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

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Earnings Conference Call for Sarda Energy & Minerals Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit from Stellar Investor Relations. Thank you, and over to you, sir.

Thank you, [indiscernible]. Good evening, everyone, and thank you for joining us today. To discuss Q4 and FY '25 business performance, we have with us the senior management team of Sarda Energy & Minerals, represented by Mr. Pankaj Sarda, Managing Director; and Mr. Nilay Joshi, Executive Director. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after the statement is made. Documents relating to the company's financial performance, including investor presentation, have been uploaded on the stock exchange and company website. I now hand over the conference to Mr. Pankaj Sarda, and then we will open the floor for Q&A. Thank you, and over to you, sir. Thank you. Good afternoon, ladies and gentlemen.

Thank you. Good afternoon, ladies and gentlemen. Welcome to Sarda Energy's Q4 FY '25 Earnings Call. Macroeconomic overview. The reciprocal tariff imposed by the U.S.A. has disrupted global trade and fostered a shift towards protectionism. While the full impact is yet to be realized, India remains relatively well positioned due to strong domestic demand, a growing manufacturing base and the increasing focus of developed economies on diversifying supply chains. However, the dumping of goods from countries with which we have free trade agreements continue to pose challenges. The government remains vigilant and responsive with policy actions. The safeguard duty imposed on certain steel products in April has effectively curtailed cheap imports. India's fiscal deficit is projected to decline to 4.4% in FY '26, down from an estimated 4.8% in FY '25. The RBI has infused liquidity into the banking system to ease interest rates, recently reducing the repo rate by another 0.25% Inflation data suggests a continued easing trend. Banks have reduced deposit rates and loan interest rates are expected to follow, which should bolster consumption and capital expenditure. Operational performance. FY '25 was a landmark year in our growth journey, marked by the successful acquisition and integration of SKS Power Generation, Chhattisgarh Limited. We achieved record high production across coal, iron ore from the newly acquired IPP. Hydro Power generation grew by 5% Y-o-Y, supported by a strong monsoon. The IPP thermal power plant delivered significantly improved performance, achieving a plant load factor PLF of 80.42% in Q4 despite a fire incident that shut down 1 unit for 27 days and 73.32% for the full year, up from 56% in FY '24. Continuing operational efficiency measures played a key role in this improvement. Temporary shutdowns at our steel plant and ferro alloys furnace for modifications led to a dip in production of metal products for the quarter. Our multipronged strategy to reduce carbon footprint includes the adoption of solar power, the replacement of diesel vehicles with electric ones and the successful registration of our waste heat recovery project with IRAC for carbon credits. Expansion and project updates. Coal mine. Gare Palma IV/7. Final approval for increasing mining capacity from 1.68 million tonnes to 1.8 million tonnes is expected in this quarter. Gare Palma 4x5. Revised block boundaries requires fresh approvals have been granted 57 months to commence production. Shahpur West Coal mine. Mine opening permission was received on 10th of March 2025. Mine development work has commenced and production is expected before the end of the next financial year. Batumba Hill JV coal mine. DPR and mining plans have been submitted to SECL and under forest land diversion approval is underway. Power plants. Rehar Hydropower project, 25 megawatt. The trial run of the plant is complete. Commercial operations will commence when water flow improves. The PPA is expected to be finalized this quarter. [indiscernible] Hydropower project, 25 megawatt. The project is in the approval stage with work expected to begin by mid-FY '26. Two additional small Hydro Power projects are in varying stages of approval. Captive solar plant. Execution is delayed due to the issues at the end of the EPC contractor that is Gensol. Most equipments have been delivered and transmission line working is ongoing. Project commissioning is expected in current financial year. 30-megawatt TGS replacement. Work is on schedule with operations expected to begin by mid-FY '27. Mineral Wool project. Operations commenced on 28th March 2025. Market response to the product has been positive. I would now hand over to Mr. Nilay Joshi to discuss financial performance.

