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

Good day, ladies and gentlemen, and a very warm welcome to the Sarda Energy & Minerals Limited Q4 and FY '22 Earnings Conference Call. [Operator Instructions] We have with us today on the call Mr. Neeraj Sarda, DMD, Sarda Metals and Alloys Limited; and Mr. P.K. Jain, Director Finance, Sarda Energy and Minerals Limited. I now hand the conference over to Mr. P.K. Jain to start the proceedings. Thank you and over to you, sir.

Thanks, Sameer. Good afternoon, everyone. I extend a warm welcome to all of you to the Quarter 4 FY '22 Earnings Call of Sarda Energy & Minerals Limited. Our press release and the investor presentation containing details of the performance has already been uploaded. Today's discussions may include forward-looking statements, which must be considered in conjunction with the risks that the industry in general and our business in particular and actual results may vary materially. The year gone by has been a year of consolidation for metal industry. We have achieved highest ever production of all main products, except sponge iron. In beginning of the quarter, the Gare Palma coal mine started production. Coal was -- we started production in mid of February 2022. This will provide hedge against volatility in prices of the coal. We have installed coal gasifier in pellet plant, which is environmental friendly and cost effective to meet our energy requirement for pellet plant. The war between Russia and Ukraine severely disturbed our supply of -- supply chain of commodities and energies. This resulted in rise in prices, the average price realization of all products, except iron ore pellets improved quarter-on-quarter. The 113 megawatt Sikkim Hydro Power project commenced commercial operation on 30th June 2021. In view of lean season, we had taken shutdown of the hydro power plant from 20th January 2022 for improvement of deficiencies observed during operation, so that the plant is ready to operate at full capacity consistently before onset of the monsoon. Plant has been restarted with effect from 5th April, 2022 and operating smoothly. We have exported about 26,000 metric tons of ferro alloys during the quarter against 15,000 metric tons in quarter 4 of previous year. With regard to ongoing projects, the process of approval is going on for Shahpur West Coal Mine in Madhya Pradesh. The company has moved an application for the increase in the mining permission of the Gare Palma IV/7 Coal Mine from 1.2 million metric tons to 1.68 million metric tons under the fast track roof. Work on the Ferro alloys expansion project at Vizag is progressing well and the third furnace is expected to be operational ahead of the scheduled commissioning timeline of March 2023. We expect to get some benefit of that project during the current financial year. The construction work at 25 megawatt Rehar River Hydro Power Project is progressing as per schedule. We expect to complete the project before end of FY '24, FY '25. The company has achieved quarterly consolidated revenue of INR 1,058 crores during Q4 '22 against INR 1,000 crores in Q3 FY '22 and INR 700 crores in quarter 4 FY '21, which grew 6% quarter-on-quarter and 51% year-on-year. The company has reported EBITDA of INR 386 crores during the quarter against INR 308 crores in the previous quarter and INR 226 crores in quarter 4 FY '21. The company's profit after tax stood at INR 107 crores as against INR 169 crores in the previous quarter and INR 139 crores in quarter 4 FY '21. The company has reported highest ever revenue of INR 3,914 crores for FY '22 against INR 2,199 crores in FY '21, registering a growth of 78%. The profit after tax at INR 807 crores registered growth of 115%. The company has reported earnings per share of INR 59 per share for the quarter and INR 223 for the financial year. The Board of Directors had recommended an interim dividend of INR 7.5 per share, which has been paid on 12th May 2022. Buyback of share, in view of the improved performance and liquidity, the Board of Directors of the company in its meeting held on 23rd April 2022 had approved buyback of [ 11,100 ] equity shares at the rate of INR 1,500 per share through tender route. This will entail total outgo of INR 150 crores including income tax on the buyback which will be paid by the company. Draft letter of offer has been approved by SEBI last Friday. The letter of offer will be dispatched this week and the offer will open next week and will remain open for tendering for 10 working day. Funds are expected to be remitted in second half of June 2022. Debt position, at the standalone level, the company is net debt free company. As on 31st March, 2022, the gross debt stood at around INR 1,400 crores. Total debt net of the cash and current investments stood at below INR 1,000 crores and net of the loans given as a part of treasury operations it is around INR 600 crores. Loan repayable within next 1 year is INR 126 crores. Ongoing CapEx is including the -- for coal mines have been financed on the internal accrual. Madhya Bharat Power Corporation long-term external rating was upgraded from BB+ given by CARE to A- from 3 rating agencies including CARE. The term loan availed by Madhya Bharat Power Corporation has been refinanced by one of the existing term lenders with substantial reduction in the rate of interest. Industry performance, in financial year '22, India produced 120 million metric tons of steel, registering a growth of 18% over previous year production of 102 million tons. [indiscernible] production fell by 9% to 1,000 million, thus global steel production recorded growth of 1.6% to 1,909 million tons. India exported 13.5 million tons of steel against 10.8 million ton constituting 11% of the production. The domestic consumption went up from 94 million tons to 106 million tons. China's share in the global production has fallen from 58% in FY '21 to 53% in FY '22, whereas India's share has gone up from 5.6% to 6.4% in FY '22. With regard to ferro alloys, India exported [indiscernible] 54,000 tons of ferro alloys during calendar year 2021 against [ 654,000 ] in calendar year 2020. Changes in custom duty, structure on steel and steel imports. In order to improve domestic availability and to contain the increasing price of steel, the central government has imposed export duty on export of iron ore, iron ore pellet and select steel products and reduced import duty on coal and coke, excise duty on the petrol and diesel also been reduced. Heavy export duty on iron ore and pellet will bring down the prices of main input of steel making that is iron ore and iron ore pellet. This is expected to bring down the cost of production and selling prices of steel. To what extent it will impact exports or increase the domestic supply has to be seen in the days to come. Revival of economic activity in China post recent COVID wave will also have a bearing on the emerging demand supply scenario and price trend. Energy and logistic prices which constitute a substantial portion of the cost of production and distribution of steel at global level is at elevated level. As such prices have finished the steel may not go down substantially. Having our own coal mine, we are insulated to a large extent from the increase in the energy cost. The forecast of early monsoon is positive for hydropower projects of the company. This is all about the performance and the outlook. Now we leave the forum open for questions from the participants. Thank you.

