at 25-megawatt Rehar Hydropower Project has started and progressing smoothly. We expect to complete the project before end of FY '24, '25. Mr. P.K. Jainji will brief about financial performance and position of the company.

Thanks, Pankajji. The company has achieved the highest-ever consolidated revenue for the 9 months ended December 2021, amounting to INR 2,833 crores. We have achieved consolidated revenue of INR 1,000 crores during quarter 3 FY '22 against INR 1,025 crores in Q2 FY '22 and INR 604 crores in Q3 FY '21, which is flat quarter-on-quarter and grew by 66% year-on-year. If we remove seasonal effect of the hydropower, the revenue was better than quarter 2. The company has reported operating EBITDA of INR 322 crores during the quarter against INR 413 crores in the previous quarter and INR 236 crores in quarter 3 FY '21. The company's profit after tax at the consolidated level stood at INR 167 crores against INR 256 crores in the previous quarter and INR 116 crores in quarter 3 FY '21, resulting into an earnings per share of INR 0.46 per share for the quarter and INR 1.64 for 9 months. The fall in profitability for the quarter is mainly on account of falling profit of hydropower projects, which is seasonal in nature, and booking of mark-to-market losses as against mark-to-market gain booked in the quarter 2. Debt position. At the stand-alone level, the company continues to be debt-free. As on 31st December, gross debt stood at below INR 1,600 crores. The total debt, net of cash and liquid investments is today INR 1,200 crores approximate and net loans after loans given is about INR 800 crores. Loans repayable within next 1 year is INR 150 crores. Ongoing CapEx, including for coal mines, have been financed from the internal accruals. Madhya Bharat Power Corporation Limited has prepaid loan of about INR 114 crores in the current quarter. Our dialogue with lenders is in advanced stage for refinancing of the loan taken for 113-megawatt hydropower project. We expect to complete the refinance or renegotiation of the terms of the loan with the existing lenders in the current quarter. External credit rating of Madhya Bharat Power Corporation Limited is also under review, and we expect a substantial upgrade very soon. Now I request Shri Manish Sarda to brief about global and domestic scenario of the steel and ferro alloys and also the industry outlook.

Thanks, Mr. Jain. During calendar year 2021, India produced 118 million metric tonnes of steel against 100.3 million metric tonnes in CY '20, registering a growth of 17.8% against global growth of 3.7% and degrowth of 3% in China. Japan and India recorded highest growth for 2021 in the range of 18%. India exported 3.74 million metric tonnes of steel in this quarter against 5.99 million metric tonnes in quarter 2 and 2.84 million metric tonnes in quarter 3 of '21. All-in exports was offset by increased domestic consumption. The apparent consumption was up from 24.7 million metric tonnes to 26.96 million metric tonnes quarter-on-quarter, but fell year-on-year from 28.2 million metric tonnes. China steel production was falling month-on-month from April 21, 103.9 million metric tonnes to 69.3 million metric tonnes in November 21. However, it has recorded positive growth in December. China's share in global production has fallen from 56.5% in April to 52.95% in December, whereas India's share has gone up from 5.76% to 6.1%. In view of Winter Olympics, production cut is expected to continue in China to contain emissions. India exported 619,000 of ferro alloys during the quarter against 56.3K in quarter 2 and 38.3K in quarter 3 FY '21 in December. The country recorded sharp rise and exposed to 241,000 metric tonnes. Overall outlook after correction in Q3, prices of iron ore and ferro started rising again on the back of demand from China. Price of coal and coke is also going up after export restrictions imposed by Indonesia and coal production in South Africa. Prices of fertilizer are also moving up due to increased prices of energy. So it will affect the overall supply and move the prices over. Our Gare Palma IV/7 coal block has started operation. Total production from our mine will provide much needed hedge to the company against price volatility and substantial savings in the fuel cost and also additional revenue from sale of surplus coal. The increased domestic consumption and stable export demand has balanced domestic demand supply of steel and ferro alloys, which should enable capacity utilization and improved pricing. This is also -- this is all about the performance and outlook. Now we leave the forum open for questions from the participants. We thank all investors who have spared time to attend this investor call organized by the company. We have tried to reply to your queries. In case any of the questions remain answered or for any further inquiries, investors can always reach to the company or our IR team. The [ guidance ] are given in the investor presentation filed with the stock exchanges. Thanks once again for sparing your valuable time. Thank you.

