Steel Authority of India Limited (SAIL.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Steel Authority of India Limited Q2 FY '26 Post-Results Conference Call hosted by Nuvama Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kejriwal. Thank you, and over to you, Mr. Kejriwal.

Thank you, Andrew. Good morning, everyone. On behalf of Nuvama Institutional Equities, we again welcome you all for Q2 FY '26 Post-Results Concall of Steel Authority of India. We are pleased to host Dr. Ashok Panda, Director Finance, along with his team for this call. Now I would request Mr. Panda to have an opening remark, and then we can open the floor for -- over to you, sir.

Thank you very much. A very good morning, everyone. I welcome all our investors and analysts who are joining this results concall for the financial results for SAIL for the period quarter 2 and H1 '25-'26. Before we move to Q&A section, let me brief you on the results for the period. We start with the economic scenario, global scenario, Indian steel scenario and performance of SAIL in brief. In the economic scenario front, beginning with global economic scenario, uncertainties and volatilities stemmed from the tariff war. This continues to impact the demand, supply situation globally as well it has got an impact in the domestic market as well. The projections for GDP have improved in line with the same for economies individually as well as regionally, and it has improved the global averages. The IMF had improved its projections for global GDP growth rate to 3.2% in 2025 and 3.1% in 2026. The projections for India has also been revised upwards to 6.3% by various agencies. In the global steel industry front, the global steel industry is weighted down on the adverse demand-supply situation as some of the largest producers are finding demand lowering in their own geographies. The landscape is influenced by economic trends, trade policies and technological advancements. While certain regions may benefit from protective trade measures, the overall impact is complex with potential for increased cost, market volatility and shift in global trade dynamics right now. That is global steel scenario. And looking at the Indian steel scenario. Indian steel industry continues to enjoy robust demand for steel with the consumption during H1 '25/'26, which has grown by more than 8% over the same period last year. This was, however, sort of overshadowed by the growth in production as crude steel production grew by more than 12% in this half yearly over same period last year. During the same period, imports have come down substantially, whereas the exports have recorded increase, yet India -- even then India remains a net importer during H1 '25/'26. There is a reversal in trend of import versus exports in this half year as compared to last year. During this time, the imports have come down and exports have gone up. Exports have gone up because during H1, the production was more than that of the demand in the domestic market. So that is the reason why there was a bit of oversupply situation in the country due to which the exports have gone up. And maybe because of this safeguard duty and other things, the imports have come down drastically. That has given some kind of a relief. But because of the oversupply situation in H1, the pressure was on the price front. We hope that in quarter -- during the latter part of quarter 3 and quarter 4, the demand, the economy will pickup -- Indian economy pickup and demand will increase, and this will then give a relief to the price front. So the challenges continue on the pricing front as of now. Now with the global trend is not very good. But in India, we are expecting that it will improve in latter part of quarter 3 as well as quarter 4. Coming to the performance of SAIL as a company for quarter 2 and H1 '25/'26. The crude steel production steady at 9.5 million tonnes as against 9.46 million tonnes during last year H1. The sales volume is at 9.46 million tonnes, which grew by around 17% from 8.11 million tonnes during H1 last year. There is a huge increase in the sales volume during this period of H1, so far as SAIL is concerned. So that has resulted in reduction in the borrowings as well. During H1, we have reduced more than INR 3,000 crores of borrowings, and that is where the interest burden has come down significantly. Revenue from operations at INR 52,625 crores in this H1 grew by 8% as against INR 48,672 crores during the same period last year. EBITDA margin stood at INR 5,754 crores, with a growth of around 3% over the same period last year. Profit before tax at INR 1,443 crores increased by 28% and profit after tax at INR 1,112 crores, increased by 32% over the same period last year. Our debt reduction drive continues as borrowings on 30th September came down by INR 3,384 crores as compared to the similar period last year. Going forward, as the monsoon season is over and festivities are over, we hope that the market is going to have an uptick in terms of its demand as well as the production will be robust, demand will increase. So pressure on the pricing front may ease out and prices may improve. That is the expectation. As the coal prices continue to remain range bound. However, because of the depreciation in rupee with respect to U.S. dollar, there is some impact on the bottom line. But in terms of index of coal price, that is almost kind of range bound. So the margins are likely to improve going forward. That is our expectation. So with these few words, I hand it over to Mr. Kejriwal for opening the Q&A session, please. Is that okay?