[Operator Instructions] The first question is from the line of Yogansh Jeswani from Mittal Analytics.

Sir, couple of questions. So first is the announcement that has come as a google surprise for the entire industry. So what was the impact of it seeing today in the local market in terms of prices if you could share, for example, what was the price of pellet was on and will it getting quoted in the market?

No, since the announcement had come day before yesterday night only markets have opened today, so everyone is in worse situation. So it will take some time to get the clarity on the implication because everyone is in the wait and watch situation, what will happen, how the things -- what is the effect. So it will be very difficult to give any indication on today's market condition.

Okay. Okay. So sir, overall, what is in your sense pricing that can be seen in terms for the entire value chain from pellet to sponge to bill it, is it fair to assume that a pellet price fall of 20%, 25%, then 10%, 15% [indiscernible] is a possibility in near term?

Because since the -- on the iron ore and pellet the imposition of duty is about 50% and 45% respectively. So that will definitely hamper -- drastically the export market, although exports in the recent past had also gone down, but exports were there and that will affect the prices of the iron ore and pellet is what we feel. But so far as steel is concerned, to what extent -- one is the effect of raw material input price that will have a bearing on the steel prices then to what extent export is affected because export duty is imposed on certain steel products to pellets exports move in this direction and how the international market rates on this news, all depends the -- how demand supply within the country is affected because the domestic demand is also robust. The government's focus on the infrastructure spending will further boost the domestic demand also. So all will depend to what extent the demand supply metrics of the domestic market affected.