We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Yash Agarwal from JM Financial.

Yes. Just wanted to understand what has been the quantum of the rise in budgets in sponge iron in the month of January, February after the close of the third quarter. And this is mainly led by increase in production in China. How sustainable do you think it could be?

You are asking about the prices?

Yes. About the prices in the month of January, February.

Manishji?

Yes.

I just wanted to know what has been the quantum of increase in prices of [indiscernible] online in January and February. And this is led by the export market primarily? Or it's more going to stay at that level?

So the exact quantum, I won't be able to tell you right now. But there has been an increase because of the domestic demand, also because of the export demand which is there from China. As we have seen that the iron ore supplies have been restricted from Brazil because of weather issues and also from Australia because of weather issues. And we foresee that the pellet prices and iron ore prices will remain firm once the winter wind picks over and once China is back from their holiday period.

And so coal -- at the moment, how much of the coal are we outsourcing and the after the Kolkata operation, will it be completely captive or that is...

Sorry to interrupt you, Mr. Agarwal. Your voice is not very clear. I would just request you to check your phone line and repeat your question as well.

Am I clear now?

Slightly unclear, sir. Please come on the handset mode, if you are on speaker.

Yes. No, no. I'm on the handset mode only. So yes, my question was that how much of the coal are we going to be buying from the outside market after the coal is back in the operation? So far, they've become pretty competitive.

On the Vizag plant, definitely, we'll be buying because we are sitting on the port there. But for Raipur, the RB1 and RB2, the South African coal that we are buying, once our washeries had started yesterday. So definitely, the purchase will fall down by almost 50%.

Got it. Got it. And I had one bookkeeping question. So what is the EBITDA from the hydropower unit in the 9 months?

EBITDA is about INR 154 crores.

INR 154 crores. Okay. Got it.

[Operator Instructions] The next question is from the line of Subham Agarwal from Aequitas.

Good morning to the entire team of Sarda Energy. Sir, first of all, my question is related to the single division.

Mr. Agarwal, I'm sorry to interrupt. Can you please speak on the handset mode, sir?

I'm on the handset mode.

Okay. Come closer to the phone then. Your line is fluctuating, that's why, sir.

Can you hear me now?

We can hear you. Go ahead.

Okay. I'll go ahead. Sir, my first question was related to the Steel division. If we see the total production of sellers till now, we have done close to 5 lakhs 80,000. And our EP is close to 8 lakhs tonnes. So my question is, will we be able to reach our full capacity in Q4?

Maybe marginally lower than that. That is the total upper limit of 8 lakh tonnes. We should be able to produce somewhere between 7.5 to 8 lakh tonnes. I mean 7.5 quarterly, but it will be -- it is the upper limit.

Okay. Okay. Got it. And sir, secondly, my question was, in general, I wanted to understand how will our spreads grow from here onwards because now we are seeing increasing realization across our value chain and secondly, now fuel cost has also gone down. So how do the spreads growing around -- Q-on-Q?

Your voice is getting train in between. You have to repeat your question. There is some disturbance.

Can you hear me now? [indiscernible] all system.

Your voice is getting cracked.

Okay. Okay. I'm sorry, once again. Yes. So my question was regarding the spread in the steel business. Given that realizations have started, increasing and our coal costs have also reduced because of the coal. So how do we see the spread going ahead Q-on-Q?

No. Whatever incremental benefit will be there on account of the coal, that will be accruing to the company. You have too consumptions there, definitely.

[Operator Instructions] The next question is from the line of [ Madripoor ], a shareholder.

So what is -- congratulations for very good results, sir. The cost of imported coal is how much? And what is the quantity post of mined coal -- local coal is how much and what is the quantity?

In the cost of imported coal, it has crossed INR 15,000 a tonne. Yes, export. That is export, plus INR 2,000 is transportation cost.

So INR 17,000?

INR 17,000-plus. Yes.

And what is the quantity imported?

So the quantity imported, so it will go down now. So we were almost around 500,000, 0.5 million to 0.4 million we were importing for our Raipur plant. So we expect to reduce it by 50% immediately.

1-5, 15%.

50, 5-0.

5-0, okay.

Yes.

Very good. And what is the mine cost, local cost?