Thank you, Pankaj bhaiya. Financial performance for the quarter FY '25 and full year financial year '25. In Q4 FY '25, the company achieved consolidated revenue of INR 1,239 crores, registering a growth of 39% Y-o-Y. However, revenue declined quarter-on-quarter by 6% due to the seasonal effect in the Hydro Power business, lower power sale realization and shutdown of the steel and Ferro Alloys plant for modifications. Revenue grew by 20% Y-o-Y. profitability. Despite challenges in the Steel and Ferroalloys segment due to a downturn in prices, operating EBITDA for the quarter increased Y-o-Y from INR 162 crores to INR 273 crores, and consolidated profit after tax grew 14% Y-o-Y to INR 100 crores. Operating EBITDA for the full year grew 56% to INR 1,247 crores and PAT grew 34% to INR 702 crores. One noteworthy observation is that the energy vertical between Hydro Power and Thermal Power, it has already contributed almost 50% of EBIT earnings before interest and tax in FY '25. And this contribution is expected to increase further in FY '26 with the full year of operation of the 600-megawatt thermal power plant and the improving PLF. Debt and liquidity. Net consolidated debt, including working capital loans stood below INR 1,600 crores, less than INR 1,600 crores. Long-term loans repayable within the next year amount to INR 235 crores. Liquidity remains strong on the balance sheet with cash and liquid investments exceeding INR 1,250 crores, which is in addition to loans given as part of treasury investments. I now hand over back to Mr. Pankaj Sarda to discuss the steel and ferro alloys industry overview and outlook. Over to Pankaj.

Thank you, Nilay ji. Industry overview. In FY '25, global steel production declined by over 3% to 1,839 million tonnes, with China down by 0.6%. India bucked the trend with a 5.6% increase, producing 152 million tonnes. Domestic finished steel demand also grew by 12%. Despite strong demand, steel prices declined due to increased imports and reduced exports. Net steel imports rose to 4.2 million tonnes up from 1.1 million tonnes in FY '24. Domestic crude steel production in Q4 FY '25 was 40.1 million tonnes, up 7% Y-o-Y and 4% Q-on-Q. Finished steel consumption rose by 3% Q-o-Q to 40.3 million tonnes. China's steel exports remained high despite reduced production driven by weaker domestic demand. Q4 FY '25 exports increased by 6.3% to 27.429 million tonnes. Many countries have introduced safeguard measures against cheaper Chinese steel imports. Indian coal production crossed 1 billion tonnes in FY '25, growing by 5%. Coal imports fell by 9%, saving USD 6.93 billion in ForEx. The Indian core index declined by 14.56% and coking coal prices also softened partly offsetting margin compression. The central government has introduced incentives for underground mining, including upfront fee waivers, reduced performance guarantees and lower minimum bid prices. Ferro Alloys exports drop to 106,000 metric tons from 115,000 metric tons due to lower production. Exchange power prices fell by 17% in FY '25, to INR 4.31 from INR 5.17 in FY '24 and declined by 10% Y-o-Y in Q4. Outlook. RBI's liquidity measures and government spending are expected to support economic growth and credit expansions. China's recent cut in the reserve requirement ratio has released USD 138.6 billion into global markets. Safeguard measures taken by India should improve margins in the domestic steel industry. India continues to be the fastest-growing major economy, driven by robust domestic demand and demographics. A reversal in the interest rate cycle will enhance competitiveness and spur capital investments, boosting demand for steel and other metals. Full year of operation for the 600-megawatt thermal power plant, improved PLF, better realization in the IPP business and lower finance costs are expected to further strengthen profitability. That concludes our performance and outlook. Thank you.

[Operator Instructions] The first question is from the line of Marcell, our Individual Investor.

My one suggestion is there because now we have got this thermal power plant of 600 megawatt and our existing hydro are very small capacity like 130 megawatts in Sikkim, another 20, 30 megawatts, something else. And moreover, these hydro are seasonal, like they basically operate at a good speed only in the Q2 of the FY and the first quarter, you can say of the molded capacity. But unfortunately, we have seen that in the segment reporting, you put only one power. So I encourage and request that this should be divided -- this segment should be divided in 2 parts. Number one should be thermal power and number two will be hydro or you can say hydro power so that the results are comparable. Now for example, in the Q4 results just announced, our Sikkim power plant is almost closed. but we see still good profitability coming in power because of the thermal power plant. So this is distorting the results. So please, like going forward, kindly have 2 separate segments, one for the thermal power, one for the Hydro Power.

Okay. Sir, we'll look into that. Still if you want to get some idea, you refer to Slide #5 of the investor presentation, where you will get on the Hydro Power, the revenue and EBITDA margin details. But I take your suggestion.