Just to add to what Jain sir said. So even if this quarter, you will see our presentation, the realization for pellets have been little subdued. And it has been going down only across the quarter if you see because the export market were not very conducive. Despite of that, the other intermediate and end product prices or the spread have been increasing. So as of now, I mean, whether it is 100% -- I mean it is going to have an impact on those is still we've been, but that impact was not seen in the last quarter when the export was subdued.

Right. Sir, what is the typical run rate of exports for say, pellet and similar other safety guidance or something, if you could shed some light there?

No, we are not exporting pellets so far as we are concerned and...

No, I meant for the overall industry level, what is the kind of volumes that were getting exported?

I think immediately, I don't have that figure.

But will it be say, 15%, 20% of the overall product, sir?

It will be -- guessing because I don't have the figures as such.

No worries, sir. Okay. And one last question from my end, given the announcement that has come in at a time when it's not that the industry was not reducing the prices like you mentioned in your comments also, I think pellet was at INR 15,00, INR 16,000 and down to I think 10,000, 11,000 off late. So the prices were coming down, but still such drastic measure is taken. So you as when -- together with the industry, are you planning to reach out to the Ministry and challenge this and maybe take up, ask them to review it again something on those lines that as an industry body you guys are looking into?

That will definitely happen as the industry -- natural industry will put forth it's views and how it will impact the overall market conditions, employment condition and growth and all those factors, so industry at its level will definitely make a representation with in this respect.

The next question is from the line of Chetan Shah from Abakkus Asset Management.

Just 2 quick question, one wanted to understand the ferro alloy business and correct me if I'm wrong. This particular quarter, the ferro alloy EBIT per ton based on the segmental reporting has reduced on a sequential basis is roughly about INR 33,200 versus INR 41,500. So how do you see this spanning out in next year also, how is the pricing behaving right now? If you can throw some light on that please?

One of the reasons for fall in the prices is basically our Visakhapatnam subsidiary which is equally contributing to the quantum and those things. So they are dependent on the imported coal because the fuel price has gone up, so that had affected the margins. So that was the reason for fall in the EBITDA level what you're talking about in the ferro alloys. And so far as the current year margins are concerned, as of now, although there have been some reduction in the prices, but margins are at reasonable level. And as we told one of the post in the ferro alloys production is also again energy, coal or power whatever you call, so partly we are insulated again that should help us out to maintain our margins. But definitely, demand supply and other factors have a bearing in the future, we don't know, but we are better off.

Sir, one big picture question. In terms of this revised duty structure and all and if we see some rationalization in the pricing of steel and all, last 3 or 4 months, we are keep hearing about slowdown in the pickup in construction in infra activity by the user industry because of the 2 reason, one is the volatility in the prices and some product prices have gone through the roof and there was some confusion among the user industry. Do you see when this rationality comes into the play, we will see demand coming back to normal and also better than what say it was in last 4, 5 quarters purely because of there is a clarity in prices and more rational outlook going forward?

One is the infrastructure spending from the government that should also work now with the increased revenue collection on the government side then election next year, government will also from the election mode, so that should also push up the infrastructure-related demand of the steel. And so far as price strategy is also concerned, there had been some resistance when the prices have moved up substantially. And I think from there, we have already corrected 15% to 20% in the finished steel if you talk about. Still there was demand, but yes, in the real estate sector, they were finding pinch of it because there are commitments, they have made it a particular price on the real estate side. So with the fall in the prices, demand definitely go up again from that sector too.

Sir, one last question from my side. Once the China slowly opens up and they also need to do and which is a charter in the international market in terms of some -- from a serious stimulus to bring their economy on track due to the COVID related issue, what ideas were 4, 5 quarters back, do you think that can bring the international price at more rational level and we don't see a sharp fall in the steel prices in the time to come. Is that a right understanding or one should wait and watch for some time to see how things evolve?

