Steel Authority of India Limited (SAIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the SAIL Q3 FY '20 Earnings Conference Call hosted by IDFC Securities Limited. [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, sir.

Yes. Thank you, Ayesha. Good morning, everyone. On behalf of IDFC Securities, we welcome you all for this Q3 FY '20 earnings call of Steel Authority of India. We are happy to host SAIL's management, which is represented by Mr. Amit Sen, Director of Finance, along with his team. So now I would request Mr. Sen for his opening remarks, and then we'll open the floor for question and answer. Over to you, sir.

Good morning, everyone. First of all, I thank Mr. Ashish Kejriwal of IDFC Securities for arranging this investor con-call, and I welcome all of you to this investor con-call on the financial result of SAIL for the third quarter of '19/'20. So first, we'll give a bit about the market economy, the economy as a whole. The economy has not been in good shape globally and also in India. And in fact, third quarter has probably been the worst on many accounts for the steel -- whole economy as a whole, probably, and definitely for the steel industry. Economy was supposed to go at -- grow at about 7%, but now the growth rate has been projected to sub-5%. The index of industrial production in these 9 months has been only about 0.5% as opposed to around 5% in the 9 months of last year, which shows a slowdown across all sectors of the economy. But the prices and demand, which reached its lowest in the month of October, and from November, there were some signs of improvement. At least in November, the good thing was that the prices didn't fall any further. They didn't grew much, but it stayed more or less flat. And then there was some growth in prices in December. But the volume of sales started picking up in November/December, and the trend of this higher volume continues even as of now, even till February. And the uptick in prices, which started from December, actually, continues into January and February. So we have to see whether this growth sustains for the whole of Q4 that we need to see. But as of now, things are looking good. So the -- coming to sale, in particular, our sales volumes picked up in November and December, growth being about 37% over CPLY in November and were 48% over CPLY in December. The finished steel inventory, which had risen to about 2 million tonnes in October, we have managed to bring it down to about 1.3 million tonnes, which is roughly at the same level that it was on 31 March. The borrowings, which had crossed INR 51,300 crores at some point, again, in October, has been brought down by about INR 700 crores till 31 December. And we have posted a loss of about INR 430 crores BT in Q3, which is a reflection of all these things, but hopefully, going forward, the fourth quarter, we expect to be good. The steel industry is making a revival. The demand of steel is picking up. Prices have started firming up. The government has made many announcements in the budget, and we are very hopeful that they will lead to an increase in demand. One of them being that investment of INR 103 lakh crores in infrastructure over the next 5 years, that national infrastructure pipeline, which comprises of more than 6,500 projects across all sectors. So this should give a big boost to the steel demand. And there are developments in the waterways, railways, freight corridors, all of these consume steel. INR 107 lakh crore has been allocated towards the transport infrastructure for highways, economic corridors, coastal and road ports. Economic activity along the riverbanks has been energized. 100 more airports under the UDAN scheme has been announced. So if all these really happen, and we are hopeful that it will happen, then Q4 and the year ahead, the next year, 2021, is likely to be good. Coming to the results. The turnover in Q3 has been INR 16,405 crores. EBITDA was INR 1,184 crores, which roughly translates to INR 2,900 per tonne. PBT was minus INR 591 crores. And after ducking for deferred tax assets, the loss after tax comes down to INR 430 crores. There was -- there has been some improvements in the techno-economic parameters. And the coke rate has come down by 5%, energy consumption by 2.5%, BF productivity has gone up by 12%. CDI usage has also increased by 40%. Of course, this is subject to the availability of CDI. So we have some supply side issues with some of the suppliers, especially the Australian suppliers. So subject to availability of CDI, we are trying to maximize the CDI usage. And most of the plants are now in profit -- of course, now means, I'm talking of Q4, are in profit. So we hope this trend to continue. So that is the introduction from my side. Mr. Ashish, we can start the questions, if you want.

Ayesha, we can open the floor for Q&A.

[Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss.

I have 2 questions. The first one is on sales volume. Now since we have seen that sales volume has touched a rate of almost 4 million tonnes per quarter, so do we expect that in FY '21, you will cross around 16 million tonnes? Is it a fair expectation?

We were 10.5 million tonnes till December.

No, no. I'm talking about FY '21, since we have hit 4 million tonnes...