Yes. Andrew, please open the floor for Q&A.

[Operator Instructions] The first question comes from the line of Amit Lahoti with Emkay.

My first question is on capacity expansion and CapEx. So currently, we are generating EBITDA of around [ INR 5,000 crores ] in our capacity expansion plan what is the [Technical Difficulty]?

Can you please repeat the question, actually it is not very audible, very much audible.

Mr. Lahoti, this is the operator. We have lost the line of Mr. Lahoti. We'll promote the next, that is Rahul Gupta.

A few questions. First, any specific reason why realization trends have been better than what we have seen with the steel pricing trend during the quarter? Is it to -- has inventory liquidation has any impact on this? Any color on this would be very helpful. So that's my first question.

Yes. The answer to this question would be actually even if the sales price has come down in quarter 2, but we can find that the realizations have gone up primarily because of more sales because as we can understand, the sales growth has been there for SAIL. H1 over H1, it is around 16% growth. So that is primarily the reason. And as you correctly said, this has resulted in a reduction in inventory to some extent, but the production was also good. And at the same time, this has resulted in a reduction in the borrowings greatly.

No, no. What I am asking is that the decline in steel prices in 2Q versus 1Q was much higher than what your steel realization has reflected into the numbers. So any specific reason for that?

Yes. The reason for that between Q2 and Q1 is that actually the sales volume of byproducts and the scrap items that has increased a lot in Q2. So we have made a lot of sales of that, and we have reduced the inventory of byproducts as well as scrap items. That's the reason why overall realization is more in quarter 2.

And what's the inventory for finish till now? I remember it was around 1.8 million tonne last quarter.

Just 1 second. Yes, finished steel inventory is 1.9 million tonnes as on 30th September. But the important thing is that the in-process stock has come down from 1.3 million tonnes to 0.7 million tonnes. There's quite a bit of -- a lot of reduction in in-process stock. So if you talk about the total steel inventory, so between opening and closing, the opening was 2.72 in this year and closing is 2.69 million tonnes.

Got it. One final question for me is, any update on iron ore sales. I remember you had got accrual for sales. So by when can we expect you liquidating your massive iron ore inventory that you have?

Yes. Let me give you the perspective in this respect, actually 2, 3 points on this. One is we've been selling from Odisha Group of Mines, that is from Bolani continuously. If I remember correctly, they have sold around 0.3 million tonnes. I don't have the figure right now, but it is around that. So that is going on against the target set by us. So far as Chhattisgarh Group of Mines is concerned, we don't have much quantity to sell as of now. But going forward, the new mines is getting opened up, which is Rowghat. Once the production picks up over there, we can think about it. Now coming to Jharkhand Mines -- Group of Mines regarding the dump iron ore fines, which is having a stock of around 33 million tonnes. So there 2 things that are happening. One is we are dispatching and the dispatch quantity has gone up significantly. We are dispatching this quantity to various sister plants. Like in a month, we are dispatching around 60,000 to 70,000 tonnes, which is at the rate of around 0.7 million to 0.8 million tonnes per annum. So it is -- we have increased the dispatches from that dump. Iron ore fines to various sister units. That is number one. Number two, recently, we have put up an auction for 1 million tonnes of dump fines. So we are looking forward to participation from the prospective customers in that respect. Yes, that is the answer.

Next question comes from the line of Parthiv Jhonsa with Anand Rathi.