So, there are multiple dimensions to the global steel scenario. But I think China with the opening of the China and the demand picking up in China, I think prices should at the global level should remain at this level or should move up from here, with the reduced export from India also may have a bearing on the international market conditions and the opening up of China. But we see -- but in the global, there are multiple dimensions difficult to predict. But yes, given the situation I think international prices should move up from here.

The next question is from the line of [ Atul Shah ] from ICICI Prudential Life.

I just wanted to understand in terms of coal production, what would have been the Q4 coal production number? And what are we targeting for FY '23?

No, in Q4, we have production of, I think, 7.8 led tons. And current year target, given the present permission is 1.2 million tons for the whole year.

Okay. For FY '23 your targeting for? Okay.

For 2 million tons, there is upper limit permissible, although we have moved an application for increase in our output capacity to 1.68 million tons depends by when we get that permission. Otherwise, based on the present approval, we will expect 1.2 million tons during the FY '23.

Sure. And just one more on ferro pricing, if you can just help understand realization given the recent move, anything away -- way to think about ferro prices from here on?

Pardon, I couldn't get your point?

For ferro alloy realizations, how should one think given the recent announcement, any streamline in terms of thought you can provide? How one should look at realization from here?

No, this will not have an impact on the ferro alloys pricing.

Correct. Okay, so it will [indiscernible] got it.

Present announcement is not affecting the ferro alloys effect and a substantial portion of our production is exported. As I addressed in my initial remarks also, we have also exported about INR 1,000 crores of ferro alloys during the FY '22. So we are also a major exporter in the country. And recent announcements does not at all have any bearing on the ferro alloys prices or ferro alloys production or sales.

The next question is from the line of Jatin Damania from Kotak Securities.

Sir, just wanted to check that you said that in the coming year, we will see a improvement in the EBITDA margin of ferro alloys. So what will drive that because coal prices continue to remain at the higher levels. So what are the factors that we are probably seeing that will drive the EBITDA performance for ferro alloys in FY '23?

No, I did not say it will move up in the current financial year right? I think what was the question is compared to the previous quarter, there was a fall in the shareholders margin. There I -- it was on account of the cost of imported coal in our Visakhapatnam plant. Now because the energy is one of the substantial component in the cost of production of ferro alloys. So as far as that is concerned, we have our own coal even for Vizag, we have started supplying part of their request. So we are insulated to a large extent against the coal prices.

So how much quantity did we supplied out of own coal to Vizag and what is the -- what are we targeting for FY '23?

No, it was not material in the previous year result, almost negligible because their boilers are designed on some different extent. So it will take some time to increase that volume. And very difficult, but yes, part of that quantity will be -- it is very difficult to any specific figure as of now.

Okay. Sir and basically coming back to the second thing, has been asked in the previous question -- participants also now once the China things improve, so -- and with this export tax levy, do you think that would be your supply of the 13.5 million ton diverting back to the domestic market or company will still target the export market and don't disturb the domestic market. So what -- as a industry and as a company, what are we thinking on the export structure?

So far our main concern we are not in the export market for any steel product. So far as industry is concerned, I think there may be -- part of that will be offset by maybe some other products, it's not that all the products have been covered under the export duty, there is [indiscernible] okay. There may be some change in the product mix of the export. And to some extent, our domestic market should have drove the -- with the increased demand and definitely this is what we feel.

Sir, last question on my side is on the pellet front. In last 1.5 years, we had seen a good value in the pellet prices. However, off late it was subdued in last 2 to 3 quarters. But now as in a country, we had exported about 11-odd million tons of the pellet in FY '22. Now with this value of the business quantum of the pellet coming back to the domestic market, can we expect near about INR 3,500 to INR 4,000 per ton reduction in the pellet prices in the coming quarters or it is -- it could be lower than that?

I don't think that much correction should happen, but it's very difficult because ultimately things will get adjusted, pellet is substitute of the iron ore, what is the extraction cost of the iron ore, what are the premium payable to the government on the iron ore? And all those factors will also come into play in determining the price of iron ore pellets.