But sir, like we can refer that I already made like I even saw this, for example, last year that what was the, for example, in the Q4, what was the hydro power, it was miniscule. So I could get some idea. But again, this -- the profitability is much higher in hydro compared to thermal because raw material almost there. So whatever we -- like from the sale only, we cannot see this profitability. So that's why you can see -- and second thing that like where do we stand in terms of, for example, another appeal going to Supreme Court, like what is the like, for example, it's likely result -- like are you anticipating number two, where do we stand in terms of the expansion of another 600 megawatts of this SKS Power?

Can you repeat your question? We couldn't get you.

Yes. My first question is that since you have taken over this SKS Power, but in the note, it's also mentioned that this unsuccessful bidders have filed appeal in the Supreme Court. So when the -- so what is the current status of that? And what is your like management confidence?

The matter is subsidized. And the next hearing is coming in the next month-end.

So like that is going to the first hearing or already a few hearings happen.

I'll just clarify the matter is in the Supreme Court. It is subjudice. It has been in the Supreme Court. It has been ongoing for some time now. And the next thing is tomorrow, but it is a vacation bent. Let's see what happens. The matter is -- I mean, whenever it will be heard as per the Supreme Court [Foreign Language].

That's okay. That understand. And sir, where do we stand in terms of the -- like the next expansion of this power plant, the 600 megawatts for which we said, okay, that we already have this utility ready?

Sir, the -- regarding the next power plant expansion in SKS Power, so we had an environment clearance, but it is not there because it has lapsed. So we have to again redo the public hearing and things like that. Our team is gearing it up. And in coming 1 year or 1.5 years, we'll have all the clearances in place and then we can start.

Okay. Sir, my last question is regarding this, our captive mining, whatever coal ore we have. So like did we now have reached this optimal extraction or like what other, for example, valuation is going to yet to be made, which can push up our EBITDA?

Sir, I'll just make a correction. So we run commercial mines. I'm just mine the commercial mines, except for the mine, which is a captive mine, all the others are commercial mines, which means there's no restriction on the end use of the minerals. And details, if you refer to the investor presentation, you'll get the current status of each and every mine, sir. is yet to come on board. refer to slide I'll just tell you. You can refer to Slide #21 and 22, and that will give you a clear idea as to what are the levers of growth in mining and what is happening in each and every mine.

Okay. I can see that you also slowed with the presentation today. I'll go through it.

The next question is from the line of Rajesh Bhandari from Nakoda Engineers.

I just wanted to know what is the basic reason that this quarter, the results were not that good. Normally, otherwise, Sarda results are quarter-to-quarter very good. What is the basic reason, sir?

No, no, sir. One is the results, I think there are a couple of things that you, I think, should look at the results. I think the results are excellent. If you look -- one, you should look at the cash profit, okay, because there is a deferred tax component. So look at the cash profit that is also disclosed in the investor presentation. That is one thing. Then if you look at the revenue growth and the EBITDA growth Y-o-Y, you will get a very good idea as to -- I mean, it's a significant growth, 39% growth Y-o-Y and 62% growth in EBITDA. I mean in both for the quarter. And if you look at the -- for the year, there's a 44% growth in EBITDA. So numbers are -- I think numbers are quite good. The only reason -- I mean, there are a few reasons that will make the numbers even better, which -- I mean, one is that the ongoing post acquisition, the stabilization efforts at SKS are on, which means the PLS will keep on improving from here. Also, the results only include partial like 7 months, less than 7 months type of results for SKS. So all that will improve the results further. But I think the results are -- I mean, if you can see any weakness, you can point out. But normally, I would say the numbers both on cost -- I mean, revenue growth or EBITDA growth or cash profit, they're quite good. They cannot be like-for-like comparison because you have Hydro Power in quarter 3.

And sir, normally [Foreign Language], normally, what is the PLF?

So we already told in the call, the average PLF for FY '25 has been 73%. But in the fourth, that is already mentioned in the con call address. But in the forward quarter, because of the efforts that we have put in, these PLF improved to 80%. And we see an improving trajectory for the PLF. We don't want to put a number to it, but we see an improving trajectory to the PLF going forward. If you see and look at the Slide #5 -- sorry, Slide -- so you will see in April a 96% PLF and the plant secured sixth position in the All India PLF rankings of CEA. So things are improving and clearly, it's in the right direction.

Sir, [Foreign Language] demand and price. Can we expect any improvement? Ferro Alloys demand and price.