Sir, my first question is pertaining to the sales offtake. We have seen a very good number in H1 and also in Q2, considering the overall market. Is it possible to quantify what is your guidance for FY '26 and '27, considering not major capacity expansions from IISCO, I think is expected in the next 2 to 3 years and only debottlenecking kind of a capacity expansion is expected. So can you give some guidance of Q3 FY '26 and '27 as far as your sales volume is concerned.

Yes. Let me try to answer this question. I just need 1 second. As you said correctly, actually, FY '26/'27, will have debottlenecking efforts which are going on because of that, the production volumes as well as sales volume will increase. We've been making a lot of strategy to increase the sales, both on the domestic front as well as on the export front to some extent. And if you can see, in H1, we have tried to reduce our inventory volumes of steel in totality and thereby the reduction in borrowings. So going forward, in quarter 3 and quarter 4 -- first, let me talk about the quarter 3, quarter 4 then '26/'27. In quarter 3 and quarter 4, we are looking at a reduction in the saleable steel inventory by increasing the sales volumes more than that of the production volumes. That means in quarter 3, quarter 4 our production volume is going to increase also. At the same time, increase in sales volume should be more than that of the production volume so that overall inventory can come down. Now coming to '26/'27, in '26/'27, we'll have still a good target as compared to '25/'26 regarding our production -- regarding our production because we have debottlenecking efforts which are going on at various steel plants. Certain things we have already done in our IISCO Steel Plant, and we're going to take up at Rourkela Steel Plant, if the market picks up, then will start one kind of the furnace -- old furnace and start increasing our volumes as well. So that is the kind of effort. So that is why in '26/'27, the volumes will be more than that of '25.'26 and because we have got inventory of saleable steel, that will also be liquidated to a greater extent, at least by 50% during '26/'27. And on to that, the production volumes. So the sales volume growth will also be there in '26/'27 as compared to '25/'26. That is our expectation. And also, our efforts are towards that as well as we understand that the steel economy in domestic market is improving. So our economy will also support that.

That's actually quite helpful, sir. Sir, my second question is pertaining to your borrowings. We have seen the borrowings going down substantially in Q2, right? Do you expect this momentum to continue at least for next 2 to 3 quarters before the IISCO CapEx kicks in? Or do you expect this to increase, let's say, by the end of '26 and '27?

No, I don't expect this to increase because in '25/'26, we are trying to reduce the borrowings to the extent possible, reduce our debt equity ratio to the extent possible so that we keep a room for IISCO expansion -- to accommodate IISCO expansion, the CapEx of that will start picking up from '26/'27. You are correct, we have a target to reduce our borrowings further. The momentum of reduction in borrowings will continue in quarter 3 and quarter 4 this year as well.

Sure. So if I may just squeeze in a quick question. Can you give us some guidance on the coal cost for Q3?

Q3 or Q2? What are you talking about?

Q3.

I mean Q3 actually, as you can see right -- coal price. I'll just give you -- just give me 1 second. So as we can see, that in October, the imported coal price in our plant units are around INR 17,300, which has gone up from the August level of INR 16,600. That is between August and October, there's an increase of about INR 700. This is primarily because of a depreciation of rupee with respect to USD. But now onwards, in this month by October end, we are finding that the indices has increased a bit. Of course, the indices are range bound, but it has increased from September level of 187 to 194 right now. It may soften, we do not know about that. But it is varying between, say, 185 to 195 in that range. So right now, the index is on the highest -- a little on the higher side, 194. So as you said, what about quarter 3 and quarter 4? Because in quarter 3 and quarter 4, the demand is going to pick up everywhere. So we believe the imported coal price will remain a little higher as compared to what it is today. Today, it is around INR 17,400, may go towards INR 18,000, INR 18,001 something that like in quarter 3, I expect. Quarter 4, we'll see how it continues.

So should we expect around $6, $8 kind of an increase in coal cost for quarter 3?

That's what it is. That's what it is because from 187 it has gone to 194, I believe it will remain there or it will be more around that level.

Next question comes from the line of Rajesh Ravi with HDFC Securities.