Right. So as a company, what are repricing, what will be the average price of the iron ore and the pellet, if this will be sustainable given the current scenario?

No, it's not -- you cannot give any specific -- because what happens with that change in the demand supply, there will be a change in the input cost of the pellet also. So pellet also again depends on the price of the iron ore fines. And iron ore price again depends on the pellet price. So there is an interplay of the different factors which determine the price, it's not any fall in the price, will be a total reduction in the margin or any increase in the price is a total increase in your margin because the margin gets distributed in the iron ore mine, in the pellet producer and maybe other related input costs.

And just to -- Neeraj here, just to clarify a little bit more on this. For us, the pellet sales is a very small component of our total sales and also the total EBITDA, the large part also we are consuming internally, maybe 50% internally for value addition. So that is one aspect. And second, since we are buying certain iron ore from the market, so effectively, even the pellet -- I mean I don't find, so the pellet margin should get compensated to that extent.

So Nilay, it will be great, if you can help us understand the contribution of pellet absolute numbers in terms of EBITDA, because I understand we are not the big exporter of the pellet, and we only export large percent of ferro alloys.

[indiscernible] not doing much. So if you see our presentation, market sales, we are not doing much for pellets for maybe 4 lakh tons. The number is there in the presentation actually, the exact number, but it's around 4, 4.5 lakh tons. That's all.

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

Sir, I just wanted to understand you said there would be some repairs in the hydro power projects of Sikkim. What is the nature of that? And what kind of the -- is there any capital cost involved in it? So if you could just elaborate on that?

No, it was basically more of an improvement related some civil work related improvements. No material cost was involved. Whatever -- some deficiencies we observed during the operation, so we took a step down and carried out both civil changes so to get better efficiency of the project.

So that means that the power generation capability can be enhanced further, since you're talking about efficiency?

Yes, as compared to the previous year, definitely some -- there will be some improvement in the power generation.

And sir, I just want to understand now our capital allocation policy, since now we have a punitive of trade thing in the steel side. So going forward, how would be -- whatever we are earning. So are we now -- how do we think of our capital allocation going forward in terms of whatever the money we are getting? And will the debt reduction would now start because in the past, we have been pretty vocal about debt not been getting reduced and incremental cash is getting into new projects. So now what's our thinking?

If you see in the last quarter also, there has been a reduction of about INR 200 crores in the debt, including one of the -- some prepayments in Madhya Bharat also and some prepayments in other companies also wherever it was possible. And as already conveyed, we have been funding our expansion projects from internal accruals, whether it is coal mine at Shahpur, coal mine at [indiscernible] market, ferro alloys project and one hydropower project. So far as capital allocation is concerned, we have been distributing the capital allocation in all the 3 segments, in hydro also, we have invested in mining also, we have invested in ferro alloys also we have invested. In steel, there have been some small CapEx have been going on either part of the normal CapEx just we had taken the [ justification ] plant we had taken. And ultimately, coal mining is also directly contributing to the improved profitability in the steel sector. So this is how the -- we are -- there is no one sector where we are investing. There have been small, small investments. So if you see the annual accounts -- the published accounts, you will find about INR 154 crores of 1 loan, which is reflected in the short-term borrowings, because if you see short-term borrowings you have been shown as increased. Actually, the 1 loan refinance on 31st March was repaid on 2nd of April. So to that extent my borrowing as well as cash and bank balance in the annual report is showing us increased level otherwise debt will go by -- go down by INR 150 crores on 2nd April, itself. So that is one transition. Accordingly, our debt repayment is going on, and it has gone up either I told -- in recently, we have already reduced it by INR 200 crores. So debt is getting reduced and with the repayment starting for Madhya Bharat [ opposite ] because major part of our borrowing is only in hydro power projects. So with the restart of the -- repayment of debt loan, now you have seen the falling trend in the overall borrowing of the company.

Sir, how much of repayment is coming in FY '23? And any idea about what kind of the net debt we are looking at in terms of ending FY '23?