Ferro Alloys, pricing-wise, we will see probably a 5% depression, mainly -- but this is going to be mainly caused by the reduction of the ore prices more than anything else. Demand-wise, demand, we think domestic demand is going to be quite good, strong. Export demand is going to be a little stressed because of the tariff issues and safeguard investigations, everything going on all over the world. So there is a little unpredictability about the export demand scenario. It is a little tough. No, the domestic profitability is quite good because in the domestic, we use less costly ore, right? The grades are quite different. And when we are seeing good support from the domestic demand is pretty strong. And the second factor which is helping us in our area is that a lot of plants are facing an increased energy cost, especially in the area where DVC has increased the power rate by about INR 1.20 finally after a long time. Significant -- about 30% of India's Ferro Alloys production happens in that belt. So that's about INR 4,000, INR 5,000 where production cost has increased. So that -- even if there is some demand weakness, that puts a cap of how much they can reduce the price because we are already operating at a very -- these profitability levels are quite historically on the lower side at the moment. So a little bit beyond can go lower pricing-wise.

But our profitability will be then comparatively better because of the availability of the power at a cheaper rate?

Yes, sir, definitely. And if you see across the industry, we are on the top 25% in the costing wise for the power cost of plants which are having some abnormal power rate, which are remaining all are above INR 7, INR 65 because some are paying around INR 6, but there is a deferred element to it, right? They have a subsidy, which is not sustainable. So we don't see major price depression happening at the moment. It's not so strong that we have to admit. But then a lot of capacity is also getting cut systematically as the higher price -- people are using higher price electricity are just closing production.

[Foreign Language]

That keeps on changing because [Foreign Language]

10%, 20% [Foreign Language]

[Foreign Language] but yes, our costs are very, very competitive.

The next question is from the line of Rakesh Roy from Boring AMC, Omkara Capital.

My first question regarding, sir, if you see our steel volume, our steel volume is down near 11% nearby -- sorry, 13% year-on-year, sir. Any reason demand is slow or anything else?

Rakesh, there are 2, 3 things I've covered in my con call address also that we had taken some breakdown corrections in our plant. So we had stopped our plant for 30 days -- 30 to 45 days. for further improvement in the plant. One is that. Second is, intermittently, when the power rate in the grid is higher, we tend to stop our production and because better realization and giving power to IEX. So we reduce our production there and we sell power in the grid. That would be also the reason.

Okay. Okay. But sir, you sell the power to the grid. If you see your power realization for this quarter is there by INR 6.50, if I'm right, compared to last quarter, it is INR 6.64.

No, we see, in quarter 4, the realizations were weaker. Now it has in the quarter -- first quarter, it has gone up.

Okay. So first quarter that's why I was saying in Q4, as you say due to the higher realization, you sell to the power to the grid. That's why the production is down. But as you...

Main reason if you see -- if you refer to our con call address also, the main reason is because the plant was not doing certain modifications for better quality and efficiency and all of that, which you will see in better going the plant was under maintenance and improvement for more than a month. Different units were under different days of closure. So that is the reason -- main reason. And of course, yes, we have sold certain part to the IEX and all. So that depends on the time might have been lesser, but certain you get. So that way -- I mean, you have to work out the economics.

Okay. Okay. Sir, and next question any guidelines for FY '26 in terms of volume for this steel and power, '26, '27?

Normally, we don't give forward guidance. But I mean, we have taken modifications, and we expect things to be because the plant will now be operational and with a better efficiency. So things should be better. But in terms of numbers, we don't give forward-looking guidance.

No, no, I'm not asking in terms of number. I'm -- in terms of percentage, 5%, 10% from here for FY '25, as you said. In terms of volume.

Commodity prices, you can not predict what -- how the commodity price...

I'm just saying if the prices remain same, could the prices remain like for whole year, so how much volume you are expecting?

See, the logical is that it should come back to the regular levels of production. The production will come back to the normal levels, which was there in FY '24 and maybe improve a little bit because of the modifications we have done. But then beyond that, saying anything will be very difficult because it's a very volatile market. prices, you don't know in commodity to put -- so that is very different.

Okay. My second question is, sir, are we seeing any margin improvement from here because of coal prices down? And if you see margin improvement from Q1 or Q2 from here onwards?

So power definitely will, I think Q1 -- I mean, compared to Q4 things will -- I mean, normally thermal power, Q1 is the best quarter.