My first question is can you say what is the NMDC volume contribution and revenue contribution in this quarter? Your 18.5 million tonne core volume that remains intact for FY '26?

Just 1 sec. NMDC, let me look at the figures. So this for quarter 1. So quarter 2 our volume is 3 lakh tonnes, almost 1 lakh every month and amounting to INR 1,500 crores.

Sorry, INR 1,500 crores?

Yes, it is 3 lakh and INR 1,500 crores in quarter 4.

Okay. And this 18.5 which you have guided, that remains intact for FY '26?

Yes, yes, yes. Yes, that remains intact.

Okay. And you mentioned that because of higher scrap sales around this time in Q2, your net realization appears to be better off compared to the normal steel price decline. So maybe in Q3 we'll have that impact getting reversed?

Pardon?

In Q3, with scrap sales normalizing or lower scrap sale and given that steel prices have further weakened, we will be looking at a higher decline than the normal steel price decline?

Let me explain actually even if there are pressures on the price front right now, but I believe from November, middle or end of November, things should improve and prices would improve. When we talk about last year, this time also from December onwards, there was improvement in the prices. December and entire quarter 4 remained under improvement. So that is going to improve, number one. Number two, so far as sales of byproducts and scrap and defectives are concerned, we are having our efforts towards that. We'll continue to have our momentum towards liquidating those stuffs through auction, frequent auctions and all that. So that is happening in all the steel plants as well as in stockyards. So we are going very aggressive on that. So -- on that front, materialization will be quite good as well during quarter 3 and quarter 4.

Okay. Okay. Any outlook on, on the cost side, you mentioned that coking coal prices will be higher by $6 to $7, right, in this quarter?

It looks like.

It looks like, okay. And in terms of overall margin, how do you look at the second half versus 1H?

Because in second half 2, 3 things will happen actually even if coal price could be a little on the high side, which we do not know at this point of time and that is also linked with steel market situation. And if this remains at this level, then the steel prices are also going to go up. So it will balance out. That is number one. Number two, in quarter 3 and quarter 4 because our capital repairs are over in all the steel plants. So the production is going to go up and movement in the furnaces -- blast furnaces will improve. Thereby the cost reduction will be also there actually. So in quarter 3, quarter 4 generally will have better cost reduction, so that will add to our profitability.

Okay. And sir one last question, which I even, I had asked in the last call your provisional price table which you -- provisional revenue, the table which you shared in the footnote, how do we read into those numbers? What do you mean by the cumulative number and the YTD numbers? Because if I look at in Q2, you have mentioned INR 2,500 crores for the current quarter. And YTD, you have mentioned around INR 4,900 crores. But Q1, you had reported INR 2,600 crores. So ideally it should have been INR 5,100 crores. And then what is the cumulative number which you share? Can you explain what is the working behind the number?

Yes, I'll try to explain rail price. This is regarding the rail pricing. So that is a constant thing in SAIL P&L and balance sheet every time. So the rail price has been finalized up to '23, '24 and '24, '25 is under process. So that is on track. So independency of the finalization, what is happening is the provisional price is decided by the Joint Pricing Committee in which there are members from SAIL as well as railways. So that is why right now, whatever revenue has been recognized as per Ind AS 115 in the books of accounts, that is based on the provisional prices. And the provisional prices are already set. So in that provisional price, we have got our revenue recognition done, which is in line with the market prices right now. So once '24-'25 prices are finalized, then the differential will also be booked to the profitability. And after that, the provisional price will also be reset. So with every finalization of the price, the arrear amount is also put in the P&L account and as well as the provisional price is reset. So this is in the notes of the accounts, which always we show as a part of the disclosure.

Next question comes from the line of Pallav Agarwal with Antique Stock Broking.

So just a question, you said you expect realizations to improve. So could you just give a breakup of how flat and long prices move between Q1 and Q2. And currently, where spot prices are compared to Q2 average?

