Thank you, Michelle. Good morning, everyone.

On behalf of Nuvama Institutional Equities, we again welcome Dr. Panda and his team for giving an opportunity to host this conference call.

We are delighted to have Dr. Ashok Panda, who has now become Chairman and Managing Director of SAIL, with an additional charge of Director Finance.

On behalf of investors community, we congratulate you, sir, for this, and we wish that SAIL will achieve newer heights in terms of financially as well as operationally under your leadership. We would also like to mention that we are privileged to have Shri T.

N. Natarajan ji, Director Commercial, who will also be there on the call today.

Without further ado, I would request Dr. Panda for his opening remarks, and then we can open the floor for Q&A.

Over to you, sir.

Thank you, Mr. Ashish, and everybody connected through this.

Let me give my remarks first, then we can start Q&A session. Good morning once again, everybody.

I welcome all our investors and analysts who are joining this result concall for the financial results of SAIL for the quarter Q4 and annual FY25-26. Before we move to Q&A session, let me brief you on the results for the period.

Let me go one by one regarding economic scenario. Beginning with global economic scenario, the geopolitical situation in the Middle East has sent the otherwise stabilizing economic scenario again bringing uncertainties and volatilities to all of us.

The economies across the globe have suffered with most seeing the projection being reduced by almost all major financial and analytical agencies. Accordingly, the projections for global GDP have been reduced by IMF and similar agencies for calendar year 2026.

Though projections for current year 2026-27 are at slightly higher level than the previous year, they are still below 24-25 levels. The projections for India also remain range-bound between 6.5% to 6.9% by various agencies.

Far as global steel industry is concerned, the landscape for the global steel industry is influenced by economic trends, trade policies, and geopolitical situations as well as technological advancements. The positive movement which was visible during the previous quarter may again get impacted.

While the production in Iran have already been impacted to push out of the top 10 countries globally. WSA has, however, not published its SRO since October 2024.

Of course, the steel industry globally is impacted, and specially impacted because of this Strait of Hormuz situation in terms of fuel constraints, as well as in terms of raw material movement through that port. Indian steel industry, when we talk about that, Indian steel industry continues to enjoy robust demand for steel with the consumption during FY25-26 which has grown by almost 8% over the same period last year.

The growth in production of crude steel has, however, been at 11%. The steel industry has grown by 8%, but growth of production is 11%.

That's the reason why during last year actually export numbers were pretty high. India finishes FY25-26 as a net exporter with exports marginally higher than the imports.

The exports have grown by around 36%, and degrowth of imports is around 32%. In terms of absolute numbers, they're almost matching: 6.5 million tonnes versus 6.6 million tonnes, it's a balancing figure.

When we look at our company performance, company performance of SAIL, there is growth in crude steel production. When we talk about quarter four of this 25-26, crude steel production grew by 4% to stand at 4.9 million tonnes as against 4.7 million tonnes in the previous year quarter four.

Sales volume has also grown by 4% to 5.3 million tonnes in this quarter four. Sales turnover has also grown by 5% in quarter four to ₹30,541 crores.

That's the thing. Profitability has also improved by 48% in PBT and 43% in PAT terms as compared to quarter four of last year.

There is a debt reduction of ₹3,200 crores alone in quarter four of 25-26. That is about quarter four performance.

When we look at the annual performance of 25-26 for Steel Authority of India Limited, crude steel production has grown by 1% from 19.2 million tonnes in FY24-25 to 19.4 million tonnes in FY25-26. Saleable steel has grown by around 7% from 17.9 million tonnes in FY24-25 to 19.2 million tonnes in FY25-26.

Company has posted highest-ever sales volume at 19.9 million tonnes, almost 20 million tonnes, which it is close to that 20 million tonnes, with a growth of 11% as compared to the previous year. The production has grown by 7%, but the sales has grown by 11%.

That's a very good sign, and it has resulted in huge inventory reduction and reduction in borrowings. The sales turnover is close to ₹1,10,000 crores in this year, which is grown by 8% compared to the previous year.

Stock reduction is around 0.9 million tonnes, out of which 0.4 million tonnes in saleable steel category and 0.5 million tonnes in in-process steel category. In totality, it is close to a million tonne reduction of inventory has taken place on the back of a good amount of sales quantities.