So it is index-based, sir. So depending on the quality of the grade that comes out of the mine. So there is an index on that basis. So it depends. The index fluctuates from monthly. Every month, the new prices come in the index depending on the rates of imported coal and the SCCL or CIL coal, and they have a formula. It's a formula-based index. So based on that index, the rate of the coal, the grade of the coal and the price.

What was our grade of the coal? What was the parallel value last quarter?

Currently, our grade of coal is around G14 to G12 grade of coal. And based on the index, it comes to around INR 1,800 to INR 2,200.

INR 2,000 per tonne?

Per tonne and plus your sales plus GST.

Then it comes to how much, total?

Plus transportation also, sir.

So maybe how much roughly?

There are a variety of grades. It will be very difficult to specify because we are producing G12, G14, G17 then washing upgrades. There are multiples. So giving any specific number on the pricing will be very difficult.

Give a range, sir. Give a range or average. So then how much?

It will sell between INR 4,000 to INR 7,000 depending upon the quality.

But then our quality of the G17 is how much kilocalories per kg?

That is specified by the Coal India Limited. You can verify. That is specified.

Okay. Very good. And Coal India is now selling the coal produced by Coal India on auction basis or on the [ margins ]?

It has long-term linkage also, sir. 5 years long-term linkage is also available, which they come from time to time. You can block your coal in that it's an auction process. And they come out with these productions also.

Coal auction also are transparent?

Yes.

Because the way the prices have risen, we feel corruption in Coal India -- we fear rather, not we feel. We fear corruption. So the better thing is that they auction it.

I don't have any comments regarding your statement.

[Operator Instructions] The next question is from the line of Aman Madrecha from Augmenta Research.

Actually, sir, I have 2 questions. As available from the results, the realizations have increased. So how are you looking at the demand on the ferro alloys front? Like is there any actual demand going on? And like are we expecting that this demand to continue going forward in Q4 of this year and see one next year as well?

Manishji.

Demand -- on demand front, we are finding very good demand for the product, and that is the reason why the prices are moving up. And we don't foresee in the near future any fall in the prices, at least in the near future.

And sir, and what about in the steel segment, like what is the demand outlook on the sales? Like are we witnessing any slowdown of demand on that side? Or is it just the same or just a quarter thing and the demand would again be back based on the order book currently?

No. Now what you will see is that almost in all the states, the COVID situation is improving. And thus, all the construction activities are again -- all the projects have started. So we see a pickup in demand in the coming future. Also the coal and coke prices that has become, I mean, we don't see any reduction in prices also.

So you are not seeing any reduction in the raw material price side right away on the coal so far?

On the coal and coke front, the prices looked very robust and increasing.

Okay. So all in all, we can expect like a good quarter for ferro alloys and like a good Q4 for ferro alloys as well?

Should be.

The next question is from the line of Jayesh Parekh from JMP Capital.

Sir, I need one small clarification. In budget, it was announced that all the antidumping duty on import of steel and various import product has been totally removed. Will this have any impact on our finished sales of billet for wire rods or wires?

It will not have any impact. In fact, in the budget, they have also mentioned that these scrap duties will -- they are extending it by another 1 year. The scrap imports, they are extending it for another 1 year. What they have removed is for the stainless steel sector.

Okay. Okay. So it will not have any impact according to you, right?

For any alloy steel production products and stainless steel products, they're not affected. Yes, it doesn't impact that in particular.

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

So my question is on the Sikkim hydro project. So you have mentioned that you have started repaying it, sir. So it's good to review numbers. Like how much you have we paid and what is your plan going forward?

No. We have prepaid amount of about INR 115 crores. It is stated in our initial address. And maybe the amount we sell you is about INR 7 crores, INR 8 crores. So total about INR 120 crores of the amount we have prepaid in the current quarter.

Okay. So how is your plan like going forward, like...

No. We are in the process of refinancing the debt from the new lenders or maybe after negotiation with the existing lenders. If rates are reduced, that is also possibility that negotiation is going on. And that will be closed before end of the current quarter.

The next question is from the line [ Nagesh Reghunath ] from [ NRS Family Office ].

Congratulations on an outstanding quarter. I have 2 questions. When I go through your margins quarter-on-quarter, I see substantial fluctuation between quarter 1 to quarter 3 from a 28.4% to 34% to 22.5% in PBT as well as equal fluctuation in PAT. My first question, why there's such a fluctuation in your profit margin? And the second question is what kind of a profit margin one can actually look for going forward?