Yes. So Q1 and Q2, just 1 second. So Q1, in case of long, quarter 1 was INR 54,500 and quarter 2 is INR 49,000. So it is around INR 5,500 reduction between Q2 and Q1. That is regarding long products. In case of flat, Q1 was INR 50,400 and Q2 is INR 48,700. That means a reduction of around INR 1,700. So if you look at the average actually, on an average quarter 1 was INR 51,700 and quarter 2 is 49,000. Around INR 2,700 average reduction in sales price, NSR between quarter 1 and quarter 2.

Sure, sir. And so this was you're saying partly offset by the sale of scrap and defectives. So this didn't show up in the blended realization?

Partly offset by that as well as partly offset by the input prices as well.

And sir, when you give this guidance of 18.5, this is excluding the NMDC trading volumes because at 0.3 million tonnes per quarter, maybe we'll touch an annual run rate of 1 million to 1.2 million tonnes. So this 18.5 is only SAIL production, right?

Yes, that is only SAIL production.

Okay. And we want to get a rough sense of the profitability on the NMDC trading sales. We have the purchase of materials. So is that a fair reflection of the purchase cost on NMDC?

Yes, there is a fair reflection on the purchase cost on NMDC based on our agreement kind of a thing. So that goes as per that.

Sure, sir. Lastly, if you could also just share how spot prices, say, in October compared to Q2 average, how much are they lower than that?

Which one?

Spot, sir. Let's say, October price...

Yes. So October actually long price is INR 50,000, INR 49,900 and flat is INR 46,600. So in October, we can say that the price -- flat prices are down by around INR 1,200 to INR 1,300 per tonne, while long prices are flat. That means in case of long products, the prices are flat in October as compared to September, but there is a downward trend in HR coil prices, flat prices, flat excluding plates, PM plates. So in PM plate, the price is almost flat. But in case of HR products and CR products, there is a reduction of around INR 1,200 to INR 1,300 in October as compared to September.

[Operator Instructions] Next question comes from the line of Raashi with Citi.

Sorry, I just missed the October flat realization, did you say it was INR 46,800?

INR 46,600 ma'am.

On the coking coal side, what was the average cost in this quarter?

Average cost in quarter 2 is INR 17,400.

And how much has imported coal?

I'm talking about -- yes, imported coal is INR 18,150.

So that INR 17,400 is currently trending at INR 17,300 now, is what you said?

INR 17,400 was in quarter 2. And right now, it is almost at the same level so far as October is concerned.

Got it. On the CapEx side and on the debt side, so we've got non-Ind AS debt numbers. Can you just give the Ind AS net debt number for September please and also the projected CapEx for the year.

Regarding CapEx, actually -- regarding CapEx, so we've achieved in H1 INR 3,376 crores, which is above our target of INR 3,100 crores. And for this year, we are targeting in excess of INR 7,500 crores of CapEx. That is regarding CapEx. So you were referring to the Ind AS and non-Ind AS, are you talking about the borrowings?

Yes.

You're talking about the borrowings.

Yes.

When you're talking about the borrowings, just 1 second. Ind AS borrowing are INR 33,663 crores, as on 30th September 2025 and non-Ind AS borrowings is INR 26,427 crores. So that is the actual borrowing. Non-Ind AS borrowing is the actual borrowing in the books of SAIL which is INR 26,427 crores which is a reduction of around more than INR 3,000 crores as compared to the opening.

Next question comes from the line of Siddharth Gadekar with Equirus.

Can you from next quarter onwards just spell out the NMDC volume and revenue and cost item in the presentation, so it will be more helpful for us to understand how much is the gain from NMDC.

I mean the quantities and realization we can certainly give for information of everybody. So the gain part is inbuilt in the system. So it may not be exactly possible to quantify that at this point of time.

And secondly, what is the quantum of scrap sales in this quarter?

The quantum, we don't have that information, let me try to see if I can. It has gone up quite a lot, INR 1,140 crores actually as compared to INR 869 crores in quarter 1. So increase of around INR 200 crores -- INR 250 crores.

Next question comes from the line of Somaiah V with Avendus Spark.