That is the reason why the borrowings have also come down by around ₹8,150 crores in FY25-26, which has given sterling advantages in terms of finance cost to us. Even the cost of borrowings have also come down from a level of 7.3% in the previous year to 6.2% this year.

This has also given rise to improvement in the interest cost for all of us. With all this, the PBT, profit before tax, for 25-26, there is a growth of 44%, and in PAT numbers, the growth is 51%.

This is highlighting operational efficiency, liquidation of inventory, cost optimization, sales volumes, etc. These profit numbers are purely from the basic operations and sales of this company and good efforts made by the company.

I would like to say last year actually we had rail price revision arrear into the profit, but this year there was no arrear into the profit. Still, we've exhibited more than 50% increase in PAT as compared to the previous year.

That shows the potential SAIL has to take it forward. Going forward, the domestic market remains steady on both demand and price fronts.

Of course, it keeps on changing from month to month on seasonal effects and the sentiments. With the coal price remaining in range-bound, coal price is remaining on the higher side range-bound, actually.

We hope that the margins will continue to improve further. Company will continue to take actions on efficiency improvement and cost reduction front as well.

Because of this depreciation of rupee with respect to USD and international steel prices are also firming up right now, we believe the steel prices will remain at this level and the margins will remain good during 26-27. One more important thing for all of us is that after pretty long time, many years, decades you can say, that the balance sheet of 25-26 is totally clean, clean from the qualifications.

There are no qualifications in the balance sheet after pretty long time. We've taken care of those qualifications in terms of the developments and wherever required provisioning, etc.

Entire balance sheet is clean from the qualifications. That's a major thing happened during this year 25-26 with the efforts of the finance fraternity.

With these words, I hand it back to Mr. Kejriwal, Ashish Kejriwal, for opening the Q&A session.

Hi, am I audible?

Hi, thank you so much for the opportunity, sir, and congratulations on a great set of numbers. The first question is on the lines of what would be the sales volume guidance for the next two FYs, that is FY27 and 28?

The capex has picked up in FY26. Can you give an update on the expansion at three plants, and what would be the capex guidance for the next two FYs?

Thank you for your questions. Actually, sales volume last year, as I said, was around 20 million tonnes.

This year we're expecting 22 million tonnes. That is the kind of target, 10% in the higher side we are keeping it, and we are geared up towards that.

That is number one answer to your question. Number two is capex.

Capex in 25-26 target was ₹10,000. We ended up around ₹9,100, something like that.

Guidance for 26-27 is ₹15,000 crores. Since our expansion projects are ongoing in different plants, in 27-28 the capex figures will be in excess of ₹20,000 crores.

That is our expectation. Far as expansions are concerned actually, we've cleared for three plants.

One is IISCO Steel Plant, wherein major packages have already been tendered out and firmed up. Another one is Bokaro, and third one is Bhilai, which we are just clearing just now.

Understood, sir. Thank you so much.

The second question was on the terms of, so as you mentioned, we saw the impact of downward revision in rail prices. Can you please let us know if there is any further scope of such downward revision in the near future?

On the Bokaro Steel Plant, can you detail out the factors which were behind the sharp recovery in EBITDA quarter-on-quarter for that plant?

Let me tell you. Actually, first question first.

The first question is about rail price. Actually, during 24-25 we had the arrears of last previous two two two years.

That was factored in the profitability of 24-25, which was to the tune of around ₹1,800 crores. In 25-26 there was no such rail price revision arrears.

24 as of now actually we are running with the provisional price of 24-25 and 25-26. That takes some time at government level.

So, 24-25 rail price will be finalized, which will have its own effect in 26-27 financial year. That's about rail price.

Rail prices keep changing actually depending on the imported coal prices as well as the efficiency levels. Sometimes they go up, sometimes they go down.

In 25-26 and going forward in 26-27 the provisional prices are on the lower side. In spite of having those on the lower side in 25-26, still we could post a profit which is with a growth of 50% on the excess of 50%.

Coming to Bokaro numbers, Bokaro actually in 25-26 they've improved because in 24-25 they had a lot of breakdowns, and they had a hot strip mill, which is their parent mill. It was under capital repair for one month, but it got extended by two months.

In 24-25 that problem as well as coupled with flat steel prices on the downward side. Bokaro had a negative figure in 24-25.

These were not the cases in 25-26. In 25-26 things have improved.