Yes. '20/'21. '20/'21. '20/'21, definitely -- again, see, these are all subject to market conditions, the demand conditions, but the way things are improving, we're at 16 million tonnes, is what we're actually targeting in our internal plans, also.

Okay. Sir, the second question is on debt level. If you look at your -- and interest cost, of course. So if we look at the debt and interest cost on Slide number, just a sec -- so in terms of quarterly debt, we have seen that quarterly debt has actually come -- has gone up, but your interest cost has come down.

Yes.

So I mean, just a little bit of light on that, how did it happened?

Actually, yes. So the total borrowing has gone up because of the mismatch between the inflows and outflows. But because there has been a general decline in the rate of interest, the repo rates being reduced and the average rate of borrowing which has come down. So we've done a couple of things. We've been taking CPs, which have -- which we are getting at very competitive rates, the lowest believe -- I believe, is 5.23%. And also, we've been taking loans because we had our old loans, which were taken at a higher rate. So we took short-term and long-term loans at very competitive rates now and repaid those old loans at higher costs, thereby reducing the average interest cost of the total loan bucket. So that is how the total interest has come down, even though the borrowing, in absolute term, has gone up.

Sir, just a follow-up question on that. Is this the -- is this our peak debt what we are seeing in Q3 end? And what would be the cost of funds, I mean, the interest cost now compared to Q3, let us say, or Q2?

The average interest cost in Q3 has been 7.7%. And the debt, as of today, is INR 49,200 crores. The peak debt, I think I told you, had reached INR 51,300 crores at some point. And it's going to come down. And because now our realization has improved, there's a -- we have positive cash flows. So we are continuously repaying the debt. There is very little likelihood of that -- of the overall debt increasing beyond where it is today.

Okay. So when you say Q3 interest cost was 7.7%, Q2, how much it was, the interest cost?

It was 8.13%, yes.

Okay, sir.

And just one thing on this question that we are reducing our borrowings in a very planned way because from the money that we have, there are so many claimants for that money. We have to pay our vendors, we have to do this, and we have to also repay our loans. We are trying to balance that with those things. The problem is that one of our biggest -- actually, our biggest customer, railways, they have some budgetary constraints. I believe, their budget has been reduced to some extent, by 20%, and they are holding a lot of our receivables. That has put our financials into a bit of a pressure. Otherwise, had the railway payments come, as they used to come. Railway, historically, has been a very good paymaster. If the railway payments had come, our borrowings would have reduced drastically, but that is not very likely now, but still from our other collections, non-railway collections, we are able to reduce our borrowings.

The next question is from the line of Ritesh Shah from Investec Capital.

Sir, I have 2 questions. First was potential monetization of ore on back of the Orissa auctions, is there any specific update over here? And basically, a related question, how do you see the overall mining scenario from a demand-supply situation, specifically given increasing share of steel mills having their captive iron ore going forward?

Regarding the -- your first question, the sale of iron ore. In Orissa, we have got the clearances. See, it actually -- if you remember, there were 2 circulars that were given -- that's were issued, 2 differentiations given to SAIL. One was to sell fresh ore up to a limit of 25% of the last year's production. And the other differentiation was to sell subgrade ore without any limit. So far, we've got clearance from the Orissa Government for selling the fresh ore. We have 2 tenders which have been uploaded. One auction is going to take place today for about 1 lakh tonnes of fresh ore. And there's another auction, I believe, day after tomorrow, which is for about 60,000 tonnes of fresh ore. We still haven't got the clearance for the subgrade ore, of which we have many tonnes -- some millions of tonnes. And clearances are yet to come from Jharkhand and Chhattisgarh governments. So that is where we stand now. Your second question was -- what was that regarding?

Sir, in the first question itself. Sir, this ore -- fresh ore, what you are referring to, it is from which mine, sir?

From Bolani. The one that's going to happen today, the 1 lakh tonnes from Bolani, and the one that's going to happen day after tomorrow is from Barsua.

Bolani and Barsua. Okay. And sir, how is the benchmark prices set over here? Like is it IBM-notified price, which is a benchmark price and on that customers have to bid on?

That is -- I don't know. I'm not sure about this one. I'll come back on this.

Okay. Sir, my second question was more pertaining to SAIL. In the press release, also, we have indicated about coke rates, CDI, specific energy consumption and blast furnace productivity improvement. Sir, I wanted to know what are the eventual targets over here? So something like coke rate is at INR 460 kg plus CHM. Sir, where do we see this, like, this 4 variable, say, 1 year down the lane or 2 years down the lane? I'm just trying to understand what sort of cost savings will actually come through once all the plants are stabilized?