No. In FY '23, as stated in our opening remark repayment due is INR 126 crores. And to what extent we prepay or we invest in the future projects, what are the opportunities we get, it will depend on that. So this is what is the minimum debt reduction on the long-term side. And to what extent the working capital loans further get reduced from, I think whatever is there, that may also get reduced. And if we prepay something, that will be additional reduction.

Sir, what is our CapEx plans for FY '23?

FY '23 as already stated 4 projects are going on. One is the top...

Yes. So -- but total on FY '23, how much of the entire total capital, what portion we are spending basically in FY '23, because some part of the capital would still over FY '24 as well, right, including hydro power projects. So FY '23 I just wanted to understand.

I think it will be somewhere about INR 250 crores.

INR 250 crores. And sir, just one last question. In terms of coal, which we have already started receiving, what is the current savings which we are enjoying in terms of -- if I want to take -- even if the [ full fill levels on this point basis ], what kind of savings we are having from our own capital coal mine?

It's [ very fecal to ] quantify separately because ultimately it gets reflected into the overall performance of the other segments because we have a total capacity of 1.2 million tons and majorly that is -- will be consumed captively. So considering the coal mine at separate segment or separate profit center may be a difficult task unless we increase our production capacity to 1.7 million tons. But -- as compared to the market prices, our cost is definitely much lower to that indirectly helps in improve profitability of our working segments.

Understood. So sir, just to re-frame it, if you could give us a ballpark percentage, which is the landing cost from own captive mines, which is deeper by versus the market price?

Landing cost should be somewhere in the range of -- maybe INR 2,500, depend because that also again depends on the market price and the index price because a substantial part of debt go there and takes to the government. So that is linked with the market price. So that also reduce from time to time.

So that I understand, that will go in hand in [indiscernible] coal index basically. But still, if I just want to see, since we get the coal index with a couple of months delay, just if I want to just take [ in 4Q ], what is the percentage savings versus the market price of landed cost, give us some idea?

Our landed cost would be -- should not exceed, I think, INR 2,500 a ton.

Versus market price would have been?

Market it depends, it varies in a long range. There has been a volatility, then also depends on the pricing grade. There are multiple factors. It's very difficult to directly compare it.

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

Congratulations on a good set of numbers. Just wanted to understand that in the hydel front, our best 2 quarters will be the ones that are now going to come Q1 and Q2? Will they be the best 2 quarters for the year?

Q2 is the best, Q3 is the second best, and Q1 is third, and the lowest season is the Q4.

And what is the capacity that we are operating on the hydel front right now?

Right now, as of today, we must be operating as far as Sikkim project is concerned must be about 70% as of today. But it depends on the rainfall, [ they may own ] -- if not only for the whole month you will get because presently, it's not the full rain period. So when there are rains there is more CapEx utilization and when there is no rain for a few days then CapEx utilization may go down to some extent. But yes, presently, we are operating at this level.

Fair enough.

But for other 2 projects, it is lower than that because the Northeast the rains are a little early.

Also, sir, I just wanted to understand, I mean, since the last year has been so strong, is -- are any of our CapEx is getting prepone? Will we be able to complete any of anything earlier than what has been planned or…

No. Our CapExes were not a big size CapExes, which could affect on account of the availability of funds to -- CapExes are going as usual. And more of the [ time, say ], if you take the coal mine more time is linked with the approval. And other projects are going on as per [ SEBI ] to availability of funds will not change materially. But yes, we are trying obvious to complete the project as early as possible. And as I stated in my opening remarks, our ferro alloys project at Visakhapatnam, which is scheduled to be completed in March 2023. We are trying to complete reasonable before and we could see some benefit of their project during the current financial year.

The next question is from the line of Subham Agarwal from Aequitas India.

Sir, my question is in and around ferro alloy. So last few months, we have seen significant decline in prices. And there is understanding that in China because they are producing less steel, there is spare capacity of ferro alloy, which is kind of depressing prices. So I just wanted to understand the current demand and supply scenario. What is the kind of order book [indiscernible] from export and whether this is, right?