They had issues in SMS, steel melting shop, in 24-25. All these things have been taken care.

In 25-26, in H2, in H2, half-yearly two, things have improved and they're looking up in terms of production, in terms of sales volumes, as well as because they are in flat products, NSR is much better. That is why there is been a lot of improvement in Bokaro Steel Plant EBITDA levels.

That will continue and they will still do better in 26-27, that is our expectation.

Got it. Thank you so much, sir.

I'll get back in the queue.

Good morning, and thanks for the chance. Congratulations on very strong performance.

First question is on the prices and cost. If you could guide what was the realization in 4Q, and basis April and May, what is your expectation of increase in prices or NSR in 1Q 27?

Yeah.

In quarter four average NSR of long products was ₹53,400, and flat was ₹51,000. When we compare this with April and May, in April NSR of long products is ₹57,600, and NSR of flat is ₹56,700.

In May mid-month expected May, long NSR is ₹57,000 same level, ₹800, and flat also ₹56,000. That means, as we can see, there is an increase of around ₹4,000 between quarter four and April to May in the sales price.

Sir, similarly for cost also, mainly coking coal cost?

Coking coal when we look at actually, in quarter four the coking coal average price is ₹18,200, which has gone up in April and May. April average price is ₹21,000, and May average price is ₹21,800.

There is an increase of around say ₹3,000, ₹3,400 to ₹500 in coking coal prices.

Okay. Sir, this is the purchase.

In the results in the coming quarter, which will be on consumption, will the same increase reflect, or it will reflect over a next quarter?

No, it will be there actually because the April and May prices are the procurement prices, but that will get blended with the stocks that we are holding. Depending on the stock level is around 30 days stock, actually.

Stock prices are less, the impact will be a little less as compared to the procurement prices in this quarter.

Okay. Sir, generally, given the Middle East issue and overall inflation, any other cost item influxes or something where we are seeing inflation in cost?

See, the increase could be there in terms of so far as SAIL is concerned actually so far as Steel Authority is concerned, we'll have some impact with respect to the fluxes, limestone, etc., which we are buying from Dubai. There the landed cost CFR cost is going to go up because it was around say $23, $24, now it will be around $35.

Overall in saleable steel its impact will be hardly ₹100 or ₹200. It is more of a raw material security than the price increase.

We are working towards tying up with the parties to get more quantities from Middle East through diverted routes. Far as fuel is concerned, fuel concern was there in quarter four, but we have come out of it by using PNG in certain locations and creating LPG banks in other locations.

That's not going to be a major challenge for us in quarter one.

Understood. Sir, my second question is on capex and employee cost.

One is employee count is reducing at a very good pace. If you could guide based on the superannuation, what is the outlook for 27-28?

Given the pay commission revision also which is coming up, how should we look at employee cost in FY27 and 28, both years?

See, two questions to this. One is employee numbers are going down.

Today, we are at around 50,000 employees. Just one sec, do you have the numbers?

Just one sec, I'll give you the numbers as well. That's the reason why the employee cost is also decreasing.

As on 1st April 2026, the numbers are 49,752 as compared to 53,159 opening of this year. Reduction of around 3,400 numbers.

This is giving us advantage in terms of salary, wages numbers, but the other things are normal increments, then the gratuity, etc., ceilings have increased, so that is also adding pressure to it. If you look at the employee remuneration in the P&L account, there is a decrease of around ₹200 to ₹300 crores as compared to the previous year because of various reasons for that.

One is the number issue, the other one is leave encashment, many other things are contributing towards that. As we look at, similar numbers will be reduced also in 26-27 and 27-28, means around 3,400 to 500 numbers will be reduced in each of the years next two years.

There will be some influx of people actually through induction, fresh induction at lower levels. Every year there could be increase of around say 300, 200 numbers because we are also expanding.

On the top of that, actually we have taken out a VRS scheme right now, which is aiming at reducing number by 500 to 1,000. That is our target.

In that process also, separation will take place, and numbers will come down. Far as pay revision is concerned, that will be applicable from 1st January 2027.

Guideline is yet to come from government because the committees are yet to be formed. We'll see with the kind of guideline which will come from there actually, then we'll have a look at that into quarter four of this year.

We are ready to take absorb those cost depending on the guidelines which we'll receive from government, pay commission through pay commission.