Sir, on value-added products you mentioned, you did talk about scrap increase Q-o-Q. On value-added products, can you give us a similar number?

Yes. Value-added products actually, the total value addition -- Value-added products is around 57%. So we've been trying to increase this value-added products quarter after quarter. We are expecting that this will improve further in quarter 3 and quarter 4. If you can compare in quarter 1, it was 55%. It has improved to 57% in quarter 2. And going forward, we are targeting more than 60%.

Got you. Sir, also on the byproducts which you said, which also increased and helped on the realization front. So is there any quantum, nature of the product and what the quantum of increase...

Yes, nature I can explain. Actually, the nature is in the scrap side, defectives, rejected, metal scrap, iron or steel scrap, crude tar, slag and other things put together. So these are the nature of items. The waste material basically, all the waste material.

This Q-o-Q increase of INR 200 crores includes everything or it's only the scrap?

It includes everything actually, we have been focusing on having frequent auctions for the byproducts as well as steel items. Steel means the scrap items, defective and scrap items. So that there is liquidation of stock as well as cash flow releases, working capital release.

Sir, any quantum that you can give in terms of inventory that we carry on these items, either in volumes or value?

We have, but we'll be able to provide afterwards. Right now, just in front of me, it is not there. But yes, we do maintain that volume as well.

But as you were saying, this is something that you expect to continue in the next subsequent quarters also for the auctions and then liquidation of this?

Yes. We continue that because there are other rejected material and defective metal lying in the shop floors. So that we are trying to bring it to one place and bring it into the yards for conducting auctions. We want to reduce that count actually.

Sir, one clarification on the long pricing. So one, at an industry level, we have seen a sharper a rebar price correction which is close to INR 6,000, INR 7,000, whereas as you were mentioning Q1 to Q2, only INR 4,500. What could be the difference? Is it the discounts or the product mix, that is one. And second, you mentioned about current long prices versus September. If you could give a current long versus Q2 average, that would be helpful.

Current long price in October is around INR 50,000, INR 49,940 as compared to Q2 average of INR 48,800. That means around INR 1,100 on the higher side. Current prices are on the higher side as compared to Q2 average.

Next question comes from the line of [ Kartik Kumar with B&K Securities ].

Sir, I just wanted to understand like how much volume growth can we expect in FY '27 as compared to, I suppose, a provisional FY '25 number?

Just 1 second. In FY '26, '27, we expect to have growth of more than 5% as compared to '25, '26. We'll be targeting anything between 5% to 7%, at least. That will happen on the debottlenecking processes.

Okay, sir. And then beyond FY '28, say, like any new CapEx that you are looking at, any update on that?

Yes, primarily the CapEx will come from 2 accounts. One is the expansion in IISCO and the other one is the debottlenecking packages in other places. So that is why actually, if in this year, we are targeting in excess of INR 7,500 crores, these are going to jump substantially from next year onwards.

Okay, sir. Can you give a ballpark number or like if it's possible?

Yes, next year onwards, it will be more than INR 10,000 crores. It will be in excess of INR 10,000 crores in '26-'27. And after '26, '27, it will be still further more.

Okay. And sir, just one more question. I just wanted to understand what's your long-term debt reduction strategy, like any specific ratio net debt to EBITDA or something that you're looking at that you target internally?

Yes, on that count, actually, now that we are reducing our borrowings. If you look at the debt equity ratio on non-Ind AS basis, it is around 0.46, which is what -- which is where we want to reduce it down to 0.3, 0.35 or maybe 0.4 by the year-end. And after that, from next year onwards, as I have already discussed, that our CapEx is going to pick up, primarily because of the debottlenecking projects as well as the expansion projects of IISCO. So that is why the borrowings are going to go up. So we are creating a headroom for having more borrowings to fund our expansion projects going forward. So expansion projects are outlined for next 4, 5 years in a bigger way.

Sir, and then and what should be the proportion of debt or internal accrual that you will be using to fund...