No. There has not been material correction in -- except -- I think presently also prices are in the range of INR 90,000 to [indiscernible] It has gone up to only INR 20,000, INR 25,000. And so far as our export order position is concerned, we have very comfortable order position. I think as usual, we have between 1 to 2 months of the order position in pipeline.

So you are saying that the prices have corrected almost by INR 25,000, right? So…

Yes, maybe around INR 10,000 to INR 15,000.

INR 10,000 to INR 15,000. So how do you see the outlook going ahead in terms of more demand and supply under China situation. If you can elaborate on that, please.

Difficult to project in the volatile market scenario, but we don't find any challenge in the order book position and there is a reasonably robust demand. Pricing is a matter of multiple factors, but it has been reasonably stable in [ last years ].

Fair enough. Secondly…

And they will not affect the ferro alloys. [ Water supply ] have been announced. Those are not -- those don't have any bearing on the ferro alloys side.

So secondly, so our ferro alloy plant in buyback. And so you said in one of the question earlier that we need to change certain part of boiler before we can start using our own coal. So how much time will that take? And are we projecting it too sooner use our coal in that plant?

No. Gradually, we are increasing and minor changes here and there will require. There is no material change. And let's not be -- we can replace that 100%. Yes, partly, we will supply from captive coal mines remaining will -- they will make some of their imported -- imported coal. But [indiscernible] on consumption will increase. More of utilization and minor changes here and there. It's not some total replacement of something.

So it will basically dependent on the landed cost of coal plus our coal cost that's logistics, right?

Yes.

And out of this 7.8 lakh ton, how much we sold outside external sales of coal?

About 2 lakh tons.

2 lakh tons. And lastly, on the volume side of ferro alloy, so we did [ 45,000 ] this quarter. So this volume number is maintainable going ahead now?

Yes, definitely.

And any timeline that you can give to this 1.68 metric ton in coal approval that is pending?

No. It's very difficult to give any timeline. We are trying to get within the current year, but when we'll get, it's very difficult to give any timeline on the government approval.

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

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[Foreign Language] we are not at all affected?

No, I did not say we are not at all affected. [Foreign Language]

[Foreign Language] Price may fluctuate.

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[Foreign Language] more or less. Percentage [Foreign Language] more or less.

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[Foreign Language] they are very, very particular on the environment to [Foreign Language]

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[Foreign Language] We are absolutely self-sufficient.

We are absolutely self-sufficient. [Foreign Language]

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Sir, buyback to 2.5%, 2.25% [Foreign Language]

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[Operator Instructions] Next question is from the line of [ Marshal ], an individual investor.

Nowadays, like we can see I'm calling from West Bengal, so I can see this like there is a good amount of rain coming here. So I'm sure that in [indiscernible] plant, hydel plant like just also getting this good rain now.

Yes, we have started getting reasonable rains there.

And so is it like peak kind of rain or still lower than what is expected in the month of July -- June-July?

No, no. Not peak. It will be I think after 15 June only, it will be peak.

And then, sir, like in the last year, in the Q2, what was like this CapEx utilization of hydel plant? And currently, what is the level? Sorry, sorry, [indiscernible] how much like level we are targeting because after this efficiency improvement?

Generally, in the second quarter, we operate generally at the 100% capacity utilization in general, except nominal, some maintenance-related small, small, but generally, it operates at the full capacity.

But like this year, since you have made some efficiency improvement like you already, debt efficiency improvement already completed or yet to be completed?

That is completed.

So with that efficiency improvement, how much like [ hydropower ] megawatt increase?

No, last year, we were operating a little lower than the installed capacity. Now it will be operating at full capacity. And during the rainy season, it goes up a little more than the installed capacity.

So whether this is Sikkim discount is taking regular payment, or do you have some [ DG ] for this?

No, we are getting regular payment from the discount.

So there is no problem on the payment part?