Okay. This ₹11,400 crores, where should we see this flattish level for 27?

No, it is going to go down, actually. This year, how much is it?

₹11,589, I think so, in 25-26. There will be further reduction of manpower.

I think this number will further come down this year. Of course, we will have VRS, because of VRS there could be some impact.

On the overall, we can see we can think that either it will come down a little bit. In 25-26 it is actually ₹11,392.

It has come down. I'm expecting that it will further come down in 26-27 despite having VRS impact also, because the overall strength will come down by 3,000 odd.

Got it. Sir, in this year's volume, what is the NISP volume in fourth quarter and full year, if you could just share?

NISP volume in totality is 1.12 million tonnes. Fourth quarter actually, it is pretty less, maybe around 0.1 million tonnes or something like that, because we have kind of discontinued their product selling because they are on their own right now.

We've started selling based on the request from RINL. We have started selling RINL products.

NISP fourth quarter is 0.48?

RINL is 0.48,

right. That's what it is, actually.

Most of this sales of NISP was in nine monthly and only bit of quantity in January, that's all. Right now NISP, they're selling on their own.

Third party, RINL, NISP put together, fourth quarter is half a million tonne?

Fourth quarter numbers are only 48 50,000 tonnes, that's all, because RINL we just started in the month of February after doing the agreement, etc. Now it is picking up.

Okay. Sir, for 27 also, it will be at a very low level?

26-27? You're talking about 26-27?

Yes.

In 26-27 RINL products will be sold to the tune of around 0.6 million tonnes or 0.7 million tonnes. It will increase for RINL.

Okay. All right.

Sir, if you adjust this, our volumes are close to 19 million tonnes. This 19 million tonnes, which is our own volumes, that we are expecting to go to 22?

Is that the right way to understand?

Yeah. Last year we sold around 19.9, which is around 20 million tonnes.

If you take out 1 million tonne, it is 19 million tonnes for us. The 19 million tonnes, we're targeting to go to 22 million tonnes in this year.

In 26-27.

Okay. Just one last question if I can, the capex is almost doubling this year.

Are we in a position to disburse so much from say ₹8,000 odd to ₹15,000 crores in FY27? Because

last year our capex was around ₹9,100 crores, and this year we're expecting ₹15,000 crores, and we'll be disbursing. Because this will partly for the debottlenecking projects, partly for the AMR projects, as well as partly for the expansion projects of IISCO Steel Plant.

We're ready for that, actually. That is what is required.

All right, sir. Thank you so much and all the best.

Thank you.

Hi, sir. Thanks for the opportunity.

The first question, just a clarification. In 4Q, when you said RINL, it's 0.48 million tonne or 48,000 tonnes?

48 48,000 tonnes.

Okay. The 0.6 to 0.7 million tonne guidance for RINL in FY27, that is on top of 22 that we are seeing right now.

Is that correct?

No, it is within that.

22 includes 0.6, 0.7?

Correct.

Okay. Sir, get a sense as to what's our crude steel capacity right now?

Used to think that it's around 20, 21, but now we're talking about selling more than that. As we speak right now, what's our crude steel capacity, and how do we see it going in 27 and 28?

Actually, last year we produced around 19.43 million tonnes of crude steel. Our capacity is 21 million tonnes, and we are targeting to produce 22 million tonnes in excess of I think it is 22.5 million tonnes so far as our target is concerned for 26-27.

This is without any capacity addition, just from debottlenecking we think we'll be able to?

This is through debottlenecking and making 100% capacity from the facilities that we have.

When will the new capacity be coming online, sir, for any further growth?

New capacity will start coming after 3 years from now, means from '30, '31.

We can assume that the 27 volume number will largely remain same in 28, 29 as well?

Actually, what is happening is through operational efficiencies, we are trying to stretch beyond the capacities. When we are looking at 22.5 million tonnes this year, this can again increase to 23 million tonnes going forward.

We have our own efficiency levels through which we have more flexibilities and efficiency levels through which we can stretch beyond our capacities. That happens with all the facilities which are stabilized.

What are the on

Yes, please.

Okay. Thanks.

Thank you very much. Sir, my first question is if you can give us the likely medium-term capex outlook.

You said this year is ₹15,000 crores, it will step up further. Over the next 3 to 4 years, what is the capex that SAIL plans to spend, and how will this ramp up?