Is that -- target for coke rate -- target for total cost, is that your question?

Sir, if you can break it up. Sir, I think earlier, we used to give in the presentations increase in CC route, improvement in coke consumption rate, CDQ, conversion from OHF to BOF.

So our coke rate target this year has been 419 kgs. And as against that, we are now at 460 kgs, right? So this is, again, subject to CDI, how much of CDI we are getting. So if we get more CDI, coke rate comes down. Our CDI target was 104 kgs per year. Whereas, actually, we've managed to get coal [Audio Gap] about 74 kgs is what we could get. This is subject to coal availability. So CDI has come down by 30 kgs from what we had planned. Coke rate has gone up, but we'll be tying up the coal requirement for 2021. In another couple of days, we're going to have the Empowered Joint Committee meeting with all the coal suppliers. And we'll be tying up, I believe, the entire quantity of PCI coal and the various grades of coal for next year. So next year, I don't think there'll be a shortage of PCI, and we should be able to reach our coke rate targets.

Right. Sir, can you indicate the other cost-saving measures that we had indicated, sir, something like coke purchase from external markets? Do we still do that? Secondly, you had earlier indicated about the increase in production-wide continuous casting route, conversion from OHF to BOF. Sir, if you can highlight on these 3 variables, probably then I'll join back the queue.

We are not planning on buying coke from outside. We don't have any plans for that. We make our own coke. And the cost, of course, depends on the current -- and right now, the coke prices are quite low because the imported coal price is very low. So the last coal price that we had in the month of December was about -- imported coal price was about INR 12,500 per tonne. So that has started moving up now. But -- so based on that, our coke prices are fairly low. And the BF productivity, also, we are planning -- all our big furnaces are running at full capacity, the 3 big furnaces in Bhilai, Rourkela and [ HP ]. So that has improved the productivity. And what else you were saying? The BOF routes. The production...

Sir, the entire production is now BOF. We have entirely phased out OHF production?

No, no. We haven't, we haven't.

How much is that right now, sir, via OHF?

Just 1 minute. Actually, OHF, we are doing under compulsion because, in Bhilai, we admit, we have the THF condition, the OHF is actually THF. In Bhilai, we have the THF and we are forced to run that because the SMS-3 hasn't picked up so much. But only 1.5% of our production is coming from the THF route -- sorry, sorry, how much is that?

6.75%.

6.75% of the production is coming from the twin-hearth furnace route. And as of now, about 92% of the production is there from BOF. But once the SMS-3 of Bhilai ramps up, already today, it has reached about 37 hearths per day, once it reaches 45 or maybe 50 hearths per day, the TH will be completely shut down, that route will be shut down. So we are keeping it -- we have to keep it open by force because the SMS-3 ramping up is taking a little time.

Okay. And sir, last one, as I said, obviously, the increase in continuous casting route, sir, how much is it right now? And how much do we intend to...

It's about -- it's around 90%.

It's at 90%. And sir, it will be 100% by when?

As soon as we phase out the THF. The THF route is the ingot route. Once the THF is phased out -- [Foreign Language] that cast ingots are also there -- we have some cast ingots which are there, which will continue, but the THF ingots will get paved out. So today, we are at 90% con cast, which will go up to how much?

Maybe 95%.

Maybe 95% once the Bhilai THF gets shut down.

Okay. Okay, fine. Sir, I -- just one last question. Sir, what is the change in realization that we expect because of the change in product mix once everything is commissioned? And it is to a desired product mix? And any timeline over here?

See, change in realization per tonne, how much that will increase, very difficult to say.

Sir, on status quo basis, basically assuming same HRC, CRC, GPC rates, basically what's our desired mix? So how much would it entail on savings? Because in one of the slides, we do give post ongoing expansion, we don't give a pie over there. So sir, if we had to assume, like, say, HR coil price goes down from 28% to 16% and the balance mix as it has been demonstrated, sir, what will be the hypothetical number? I'm just trying to understand what will be the profitability be for sales, say, in a year down the lane when everything is fine?