I'm sorry, this is not Sikkim discount, it's [indiscernible] just to tell you.

So like this [ bounce back ] to whom, to West Bengal or where, sir?

Chhattisgarh.

Chhattisgarh. No, I'm talking about hydel plants in this Sikkim?

Yes.

That one come with Chhattisgarh. And sir, just regarding this coal mining, this [indiscernible] from [ 1.2 to 1.8 ], and then this Shahpur mine also. So with that, like how much will be our captive concession? And how much will be available for the [indiscernible]?

No. Our present requirement is about 8 lakh to 9 lakh tons of the coal in Raipur and Visakhapatnam, we are gradually increasing captive coal consumption. So Shahpur will be additional and what are we increase in the capacity that should go additional.

So it will be sold to the market.

Yes.

And sir, my last question that like whatever -- like whatever EBITDA or like we have presented in this March quarter. Will we be able to sustain this in the June quarter, considering that what all changes has come in the steel sector or will it go down?

[indiscernible] [Operator Instructions]

Sorry, like in this March quarter, we have projected our -- like you can say, EBITDA of INR 294 crores. So considering the changes in the steel sector, we will be able to maintain the same kind of margin in the June quarter? Or will it be down? It would be less?

You see we have multiple divisions. One is the steel, another is ferro alloys, third is hydropower project and definitely fourth will be. So we have a diversified portfolio, but there have been changes in the market scenario, so how does it be. It's very difficult, and we don't give any forecast on our projections that we have given is the overall picture of the scenario, how the things are there in the ferro alloys, how the things are there in the steel, and how it affects us or not. But…

Sir, like to say, project cost for hydro Sikkim plant, what were the final project cost when we commissioned it, like whether it got escalated than the budget cost or was it completed within the budget cost?

That has already completed at -- the total cost was about INR [ 1,500 ] crores.

So it was above the budget or it was within the budget?

No, in hydropower, there are overruns. It was above the budget.

So sir, like you already mentioned that we started prepaying the loan. So how much loan we have prepaid for this one? And what are the total loan sector for this subsidiary?

Total was -- I think somewhere about INR 960 crores, INR 950 crores.

And how much you prepaid or how much -- or how much you repaid till March '23 -- sorry, till March '22?

I think except the regular payment, we have prepaid about INR 85 crores of the loan, in this [ term ].

[Operator Instructions] We will take the last question from the line of [ Ayush Agarwal ], an individual investor.

Sir, I want to know our expanded iron ore volume drops. So are we maintain annual maintenance plant or any other reason?

No. Basically, earlier, we were using the imported coal, better efficiency in the plant. Now we are using our captive coal, which is of a little inferior quality. With the use of the captive coal, the capacity utilization of the plant goes down. And to the extent, we use the captive coal, but it makes economic sense to use the captive coal in spite of the fall in the volumes. It gives us better profitability. Therefore, we are using more of the captive coal, and it may have some bearing on the production volumes of [indiscernible].

So sir, in Q1 are our [indiscernible]?

[ Adam ], I couldn't get you. Can you repeat your question, please?

Sorry, in Q1, are our [indiscernible] volume are also down?

May remain down as compared to the previous year's Q1, because as I told, we are using captive coal and that may have some bearing on the production volume of [indiscernible].

Sir, my last question is, are we have any new plan to increase our [indiscernible] plant capacity because margins are slightly better?

As of now, we don't have any [indiscernible] plant with regard to the expansion on the steel side. That was the last question. I now hand the conference over to Mr. P. K. Jain for closing comments. Yes. On behalf of Sarda Energy & Minerals, I thanks all the investors and participants who have joined and participated. I hope we have been able to address your queries. If any doubt remains, you can always reach to our PR team or our team at Mumbai. The details are given in our presentation uploaded on the website of the stock exchanges. Thank you. Thank you all once again.

Thank you very much. Ladies and gentlemen, on behalf of Sarda Energy & Minerals Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.