This capex for 26-27 is ₹15,000 crores, which is going to go up as we progress in our expansion. As I told clearly, our expansion in IISCO is in the advanced stages.

They have been firmed up, and so the ground work is going to start over there. As the ground work starts over there, then the expenditures will be done, and the expenditures will start increasing from 27-28 onwards.

Bit of that will come in quarter four of 26-27. Followed by that, the Bokaro and then the Bhilai is going to join.

There the expenditures, majority of the expenditures will come maybe from 28-29, this is what I'm guessing. That means, actually, in 26-27 we'll spend around ₹15,000 crores.

In 27-28, it can be around ₹18,000, ₹19,000 crores. After that, this will go towards every year almost ₹20,000 to ₹25,000 crores when expansion in these three plants will have its own effect.

We will manage through our fund management activities.

Got it, sir. Sir, my second question is that the employee cost guidance that you have given, this would not include any provisions you will be making in Q4 for the wage revision, right?

Historically, wage revision has been around 15-odd percent or so. That will be over and above whatever guidance you're giving.

As I told clearly, actually government notification, etc., will come regarding pay revision. After that, we'll make a provision in quarter four of next year, 26-27.

Those figures will be known only when we get the guidelines, and that will be over and above the figures that we are talking about now.

Got it, sir. Thank you very much.

Thank you.

Hello. Sir.

Thanks for giving the opportunity. Sir, my first question was if I see the PPT, I can see that our coke rate has basically improved by almost 20 kg in last two years.

I understand that part of it could be due to high PCI, but is there any other thing which I am missing? Have we improved on grades or something, or can you explain the reason?

The reason is actually reduction in coke rate is because of increase in PCI as well as by increasing oxygen enrichment in the blast furnaces. These are the two vices we are using whereby we are trying to reduce the coke rate.

Even if the coke rate has come down by 20 kg, etc., over the years, but we are still not satisfied with that. We need to reduce further by 20 kg in 26-27.

In 26-27 you are saying your goal is to reduce this by more 20 kg, you are saying?

Yes. Yes, yes.

Okay. In terms of, sir, just continuing on that, even in terms of BF productivity, I think it has improved considerably over last 2 years.

What has been the reason for the same?

The reason is because of the operational efficiencies in the furnaces as well as by closing down the inefficient furnaces and ramping up production from the bigger furnaces. These are the two reasons.

Okay. You're saying basically you are producing more from the bigger furnaces, is that what you are saying?

We have closed down the smaller furnaces and started ramping up from the bigger furnaces. These are the reasons.

Sir. Sir, also

Sure, sure. Thank you.

Thank you. Just to understand a little bit on the volume side, what is your current capacity utilization?

Volume side, as I told you actually, our capacity is 21 million tonnes of crude steel, but our target is 22.5 million tonnes of crude steel for 26-27.

To understand this correctly, in the 22 million tonnes you have 0.6 from RINL?

In 22.5 million tonnes, 22.5 million tonnes, that includes 0.6 million tonnes of RINL as well.

On a like-to-like basis purely volumes from SAIL, if I just remove RINL and NMDC volume this year, you are at about 18.8 million tonnes of sale, and your sales, and you are essentially saying that pure SAIL volumes will go from 18.8 million tonnes to upwards of 21 million tonnes in this year?

Rather I am saying that it will go from 18.8 or close to 19 million tonnes, from 19 million tonnes to 22 million tonnes, that is our target, excluding NMDC, NISP, and RINL. So,

22 does not include RINL?

No, 22 doesn't include RINL.

That's

22.5 includes RINL.

Understood, got it. Just you gave the NSR for longs and flats separately, what was the blended NSR for the quarter?

Blended NSR for the quarter four is ₹52,000 per tonne, and in April it is around ₹57,000 per tonne, April and May.

April and May, ₹57, okay. Just one last question from me, on the capex you mentioned IISCO, Bokaro, and Bhilai.

What is the capex for each of these projects, if you are to break it down, IISCO, Bokaro, and Bhilai?

Capex of IISCO is around ₹36,000 crores, maybe ₹35,000 crores. Bhilai, which is yet to be announced, is around ₹30,000 crores.

Bokaro is somewhere around ₹18,000 crores, something like that.

What are their corresponding capacities?