You see there have been price fluctuations in a very wide range both in the finished goods as well as raw material. Yes, finished goods, you see the pellet had gone up to 18,000 to 9,000. Then as you can see the coal, coal has gone up from 7,000 to 18,000. So when the prices of the raw material and finished goods both are fluctuating in a wider range, the margin percentage are bounded to fluctuate in a wider range. And giving outlook, whatever we could say we have already given in our address. It will be very difficult to give any further guidance in that matter because market is volatile.

I respect it. But would you have some kind of a broad range from quarter 4 to next year? Would you have some kind of a broad range?

No. In the present market conditions, the prices of the raw materials are also fluctuating in a wider range. And the China fixed rates have become a very vital aspect. When China imports in a bigger way, then price is fluctuating at much larger level. So giving outlook, specific figures will be very difficult. Overall scenario, whatever we could say on the outlook has already been given in our address.

Understand. I understand. Can I ask one more question? When I look at your quarter-on-quarter revenue, the quarter 3 revenue was substantially lower than quarter 2. Could there be any reason?

Yes. There, we have told you in the second quarter, one aspect was hydropower generation is at its peak in second quarter. Marginally, the revenue is marginally lower. That is only on account of debt. Otherwise, marginal is not -- revenue is not lower much. If you see our revenue in the second quarter was INR 1,025 crores and in third quarter, it is INR 999 crores, almost INR 1,000 crores. It's hardly a INR 25 crores of difference between -- mainly on account of the hydro revenue. Otherwise, third quarter revenue is higher than the second quarter.

And what could be the projections for quarter 4? And in terms of revenue, what can we expect?

It should be in line. I think second and third quarter, if it is in the range of INR 1,000 crores, it should fall in line.

The next question is from the line of [ Ketan Shah ] from [ Abacus Asset Manager ].

Congratulations on a good set of numbers. Just a small clarification on a net debt data. Sir, you mentioned INR 1,200 crores. Have I heard it right?

Yes, yes. Correct.

Yes. So about INR 1,600-odd is a consolidated debt and roughly INR 400 crores is the cash in the book. That's the right understanding, correct, sir?

Less the investments.

[Operator Instructions] The next question is from the line of [ Rajesh Munari ], an individual investor.

Hello.

Yes, please. Yes, sir. Please go ahead.

Congratulations for the good results.

Thank you.

Sir, I wanted to know, I have 2, 3 small points. One is the demand for ferro alloys for the fourth quarter and the first quarter of FY '23. That is one. And the other one, since we are going into the production of the coal, then the cost, the difference would be around INR 10,000 per tonne for at least the Raipur plant. So if we see that, will there be a saving of INR 200 crores per annum on the coal itself if the prices remain the same?

Sir, regarding coal, what we are producing, what we are getting from the coal mine is around G12-G14 grade.

Yes, sir. Yes, sir.

Again, it cannot be compared with the high-grade coal that comes from South Africa.

Yes, yes. [Foreign Language] So you will be upgrading it.

[Foreign Language] You have to understand. So the RB1-, RB2-, RB3-grade coal is being used in sponge iron, whereas the G5-, G14-grade coal is being used for all the power plants for [ capital ] power plants. So after upgradation also, we can upgrade it. So that can be used, but we cannot eliminate the use of...

The imported coal.

Absolutely.

[Foreign Language]

Should be. Should be.

[Foreign Language] Coke prices are now stable and it has slightly come down.

No, sir. In fact, last week, further, there has been an increase of INR 500 a tonne. So almost it is going above INR 45,000 a tonne.

[Foreign Language]

Now consumption coke is there in ferro alloys plants only. So now, 50% of our FC requirement comes from coke. So [Foreign Language] That's why we told also that the prices of ferro alloys doesn't look like it will go down. Steel products, it doesn't look like that will go down in the coming quarter.

[Foreign Language] Sir, in fact, after Q2 to Q3, ferro alloys prices still impact, so the realization has been better, has a better OpEx?

Yes.

So are they approximately case range in a ferro alloys [ RII ] sir?

[Foreign Language]

But sir, [Foreign Language]

[Foreign Language] It was not realization.

Okay. But then of the production cost [Foreign Language].

Production cost was volatile at the time. [Foreign Language]

[Foreign Language]

It will be very difficult to give because it's [indiscernible] and that will create confusion only.