Okay. So we see the margin will improve from sequential versus margin will improve in Q1 compared to Q4?

Very hard to say for commodity prices.

It's very hard to say that, but there are raw material prices are also going down as well as the finished prices are also going down. But there is a lag when the finished product prices go down and the because after -- generally, the raw material prices go down later, but we can see the trend at the raw material prices and finished prices going a little bit down from here.

Okay. Okay. Sir, my last question is any chance to -- in next 2, 3 years, you will hive off your power business because the power revenue is near 45% of total revenue, nearby after SKS. So any chance in next -- are you planning to hive off this power business to separate company like this any plan?

Right now, no plan. The name of the company is Sarda Energy & Minerals Limited. Right. It begins with energy -- and energy, as I said in the opening remarks also, energy is going to become more and more prominent. That is the clear guidance that we can give you that energy vertical is going to become more and more prominent in terms of contribution to both top line and bottom line. If you see Slide #5 of the presentation, already EBIT contribution of the energy vertical is almost 50%. We expect that to go up significantly because of various reasons, which are already captured in that slide. So the energy vertical for Sarda Energy & Minerals is going to become more and more dominant and the name itself is Sarda Energy.

The next question is from the line of Parth Pathak, an Individual Investor.

First of all, congratulations to the entire team for such phenomenal -- my question is not actually question. I just wanted to understand it Page #36, that thermal power generation versus sales. So we see that the generation is 3,482 million kilowatt hours, but the sales is only 2,096 million kilowatt hour. Can you...

Balance is capital consumption and auxiliary [Foreign Language]. So we have in thermal power, as you would appreciate, we have 2 type of assets in thermal power. One is the power plant -- I mean, the IPP, where we sell the power to the grid or under PPA or whatever, so where we basically sell the power. And the other is the captive power plant for 160 megawatt. So. That those captive power plant we use for internal consumption for manufacturing of steel or Ferro Alloys. So that is why the difference that you see between the generation and sales. I hope that clarified.

Yes, I understood that part. Just -- I mean, if you allow me, maybe I can ask one more question. I was looking at this metals production and sales numbers for iron ore pellets and iron steel wire rod, wire and Ferro Alloys. I see that it's like last 4, 5 years is like completely flat, maybe hardly some 4%, 2.3%, minus 2.5% growth, 2.5% growth. So is this like a common trend across industry or like something specific only to our company?

No, you are talking about the production numbers, volume?

Yes, production and we are almost like flat for the last 4 to 5 years.

So sir, it is like this that production-wise -- so now we have -- so on a big picture basis, now we have basically 3 verticals, energy, minerals and metals, okay? Metals is our legacy business, which is already under optimum utilization or optimum production level. There might be minor delta in production here and there because of some improvement that we do in the plant, et cetera. But there is no major expansion that we are planning on the metal side as of now. Largely, the expansions that are happening are either on the mineral side or on the energy side, as you can see from the revenue growth and EBITDA growth numbers also that the growth is coming from energy and minerals, right? The metal side type of growth or rather the type of improvement that will happen will be either carbon footprint reduction or improving efficiency, which includes projects like solar project or the mineral fiber project that we did recently. So those are things which reduce cost, save costs or improve efficiency or reduce carbon footprint for the company as a whole and make the steel more greener and all of that. So we are not doing any large capacity expansion on the steel side. Pankaj, do you want to add anything to it?

No, I totally agree. Strategically, we have taken a decision. The group has taken a decision that we would want to grow in Energy and Minerals direction. And that's how we have put our CapEx in the last 5 years in those areas.

So the EBITDA for this coal-based thermal power generation, like you said, like for the hydros 72% EBITDA margin. Is it something similar for coal or it is much lower?

Coal is much lower, sir, coal is low hydro because there is no cost in hydro. The only cost in hydro is during the putting up the CapEx. Otherwise, it is free.

The next question is from the line of Rajesh Bhandari from Nakoda Engineers.

[Foreign Language] that is the best thing, as a matter of fact, because they will be the basic price INR. [Foreign Language] the demand in India is going to increase every day. [Foreign Language]?

Putting [indiscernible] near Raipur.

150 megawatts.

50 megawatts. As of now, we are putting 50 megawatt. And major CapExes on solar side as of now is this much only.

Okay. And Greener [Foreign Language] any incentive? Greener steel.