This is very outdriven. This is very outdriven. See, we have lots of capacities, which are right now lying idle because of lack of demand. So once those things come on stream and the total product portfolio changes with rail production ramping up to maybe, say, 1.2 million or maybe 1.5 million in a year and the HR, CR and the galvanize and all the heavy wheels of IISCO and the medium structures of Durgapur, when all these come on stream, the realization will go up. I can't, actually, put a number of that, how much it will go up, it's very hard to say.

The next question is from the line of Vishal Chandak from Emkay Global.

My first question is with respect to Bhilai Steel Plant. What is the run rate currently? And how soon we can expect this to be at the peak 7 million tonnes capacity?

7 million tonne capacity maybe towards the end of next year for the SMS-3. We have one conversion still to be commissioned in SMS-3, which is going to be commissioned in a few days from now. One casting is still left, where some change order will take place. And the rest will be ramping up. So maybe by end of -- towards the end of 2021, we should be able to reach the full capacity -- demand pertaining, we should be able to reach full capacity.

So we can fairly assume that by 4Q FY '21, you will be, on an annualized basis, running at 7 million tonne at Bhilai?

Yes, we should. Yes.

Sir, my second question was with respect to the semis that we have. If I take a step back and look at the mix in 2009/'10 before we started on this massive expansion program, our semis was to the tune of 9% only. And today, we are hitting somewhere close to 21%. So what steps do we need to take over here to bring it down to, let's say, 10% level? Because I believe 9% to 10% is kind of an unavoidable, given our vast expansion that we have in the multiple locations that we have. How best can you optimize this? And what are the targets for that?

See, the -- today, we are making -- selling semis, actually, because some of our finishing mills are not running at full capacity. For example, in the case of Bhilai, iron-rod mill has just been commissioned, right? And it will take some time for all the 4 lines of iron-rod mill to run at full capacity. Till it does that, the billet that we're producing in SMS-3 will become surplus. Similarly, in Durgapur, the billets that we -- the blooms and billets that we make in our caster, the out-stream offtake in the MSM is not there because of the poor demand of the MSM product, which is why there's a lot of bunching up of semi taking place. The increase in the percentage of semis is mainly due to a shortfall in the downstream finishing mills. So once that is taken care, once, -- again, I'm saying for everything the finishing mills is what we put out to the market. There has to be a market to absorb that product. So once we have downstream demand for our finished products, automatically, the semis will come down. Selling semis is not an ideal thought, we get very low price for that, we actually stand to lose. But the choice that we have now is given the low demand for the finished product, either with sorted production or we maintain the production at some level and then purposely get semis. That is the situation today. So if the demand picks up for the finished products, we have our finishing mills ready and running. It's only waiting for the demand to come. Once that demand comes, the quantity of semis and the proportion of semis will automatically come down.

Sir, in that case, would it be fair to assume that in the past, when the demand was strong, the downstream mills were still under the election and commissioning stage or maybe in the construction stage? Now that we are ready, going forward, as soon as we will have the demand scenario looking better, we would be able to monetize everything?

Actually, in the past, that is pre-start of modernization, we had a certain balance between the semis -- the steel production and the finished production, right? There was a balance. And therefore, the semis was actually, the planned semis of maybe 8% to 9% ready for that. Now we have planned at a bigger scale. Again, there is a linkage between the amount of the steel that we make and the finished products that we make. That same linkage has been maintained in a greater scale -- in a bigger scale. The problem that is now happening is because of the shortage of demand in the finishing mills, which is causing the semis to bunch up. So like I said, once that problem is taken care, the semis quantity will automatically fall. Maybe, it'll come down to that 10% or 9% to 10%, as it used to be.

Got it, sir. And sir, just last, finally, as -- just picking up on the last question, on the cost reduction front, what are the major targets? Again, as you mentioned, I know coke is something that you are looking at by bringing -- by tying up on the CDI for next year. Is there anything further on the techno-economics that we can look at in terms of digitalization, preventive maintenance or anything which you can add on?

See, we have our annual cost reduction targets where we set targets for all the plants for various parameters. Coke rate, of course, all the coal related parameters are the most critical for us because coal alone accounts for 40% of the cost. So these set of parameters are the ones which are most critical for us. But apart from that, there are many other techno-economic parameters which have a big impact on cost, one of them will be TMI, the total metallic input in SMS. So there are some plants, especially Bhilai, where the TMI is very heavy. Because of it, the cost of wood sheet in Bhilai is going up as compared to the other plants. So Bhilai has been given a target to reduce the TMI, specifically the scrap in the TMI. Similarly, the higher BF productivity, higher yield in the finishing mills, more higher acceptance. That means less of quality rejections. These are some of the targets which have -- which we have taken for the 2021 year. And if it goes through, there will be a substantial improvement in the costs.