Confusion. Okay. Okay. Okay, sir. Okay, sir, mark-to-market losses can open, sir, on currency?

[Foreign Language]

Okay. This is notional, basically?

Totally notional. December was product equity market downturn. So some prices for the current [Foreign Language] notional entry. That is not an actual loss.

This is [indiscernible]. So in general, Hyderabad hydropower mark-to-market losses are there? .

Yes.

So we have done better than Q2?

Yes, yes.

Because market has not taken it favorably, maybe they couldn't understand it. Or, sir, market may flow...

I'm sorry to interrupt you, Mr. [ Munari ]. I would request you to rejoin the queue for follow-up questions as we have several others waiting for their turn as well. Thank you. The next question is from the line of Vikash Singh from PhillipCapital.

I just want to understand the price rise. As of now, we have taken to the end set of the issue.

Mr. Vikash Singh, your voice is not very clear. I'm so sorry to interrupt you. Can you please come closer?

Is it audible now?

This is better. Please go ahead.

Yes. So I just wanted to understand the price rise, which we have taken so far. Are these prices are sufficient enough to cover for the entire cost inflation which have been seen so far? Or there are still some headroom in terms of price side to manage the costs?

I can't hear you clearly.

Am I able, sir, now?

Yes. A little better.

Mr. Singh, you are inaudible. Can you speak a little closer on the phone?

Give me a second. Is this better?

It's actually the same.

Maybe some problems with my line. I'll just try and reconnect again.

Thank you, sir. That would be great. So we can hear you clearly. [Operator Instructions] The next question is from the line of [ Ketan Shah ] from [ Abacus Asset Manager ].

Yes. Sir, if I ask what Vikash was trying to understand is the price rise, which we have taken in the last couple of months are sufficient enough to take care of the cost both due to higher raw material, both coke and coal and other raw material or do we need to take some more price rise in case this raw material price prevails what it is right now? That is what I think he was trying to understand.

Yes. I think a price rise in the raw material is reasonably offset by the price rise in the finished goods. So we have been able to pass on the price rise of raw material on the finished side.

The next question is from the line of Maan Vardhan Baid from Laurel Investment Advisers.

Congratulations on a very good set of numbers. Sir, I wanted to understand, what is the CapEx that is lined up here on? And what would be the commissioning schedule for the various sort of expansion plans that we have?

No. It's already stated in our address -- our -- this ferro alloys plant in Visakhapatnam will be commissioned in the next financial year. Then our hydropower project of 25-megawatt will be commissioned in FY '24, '25. One coal mine washery had already started in this quarter. And second coal mine will take 4 years to -- between 3 to 4 years from here. These are the 3 major projects which are going on.

Okay. So on account of the coal mine and washery that have started, what would be the savings that we will generate on an annual basis, ballpark figure, given where prices are right now?

I already discussed, prices fluctuate, to be expected. It should be in the range of -- I think, EBITDA level, it should be in the range of INR 1,000 a tonne on minimum side. That should be the earning on the coal mine.

Okay. Okay. So even in the present scenario of coal prices, still the savings will get INR 1,000?

It may increase in the present scenario. But how long it will sustain and all those things.

Of course, I mean, pricing is not under anyone's control, but that's what I wanted to understand from...

We take a longer-term view because in the short term, prices may fluctuate. And presently also, fluctuation in the coal price is very strong grade of coal. Most location is on the very high grade of coal, RB1, RB2 which is used in the process industries as reductant and et cetera, not from the energy perspective. The pricing of the low-grade coal, which is used generally for the energy requirements of the power plant and other heating purposes, their price increase is not that much.

Fair enough. And on the hydropower front, since Sikkim has been commissioned this year, it's yet to see a full year revenue. So there is obviously the seasonality quarter 2 to quarter 3. Just wanted to understand the seasonality. I mean will quarter 4 be better than quarter 3? Will it be like quarter 2? Or will it be some more?

No. Quarter 4 is a little poorer than the quarter 3 because the minimum water availability is in the quarter 4.

Okay. So Q1, Q2 will be better quarters for this particular side of the business? Q3, Q4 will be weaker quarters?

No. Q2 is the best quarter, then Q3, then comes Q1 and then Q4.

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

Sir, just wanted to understand, has the price increase we have taken so far sufficient enough to meet the cost inflation? So essentially, what I'm looking at is the margin's sustainability in 4Q and going forward.