Yes. We're looking at 50%, 50% at this point of time.

Next question comes from the line of Parthiv Jhonsa.

Just on the byproduct scrap sales and everything, I just had a very quick question. I believe in this quarter, you said you did about INR 1,140 crores kind of realization from those category. Considering you have done some recent auction in coal tar and iron ore where you have -- especially in iron ore, you have received some better interest compared to coal. Is this number expected and considering you're going to sell more and the quantum in each and every auction is getting higher and higher, is it expected that this number of INR 1,140 crores is expected to go up higher in Q3?

Yes, it is going to go higher in Q3 and Q4 also because it is not just coal tar, it is also the defective as well as iron and steel scrap items and also the slag items. So all put together, this is a bundle actually bundle of all those plant sales.

Okay. And is it fair to assume that this entire benefit of INR 1,140 crores has flowed down to EBITDA and PBT?

Yes, because it was in the stock, so the differential amount between sales price and the stock valuation rate, that has gone to the PBT and EBITDA.

Is it possible to give...

And also because the borrowings have come down. So in terms of reduction in interest, that has also gone into the PBT.

Absolutely. Absolutely, sir. And is it possible to quantify the quantum, positive quantum what it had on your profitability?

Right. Say, for example, if there is a reduction of around INR 300 crores between quarter 2 and quarter 1 increase in that realization. So out of that, at least 20% to 25% has flown into the EBITDA and PBT.

Next question comes from the line of Tushar Chaudhari with Prabhudas Lilladher Private Limited.

Sir, I would like to know the progress of DPR, I think we -- for IISCO. Sir, can you be a little -- I mean, you give us more details on the projects which are going to come up in second half of FY '27?

Yes. So in case of IISCO, where we are planning for 4.5 million tonnes of expansion at a cost of around INR 33,000 crores. So order placement in certain cases have already been made and in a couple of 1 or 2 months, order placement for the balance major packages will be completed. And after that, the design engineering will start and then the physical active supplies and physical ground activities will start over there. So that means from '26, '27 onwards, in '26, '27, there will be major CapEx payments towards IISCO packages. So far as order placements are concerned, they are almost on track.

And rest of the projects, any DPR activities done?

Yes. In rest of the projects, we are looking at the debottlenecking projects at Durgapur, at IISCO, at Bhilai, at RSP. So these are also on track. And in certain cases, orders have been placed, for example, in case of Durgapur Steel Plant, the rebar mill order was placed last year. So the ground activities already started over there. So in blast furnace of Durgapur, they are also finalizing orders like that. So in all the plant units, the tendering processes are going on in certain cases, orders have been placed and work has already started.

Okay. Sir, 1 last question. On this scrap, you said for 2Q, we sold INR 1,140-odd crores of scrap.

Yes. Scrap and byproducts put together.

Next question comes from the line of Rajesh Ravi with HDFC Securities.

Sir, this byproduct and others, which you mentioned in the annual report in schedule, this is mentioned as other secondary and byproduct, which was like in FY '25, INR 3,300 crores revenue or income booked from this?

Yes. This is part of that byproduct.

Okay. So this is part of -- around INR 2,000 crores is what you have realized in first half. Is this understanding correct?

Yes. That is correct.

Okay. And secondly, I was again coming back to your disclosures regarding the provisional price table which you put in. Just want to understand technically what do you mean by the cumulative number over there? Because that number and also the half yearly number, they don't match, the first 2 quarters sum don't match.

Just one thing, if you can be specific on the numbers, we'll try to explain.

Okay. The standalone on Slide #9 of the result table, Page #9. So for this quarter, you have mentioned the number is INR 2,500 crores. And Q1, this number which we had presented was INR 2,600 crores, put together should be around INR 5,100 crores. But half yearly number, which is put in this quarter table is INR 4,840 crores. And similar differences are there even in the last year numbers, which I have calculated. So why this difference? First? And second, what is this cumulative till 30th September number of INR 13,800 crores? What does that mean?