Squeeze in. Your presentation says that even after expansion, the continuous cast route would only be 94% and will not be moving to 100%. So what would be the bottleneck over there, sir?

We have been in the casting -- Vishal this is [ Sai ]. Our -- in the casting routes in Durgapur and Bokaro steel plants, which have not been planned for any change under the current [indiscernible]. Maybe as we go forward and go for the future expansions, there, we can think about this. As of now, these are going to continue at Durgapur and Bokaro. So the ingot casting would continue for maybe that 5%, 6%.

The next question is from the line of Kamlesh Jain from Prabhudas Lilladher.

Yes, sir. Would you please provide the NSR during the quarter? And what are the current levels as compared to the previous average?

Can you repeat that question, please? There was some disturbance in the line.

Sir, would you provide the realization NSR for the quarter? And what are the realizations currently as compared to previous quarter average?

So the average NSR during the third quarter is INR 35,310 per tonne. And in Q2, it was INR 37,382.

And what are the realizations, sir, currently, NSRs?

What was that?

Current realization, sir, NSR level?

Current realization? So in February, this month, our average NSR has been INR 37,700.

INR 37,000. So broadly, say, around INR 2,500, INR 2,400 improvement?

Yes, improvement over average of Q3.

Okay. And then sir, lastly, sir, in terms of coking coal, how much fall do you expect in the Q4 and what we have seen in the Q3, sir?

No, no, no. There will not be any fall in Q4. Our imported coal price in December was INR 12,500; in January, it is INR 12,200. But now if you notice the last index, it has started moving up. See, as you know, there's a 2-month time lag between the FOB price, that means the price at which we pay when they ship hearths at Australia till the time the coal reaches the plant, right? So the benefit that we're getting now is for a price which is 2 months' old. Now the prices have started moving up. In fact, as of now, as of this month, it has touched $150. So from now onwards, the imported coal price is going to rise. This is -- INR 12,200 is probably the lowest price of imported coal, so far.

Sir, but if we adjust this quarter for your price, like, say, devaluation in the case of rails and also that inventory revaluation of sublime. So if you see the EBITDA, then it would not be more than, like, say, around INR 47-odd crore for this particular quarter. So how do you see this...

Why do you say INR 47-odd crores?

INR 47-odd crore EBITDA for -- adjusted for these 2 items.

It will be. I think the EBITDA is INR 1,186 crores in the third quarter.

Yes. Sir, that's there, but majority part of that EBITDA is coming because of prior year price revisions and secondly, because of that sublime or low-grade iron ore revaluation.

Yes. But that is how much? That is about INR 950 crores.

Yes. So if I include that...

So that still leaves about INR 250-odd crores as the EBITDA, not INR 40 crores.

Yes. But your EBITDA is inclusive of other income, sir, I'm just including other income into that.

[Foreign Language]. Okay. Great.

So going forward, if I take INR 2,500 price improvement and the cost remaining the same, so we won't be seeing that margins, like say, going above INR 3,000 per tonne. Is that reading correct? And if we see the last year, like, despite having, like say, in pressure on the prices and all these things, we had done EBITDA per tonne of roughly around INR 5,000. So even compared to that, we won't be, like, say, in good operations, like, say, seeing all these improvements on the CDI, cost parameters, efficiency improvement, high scale even then we would be lower in terms of margins per tonne basis by around 50% year-over-year, sir?

No, no. That is not correct. That is not correct. See, we are talking of a situation where the NSR has reached its bottom-most level. So as things improve, and not only the NSR, also when the volumes improve, our cost is going to come down. So there'll be a double impact on the EBITDA. The price going up, volumes going up, so the income going up. Price into volume, the income going up. And also the cost coming down. The EBITDA will increase in [ month end ].

Okay. And sir, in terms of this price finalization. So it all has come through in this quarter? Or anything -- any portion is still left?

No. The price revision of 2000 -- the rail price you're talking about?

Yes, yes, yes.