No, green steel as such, there is no policy of the government at the moment to price it over or give a price incentive. But going forward, as a group, you are reducing your carbon footprint, which is important. That is the major. As of now, there is no settle norm from the government that they will pay extra for some green steel or something. The technologies which are going to be used in green steel also are still under study. So starting from technology like hydrogen or they will do some radical improvement in the current steelmaking by reducing the amount of the carbon burning or different way of reduction. It's a technology under transition at the ,moment. Very difficult to say anything.

[Foreign Language]

We evaluate opportunities in the verticals that we are focusing on, which is energy and minerals. We keep on evaluating opportunities. Our balance sheet is very strong. I think the capital allocation that we have done has been very prudent. So we're still evaluating, sir [Foreign Language] is there, so we'll definitely look at it.

[Foreign Language]

[Foreign Language]

Sir [Foreign Language] matter [indiscernible] is totally different. Can't compare apple to apple, right.

The next question is from the line of Marshall, an individual investor.

I have gone through your slides. Just a few questions. Number one is regarding coal. I mean currently for this SKS Power unit, how much approximately coal is being consumed and how much coal is, and against that, how much coal we are utilizing from our captive production and how much we are buying, number one. In the same regard, suppose once we -- like Gare Palma supposed just like spent 1.8 million tonnes, then what will be our cost of production for the coal? And currently, the coal which we are buying for SKS Power, what are we buying?

I'll answer this. Sir, every day, if the plant is running at full capacity, we are consuming 10,000 tonnes of coal. Depending on the GCB and the ARB, generally, I'm just giving you some rule how the consumption is happening. Government comes out with Shakti coal linkages, the coal prices are much, much cheaper. So if we are lucky and if we get a good pricing in Shakti coal linkages, we try to take as much as coal from Shakti coal linkages. And the shortfall is always we have a facility of our coal mines from where we can always utilize our coal. So -- but our coal mine is -- as told also in earlier question, it's a commercial coal mine. So if it is not consumed in our captive power plants or IPP, it can be sold in the market as well.

That's very good, sir. My second question regarding this, one of the unit was shut down for about a month. So was it properly insured? Did we file a claim on the insurance for the shutdown because there was file incident also. So like did we file the claim for the loss of profit as well because this insurance has been mentioned in the accounts also.

No, no. I'll just -- so you have to appreciate one thing, sir. The asset or this plant was taken under NCLT, which means it was an NPA and it was basically I mean, not run as a regular plant, right? So hence, after we came in, we are doing regular improvements and things like that. But it takes a distressed asset, it takes some time before you can kind of stabilize it properly and take it -- I mean, make the operations proper and efficient the way you want a regular asset to run. So you will see -- I mean, in the initial -- in a distressed asset, you will always find these type of challenges and something happens, something missing. So that is where all the...

No. Actually, I'm not referring to the first shutdown, which are the maintenance shutdown, which is like normal part and parcel of any plant like from September to October. incident.

Yes. I'm happy to share that there was no loss of asset. and I'm very proud of our team who had worked day and night to bring back the equipment and running condition. immediately, we could procure them and could import them on a timely basis or on a fast basis. So...

The fire was detected very fast, and it was quenched almost immediately within half an hour, everything was over.

[Foreign Language] due to this continuously, we also lost profit for 1 month. [Foreign Language]

Loss of profit requires a shutdown 45 days or something like that, and it didn't get triggered. [Foreign Language] it has to be minimum 45 days, and it didn't get triggered.

[Foreign Language]

[Foreign Language] That's what I was trying to tell you, our team has been continuously on the job after the takeover of the asset. But any NPA assets [Foreign Language]

In the same sequence, I want to give you one more valued input year. because 45 days, for example, as our other colleagues onto regarding this like it is the minimum required for the policy. But so let me tell you, those minimum criteria are set by deferred insurer is different. And this can be negotiated. So 45 days is too large period. So I'll request that [Foreign Language]

Fully take your point, sir. That is why I said the beginning that there will be gaps in any NPA asset and the team is working to fill those gaps. We appreciate...

[Foreign Language] what is a Mineral Fiber project. Can you just give some highlight on this one?

Mineral Fiber is basically from waste, we are. The project has just come online in March. We have started supplying some product in the market. And we'll come back with details as market acceptance and sales pick up all of them.

[Foreign Language]

It's basically a waste to project.

How much CapEx was incurred sir?