Okay. So cumulative till date is INR 13,800 crores, total provision cumulative, which includes not only rail items, actually, it includes rail as well as defense items put together, anything which is sold to the government. So majority of that is rail items. But after that also, we have other items like the quantities which are going to defense from different, different plant, all 3 plants. So this INR 13,800 crores includes rail as well as defense items.

Okay. And this half yearly and quarterly numbers, how do we match them up?

So these numbers vary a little bit based on the debit advices and credit advices, which are concurrent in nature.

Next question comes from the line of Siddharth Gadekar with Equirus.

Just a follow-up question, sir. First, on the employee wage revision, when do we expect the next employee wage revision to kick in?

Yes. Regarding wage revision, actually, it was from 2017 to 2027. So it is 1st January 2027, after which it will be due.

Okay. And sir, the quantum of increase that we are expecting in employee cost beyond that?

Because there is no guideline right now, actually it will not be possible for us to quantify even we do not know.

Next question comes from the line of Vinit Thakur with Plus91 AMC.

Sir, I just want to know why is the reduction in the OPM, sir, as in Q-o-Q and year-on-year as well?

Pardon, can you please repeat the question once again?

So I saw there was a reduction in OPM Q-o-Q and year-on-year. So could you just shed some light on why would -- what is the reason behind it?

Yes, reduction in OPM between Q2 and Q1 you're talking about, that's primarily because of 2 things. One is reduction in the sales price. And the other one is actually in Q2, we had taken certain capital repairs and there were some issues with Bokaro steel melting shop in quarter 2. So that is why there is a reduction in quarter 2 in OPM. But all the capital repairs are over as well as Bokaro has come back on track. So from quarter 3 onwards, we are expecting good numbers, improved numbers.

Sir, could you shed some light to what would be -- would be back to original numbers around 12% or would be going down or would be around 11% as per last quarter?

You're talking about quarter 3?

I'm talking about the Q1 of FY '26 and the Q2 of FY '24. So FY '25 had around 12% and FY '26 had around 11%. So I just want to know would be around the same number or would be...

EBITDA margin you're talking about?

Yes, sir.

So EBITDA margin actually in H1 '24-'25, it was 12.9%. And average '24-'25 was 11.57%. Right now, it is 11.01%. We are expecting that it should improve in quarter 3 and more so in quarter 4, actually. In quarter 4, this should be a good number because every time we find in quarter 4, things improve a lot. It will go towards 14%, 15%, something like that in quarter 4. So in quarter 3, it may remain flat or may improve a bit depending on how the market behaves. But as I said, all the capital repairs are over, the production is going to go up. So things are looking up.

And the reduction in production as well is due to the Bokaro plant, reduction in production of crude steel...

Yes -- if we look at the crude steel and hot rolled, they are linked to each other. So it is because -- primarily because of Bokaro plant, they had issues with the steel melting shops, which is resolved by now, just a couple of days before. So now it has started improving production.

Ladies and gentlemen, that was the last question for today. We have reached the end of question-and-answer session. I would now like to hand the conference over to Ashish Kejriwal for closing comments.

Yes. Thank you, everyone. And I would like to thank the management to give us an opportunity to host the call and Dr. Panda for patiently answering all the questions. Sir, any closing remarks from your side? That will be helpful.

Yes. Thank you very much, Mr. Kejriwal and all our members who participated here. I'd like to give my remarks, closing remarks here. The second half of the financial year is always the best for the steel industry, and we hope the trend would continue in this year as well. Meanwhile, steel demand also continues to prosper and with the improvement on the efficiency front and cost control measures, we try to -- we will try to improve our margins in the balance period of the year. Also, the company also remains committed towards sustainable performance, including emphasis on decarbonization, improving capacity utilization, value addition and achieving cost competitiveness. I thank all our investors for reposing their faith in us, and I'm hopeful that the same will continue in the future as well, and we'll try to come up with better numbers as well as the time progresses. Thank you. Thanks a lot to everybody.

Thank you. On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.