The rail price of 2018/'19 has been finalized in the quarter. One more revision which is yet to come, which would probably come in the fourth quarter, is the provisional price being given for this year, '19/'20. So we don't know how much that will be. That depends on the Railway Board, but that delta in the price is also going to come. And we'll be supplying, say, around 13 lakh tonnes of rails to railway this year. So some income from rail price revision is expected again in the fourth quarter.

The next question is from the line of Chintan Shah from Investec Capital.

Sir, how should one look at the volumes for this year? And you did indicate 16 million tonnes for next year, sir, how should one build a bridge from this year's volumes to next year's volumes?

This year, see, we are, I think, 10.2 million tonnes of sales till -- for these 9 months. And assuming we get about 4 million tonnes, 10.2? 10.28 or something?

10.5.

10.5. 10.5 and another 4, so 14 million -- 14.5 million is what we are expecting this year. And next year, -- again, see, I keep on repeating this, it's very difficult for us to forecast the sales. It all depends on what the market -- how the market behaves and what is the demand in the market. We are hoping that the measures announced by the government will actually fructify and they will actually come on the ground, and there'll be some revival in the world market. If all these things happen, then our sales volume of 16 million tonnes with a good price is expected. So we are expecting that 16 million tonnes to happen. This year, we'll be probably ending at 14.5 million.

Okay. Sir, this incremental 2 million tonnes will come from which segment? I guess it's CRC or plate mill, anything specific or railway orders, anything specifically that you're looking at?

Yes. The Rourkela Hot Strip Mill has started. So we are hoping for some products from the Hot Strip Mill also in 2021. And also, these 2 mills -- the 3 mills in long which are now lying idle, the USM of IISCO, the MSM of Durgapur and the Bar & Rod Mill of Bhilai. So if the infrastructure projects are announced -- because these are all long product-driven investments, if those are announced, then hopefully, these 3 mills should be able to run to at least maybe near capacity.

That's helpful. Sir, secondly, can you indicate how much is the inventory in the system and overall at Steel Authority?

I don't know about the system, but in case of Steel Authority, our inventory now is about 1.3 million.

And sir, how much was it last year?

1.3 million. Just marginally higher than the 31st March figure.

Okay. It is broadly flat, you are referring to?

Yes. It had touched 2 million at some point. Now it has come down to 1.3 million.

Okay. Sir, what we hear from the market is recently, there have been price declines of about INR 750 to INR 1,000 per tonne, this is on HRC side. The reason being demand is very weak. And what we understood is exports were one of the key variables, and hence, domestically, material was not available. And because of that, the steel mills had taken a price increase. Sir, what is your reading on the recent price increases, say, from Jan and the demand situation actually on ground when you look at it in conjunction with the inventory levels?

You're talking of HRC or as a whole?

Sir, I'm looking at, basically, commentary for both flats as well as long, sir, from you?

See, HR-wise has been a good demand. So prices are going up, we are getting a better price in the export market than what we are getting domestically. So domestic prices have gone up. And the export prices are even more lucrative. So HRC is not that much of a problem. In the long product, some issue has come up. There has been some, I think, overstocking by the stockist. There is some fall in demand, and that margin has fallen in price in the long product.

Okay. Sir, can you quantify the price increases that you have seen in HRC since Jan and for longs, what you indicated, we are seeing some decline? If you could please quantify it.

Till Jan and Feb?

Yes, sir.

I think it was -- it had increased by about INR 1,000 in Jan. And just 1 second. About INR 1,600 increase was there in January over December, right? Hello?

Yes, sir. INR 1,600 for HRC in Jan.

For increase in the flat product, January over December. And February over January is another INR 1,500.

Wow. Okay. And sir, for longs?

For long, January over December was about INR 2,000.

This is, again, an increase, sir? Because you -- for long, you said there was some overstocking and price fluctuation?

No, no. That is now. That is just now. I'm saying January over December, the average NSRs of long had increased by INR 2,000. So for January, again, the increase has been INR 2,000. But now there is some reduction from this rate, from that high level there's going to be some reduction.

Okay, okay, okay. Perfect. And sir, last question, sir. NMDC, they have a steel mill, the 3 million tonne in Nagarnar, which has been -- basically, they have been scouting for a buyer. Sir, is there any particular -- is there any distant remote possibility wherein Steel Authority can actually look at this asset, given we have the capability -- better capability to manufacture steel as compared to NMDC?