Yes, the margin shift remains sustainable in the present scenario. And We have been able to put price increase in the finished goods so far.

Understood, sir. Sir, in terms of ferro alloys plant upgradation. So given that these prices have been pretty good in terms of upgradation, we may lose out some of the volumes during a peak pricing time. So I just wanted to understand, are we still going through with our plan or we would believe and try to take advantage of the good pricing scenario?

As told in our address, we have upgraded all our ferro alloys furnaces. And all our ferro alloys furnaces are running at full capacity from November 2021.

Understood, sir. And sir, lastly, the CapEx figure, if you could give us what we have spent so far, a total yearly target and next year target?

We will -- we don't have immediately. We'll come back to you offline.

The next question is from the line of [ Madripoor ] , a shareholder.

Sir, we are manufacturing steel through spool and rope while other large manufacturers are doing it through blast furnace, which uses coke, which is very costly. What is the difference in cost of production due to coke or coal in production of one tonne of steel?

Sir, definitely, there is a huge difference in cost of production, but the end product that the large manufacturers are making is a little different than what we are making. They are making HR coils, they are making alloy steel, they are making very high grade of steel and for which the realization is also much higher.

Yes. But if you can -- just for understanding, our coal cost is very low. So spooling and roping is much cheaper than blast furnace. So what is the approximate difference in both the products?

On induction furnace route, we make MS-grade steel. And through blast furnace route, they make alloy steel and HR coils.

Very good, sir. And cost of production, if you can throw some light, if it is possible.

Both are not comparable at all. They are ultimately used again in the liquid metal manufacturing, whereas in case of blast furnace, it is a direct liquid metal. It goes to the induction furnace. So spooling cannot directly be compared with the liquid metal.

[Operator Instructions] The next question is from the line of [ Murli Sundilwal ] an individual investor.

Actually, sir, I want to understand the [indiscernible] has bought [ Milancha Spot ] at enterprise of around INR 13,000 crores. There, the capacity is around 1.1 million tonne per annum. So how do you look at this deal? Can you please throw some light on it?

It's not only the capacity of the plant, which got the value. I think there are other intangible assets. They have got certain mining rights or mines.

Yes. They have about some 100 million tonnes of for...

So valuation, I think that's the effect also. It is not only on the capacity of 1.1 million tonnes, you have to see the entirety of the assets or benefits that are getting attached with the plant.

Okay. So if you look only at the -- that capacity and if you compare to our company, then how you look at these deals? And if you compare the valuation of Sarda and that [ Milancha Spot ]?

Both are not comparable at all. They are in a different route. We are on a different route. There are different products, not at all are comparable.

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

Sir, [Foreign Language] in Gujarat is at the international market now. Are we not planning for putting any small cocoa plant [Foreign Language] second market?

[Foreign Language] For that reason, we have not yet. And requirement is also very less.

[Foreign Language]

[Foreign Language]

[Foreign Language]

Our requirement is very low. We use only in ferro alloys, not [ metal ] alloys. Well, we have a blast furnace route, they have a huge requirement of coke, and that's why [indiscernible] in coal plant.

[Foreign Language]

[Foreign Language]

[Foreign Language]

We are noting your suggestion. We'll definitely take it up.

The next question is from the line of [ Madripoor ], a shareholder.

Sir, if you have any questions later on, on what e-mail ID should we write?

We have given in our presentation. This e-mail ID is also given there on the presentation.

Same place I can write?

You can write. [indiscernible] If you see, it is there. It is mentioned.

Pardon, sir?

On the last page of the presentation, it's the details I mentioned.

Okay. I'll see that. And this is the best time you are passing through. The steel industry is passing through in the history. You can always look at bonus and extra dividend. [Foreign Language]

Sir, whatever is in the best interest of all the shareholders, we will -- I mean the Board will call accordingly.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Pankaj Sarda for closing comments.

Thanks. We thank all the investors for participating in our earnings con call. As already stated, the performance in the third quarter has been more or less in line with the second quarter, except for the hydropower business and this mark-to-market notional losses book. And as stated in the outlook, coal mines have started. Once we started, all these things will add up to our competitive advantages. And hopefully -- we are quite hopeful things will go in a better way. With this, we thank all the participants once again. If anyone has any query, they can connect on the coordinates given in our presentation or information given on the website of the stock exchanges. Any time they are welcome. Thank you.

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.