50 tonnes. Sir, capacity...

CapEx, sir, how much?

CapEx was INR 70 crores. INR 70 crores of CapEx happened.

Will it be positive, sir? or the money is gone?

Sorry, sir?

Will it be positive in the near future?

Sir, we are positive on the product. We have just started supply. We have built a good team and we have just started supply to the market. So that's why I said maybe in the next quarter, we'll comment more on the product but we also are more -- I mean, the market acceptance and all of that included. It takes some time to build the market. So we are in that...

Understood. And sir, one other humble submission or suggestion...

Sir, there is a lot of disturbance from your side. I think you are in some traffic.

Is is okay?

Better.

Yes. So what I was saying that like as you mentioned that we are using 10,000 metric tons of coal per day. So it means there is a huge amount of logistics and transportation required for the coal movement as well as the ore also. So sir, like I have seen because in my own experience, I have seen that like this logistic cost for this commodity business like be it cement or steel is very high, 30% cost is generally the logistic cost. So are you 100% taking this transportation on higher? Or did you also create your own fleet and transport department because we could save a lot if you do our own captive, for example, captive transportation?

Sir, as of now, we don't have our own fleet and managing fleet is a different ball game. And you need to have that bandwidth also to handle all the truckers and the drivers and the helpers and the trucks and the maintenance, et cetera. So as of now, we don't have this facility in place. And right now, as Mr. Nilay Joshi discussed, our first and primary objective of this IPP plant is to run at full capacity and to better PLF numbers. So we are focused...

Sorry to interrupt. Mr. Marshall, I would request you to mute your line while the management is answering your question. There's a lot of disturbance from your background.

So that is the idea. So we are focused on improving the PLF of the plant. Maybe in future, we can think of that.

Now just to add on to what Mr. Sarda said, we -- from the logistics side, the power plant, the IPP plant already has a running railway siding, okay, on which the coal delivery happens as on date also. I mean that is the best way of logistics for coal. The -- our Siltara plant also has railway siding. And we are in the process of developing a railway siding at our coal mine. So we see that the best way to transport coal in the most cost-effective manner is through railways, and we are working already in both our major plants are having a railway siding in place, and we are developing a railway siding on our coal mine also. So I think that should largely take care of the logistics of getting the logistics part under control.

Sir, I fully agree just like because my own I'm only sharing with you. I understand that currently, our prime focus, our prime objective is to maximize the PLF, no doubt. I'm not saying to do today, but what I'm saying since we are also shareholder for the long term, what I'm saying that, for example, even if this railway siding is there, if the railway siding is coming to the pet or to the head of the plant, it's fantastic. But again, for example, this unloading loading is there. I have seen that how the transporters are mating money. I have seen from my own Sir, I have seen that how the transporter has become multimillion, multimillion, multimillion. I have seen them growing in the last 30 years. So that's what I'm saying, not now means we can create a separate department or separate profit center, like be it sufficient admin guy transporter guy who over because since our volume is too huge and plus we are more investing in the minerals and the mines, so this requirement is going to more and more and more because, sir, like this transporter a person who buys a truck today within 24 months, like his truck become cost of free. So what I'm saying, this is kind of the delta we are making. So please, if we cannot replace 100% for the transporter at least INR 30, INR 45 or INR 50, we should start like we should a plant so that in the next 1 year, 2 year, we can start it. And we are a fund plus company and there is no like a problem in funding those things. But yes, I fully agree, existing manpower of transport department cannot run it. It has to create a separate vertical, which itself has to be profit center. So definitely, it will bring some more profit for the company, sir. And like currently, it is -- we think it is, for example, we are taking it as granted, but there is a money which can be saved for the company, sir.

Sir, thanks for your suggestion. We'll look into it.

Mr. Marshall, sorry to interrupt. May we request you to return to the question for a follow-up question as we have participants waiting in the question queue. The next question is from the line of Vedant Sarda from Nirmal Bang Securities Private Limited.

I want to just ask our new capacity of 600 megawatt, which is fully operational in the current year, what kind of revenue addition we can expect and EBITDA from that project?

You mean the SKS power, the 600-megawatt that -- so you can take maybe -- I mean, INR 400 crores of salable units.

400 units.

Crores.

INR 400 crore of revenue?

Yes -- no. No, unit, salable units.

Last year, we produced around 3,700 million units. So this year, our target would be to produce 3,200 million units.