I have no idea. This -- I don't think there's been any discussion on this.

The next question is from the line of Pinakin Parekh from JPMorgan.

Yes. Sir, my first question is, sir, can you give us a sense of what is the current due from Indian Railways? And how has it changed from where it was in March 31?

Right now, our dues is around INR 3,700 crores.

And what was this earlier, sir? Because you said that one of the reasons why the debt number has not changed is because of the dues from the Indian Railways.

It's normally -- I can't exactly tell you off-line what the figure in March was, but generally, the outstanding with Railway at any point of time is around INR 800 crores to INR 1,000 crores.

Sure, sir. Sir, my second question is on the outlook of supplies next year and you mentioned the 3 downstream mills: the USM, the MSM and the Bar & Rod Mill. Now sir, what we understand is that over the last few years, one of the issues SAIL has faced is in the downstream mill stabilization and the demand outlook, and which is why we are not seeing any real benefits on the CapEx done. Now, sir, in terms of next year, what -- if demand revives, can this mills ramp up? Or are the end products from this mills geared for a very specific end market where the demand is not evolved at this point of time, and hence, it could be a few years before we see this mills ramp up? How should we look at this 3 downstream mills? Because apparently, this has been the main bottleneck over the last few years in terms of why that sales volume is not translating into margins.

Okay. So these 3 mills, the USM, MSM and the BRM, they don't make any new products or a novel product, which has not yet been tested. They are making products which are already we are running. For example, the Universal Section and IISCO again, basically make the high-end structures: heavy beams, heavy angles, heavy channels, which are used for the projects like bridges or skyscrapers or things like that, heavy load-bearing stuff. That is what they make. MSM and BRM, they also make products which are widely used in the market. So it's not something which needs to be market-tested before it is sort of -- before things gear up. That is not the case. We make normal products of good quality of high -- like the TMT products. And it's a good quality products, things which are already being used. The only problem that we're having is the lack of demand. So if the infrastructure at the Sagarmala and the -- that -- the growth project, if all of these things goes through because we make long products in the end-to-end segment, from the lowest to the highest. We cover the entire portfolio. So if the infrastructure and the construction segment improves as we hope it will, then all the 3 mills should be able to run to capacity. There is no inherent problem in the mills, as such, nor do we have any new products which we need to test. They are existing products of good quality only waiting for demand. That's all.

Understood. And sir, my last question is, if you look at the balance sheet, sir, and based on what visibility we have in terms of the demand, in terms of the prices, I mean, we assume that things don't materially change, would the debt number increase further in F '21? Or does the company believe that this debt number can come off? I mean we are just trying to understand over the next 1 to 2 years, how much debt can SAIL reduce if it can because we have only seen debt increase?

See, first of all, I replied earlier that there is very little possibility of debt going up anywhere, right? The major expenditures that we're having on the CapEx that has mostly been incurred, now it has been tapering off. And -- so from the peak of INR 51,300 crores that we reached in October, now it's generally going to be downward, provided, of course, that our cash flows are properly balanced. There is very little possibility of debt going up anymore. But how much it will come down to will depend on how much collections we are able to meet. I believe, when the Railway budgetary constraint is removed from April, this big chunk of outstanding which they are holding will get liquidated, and we will use that and also the money that we are putting to get from the sale of fines and anything which are beyond our normal operations, we have earmarked for debt reduction. And even though I can't give a number, but definitely, we want to bring our debt down to as low as possible, keeping our debt to equity ratio at a very healthy level. There is a very little possibility of the debt going up anymore.

Lastly, sir, given that the approvals are still waiting from the Jharkhand and Chhattisgarh government and the Orissa government has not given on subgrade fines, sir, for FY '21 at this point of time, sir, what is the amount of iron ore that the company expects to sell across its existing production and from its dumps because so far, the tenders are of very, very small quantities?

Yes. So actually, the tenders that we've uploaded, if you noticed, is actually for 11 lakh tonnes, and which we've uploaded tenders for the Jharkhand mines also and for the Orissa mines also. And everywhere we've put a small guidance that this is subject to getting all the clearances. Out of this 11.6 lakh tonnes that we have uploaded, 1.6 lakh tonnes have materialized, which we are good to go ahead with. The quantity that we are looking at next year is about 20 million tonnes, 7 million tonnes from the fresh fines and 13 million tonnes from the old fines. That is what we are planning for next year.