The next question is from the line of Pranay from Alfa Invest.

So yes, just continuing on the last participant's question. You mentioned that you are hoping to produce some 400 million units. So what is the price average price per unit that you're expecting?

No the price vary -- around 100 megawatt, we have a PPA in place. But for the balance, it depends on. more broader picture, what we are doing is as a strategy, we are trying to tie up a large part of the capacity [indiscernible].

Sorry to interrupt Mr. Pranay can I request you to mute your while line the management is answering your question?

Yes. So I was saying that as a strategy, I mean, we right now have around 100 megawatt of medium-term PPA. And we are trying to basically see that a larger part of the capacities can be tied up into medium-term PPAs or long-term PPAs so that -- I mean, you have more stability in terms of price at that point in time. But right now, to comment on one single price, it will be very difficult because short-term arrangements on sale of power or on IX, whatever, that keeps on varying. It's a seasonal thing. Summer, you get a very good high price and then rainy season, you'll get a low price. So it changes. So you have to get into long-term or medium-term PPAs to give a proper price guidance.

Okay. But can you just give a guidance on what are the current PPAs being done at the current rate not the exchange rate, but PPA rate [indiscernible].

No, the existing 100 megawatts at INR 5.2.

Okay. All right. And on average, we can assume INR 5 considering summer [Foreign Language] and later it's less.

I think average between INR 5 to INR 6 for the whole year.

Okay. And just one more -- one or two more questions on this side. What is the debt for the power plant? How long is the expected life of this asset?

I didn't get the first question, I didn't get the second part of the question. The total funding requirement or the cost of acquiring the project was INR 1,950 crores, and that was actually funded in a debt to equity of 70-30. So around INR 1,380 crores of bank debt is what we had taken and we already repayment started.

Just wanted to confirm when we acquired the we acquired the company, there was no debt all the control itself, right, Like on SKS?

So this acquisition happened under IBC, where basically -- so it had already become NPA, right? The asset was an NPA asset. So we basically -- the payout that we made went to financial creditors or operational creditors. So that -- yes, so the debt was settled in that sense.

Okay. So the company itself is debt-free. We have taken some debt to fund the acquisition, 70-30.

So now it is merged, actually. Now it is a single entity.

Yes. So no debt is just the one we -- debt is like INR 2,000 crores is the total?

The only debt which came with the asset was the one that we raised to fund the acquisition. There was no debt came along with the asset.

Okay. And the second part of the question was, what is the expected life of the package?

Pankaj, you want to answer that?

It would be around 30 years from now because it has run very little.

Okay. The usual thermal power plant run 35 years or so, I'm assuming [indiscernible].

Our next question is from the line of Rajesh Bhandari from Nakoda Engineers.

[Foreign Language] SKS Power, is it being maintained by -- still by NTPC?

No. Just within a month after our acquisition, we terminated the prematurely terminated the contract, and we are looking after with the existing people only and few...

Sarda is in a position to maintain such a big plant? That's really commendable.

The result shows.

Yes, yes. It's really commendable, sir.

Sir, we have a very highly qualified team of people, very, very senior people from NTPC and other established organizations who have joined us over a period of time, including -- I mean, the gentleman, Mr. speaking, he was a very senior Executive Director with NTPC. So the team is -- we have a very strong team in place.

[Foreign Language]

Sir, right now, it will be very too early to speak about that's what I said. It's a new product that for us, we have introduced in the market. Initial response we have got is positive. But you give us a quarter or 2 before we can put numbers to it.

[Foreign Language] Mineral fiber.

Energy conversation.

So is it kind of rock wool?

[Foreign Language]

Thank you. Ladies and gentlemen, in the interest of time, we conclude this call, and I hand the conference over to the management for closing comments.

The year gone by breaking year for the company and current year is more exciting. The diversification strategy of the company into Energy and Minerals has paid off well. The operating performance of IPP has shown consistent improvement. The company has been reinvesting surplus funds in a number of diverse projects for long-term sustainable growth. Current year performance will have incremental benefit of full year operations of the IPP, increased production and commissioning of 3 new projects that is 25-megawatt Rehar Hydro Power project in Chhattisgarh, the Mineral Wool project in Vizag and 50-megawatt solar power project in Chhattisgarh. Please feel free to reach out to us or our IR team for any further questions. Thank you all.

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.

Thank you.