Corresponding capacity in IISCO is around 4.5 million tonnes. At Bhilai it will be around 3.5 million tonnes.

Bokaro also will be around 3 million tonnes.

Understood. Thank you.

Thank you.

Good morning, sir, and congratulations on a good set of numbers. I think in the EBITDA bridge in the presentation, I think there is some raw material saving also between the third and fourth quarter.

Could you just quantify, I guess it's primarily from coking coal cost. Could you just quantify what was the coking coal consumption cost in Q3 and Q4?

Between Q3 and Q4, raw material you mean to say what? Input price, it is negative, actually.

In Q4, the prices of coal was more as compared to quarter three, and it had an impact of ₹272 crores. Far as raw material usage is concerned, because of better usage in quarter four, we have gained around ₹429 crores.

It has offset the impact of input price increase.

Okay. This is because of higher PCI and more oxygen enrichment?

Because of

more oxygen, higher PCI, and better usage of iron ore, etc. Quarter four being a dry month, and production remaining pretty high, all equipments are good in quarter four after capital repair, performance has been better.

Operational efficiency you can say, because of that reason.

Sure, sir. Also, in terms of our iron ore mines, is there any risk to our mines expiring in 2030 or we will not face that problem of the different lease periods for our iron ore mines?

We don't have major problems, risks to our mines. The productions are going to go up, because last year we produced 38 million tonnes raw yield.

This year we have kept target of 56 million tonnes, out of which some quantity will be sold, and going forward we are trying to ramp up to 80 million tonnes. Major issues are not there.

There are stray cases, stray issues, those we are taking up. Far as renewals are concerned, major renewals no issues, except the Chiria thing, which everybody knows about it.

In Chiria mines we are looking at getting that mining lease, it's not a renewal actually, it's a new mining lease. That would enhance our capacity.

Notwithstanding that, today whatever mining capacity we have we are going to ramp up, and our mines are quite good enough, and there are no renewal issues in that, no major renewal issues in those.

Sure, sir. Thank you.

Thank you.

Hi, sir. Thanks for the opportunity.

Sir, I have three questions. Sir, first question is, is there a way in which a government can allocate a iron ore lease to any company?

This is, given post MMDR, auctions is a way, but is it possible, say if there's some backward district, government can allocate a iron ore mine to a company?

Government can allocate a mine through auction process to any private company through NPP process. There is set procedure for that.

They can do that. Far as allocation to public sector is concerned, it forms a different way.

The methodology is different, everything is different.

Right. Sir, I didn't understand.

You said for private sector, allocation is possible?

For private sector, allocation is possible through auction route.

Through auction route only, okay, fine. That's clear.

Yeah. Sir, my second question is, sir, you indicated on rail price revision with the benefit likely to come in FY27.

If you had to look at say spot prices or look at the average pricing, is there a number that you would like to give out how much could be the benefit because of rail price revision in FY27? I didn't

say that, actually. What I said is that in 24-25 we had rail price revision arrear of ₹1,800 crores, which had gone into the P&L account of 24-25.

In 25-26 there is no rail price revision arrear. In spite of not having ₹1,800 crores advantage in 25-26, still we posted 50% additional profit as compared to 24-25.

Far as 26-27 is concerned, we can't say anything about whether we'll get an advantage from rail price revision or we'll get a negative on rail price revision. Things are not very clear at this point of time.

Perfect. Sir, just last question.

You indicated flats and longs prices at ₹51,000 and ₹53,400 for Q4. I just wanted to understand how much was the price increases that were taken in the month of March?

In

the month of March in the month of March long price long products prices were ₹55,500, and flat was ₹52,778.

Which which Sir, I'm asking the price increase which happened from 1st of March to say 31st of March, because there might be the benefit which will come into Q1.

It is around ₹1,400 per tonne.

That is for longs and for flats, sir?

For flat it is ₹1,400.

For longs?

₹1,500.

Fine. Thank you so much for the answers, sir.

Thank you.

Hi. Good morning, sir, and thank you for the opportunity.

My first question is pertaining to your debt levels. Now, considering that you are in one of the best state of balance sheet after many, many years, and you just indicated that next year, 27, your capex is ₹15,000 and eventually going to ₹20,000, ₹22,000 over next couple of years.

Considering your cash flows are at similar levels, would it mean that you'll be funding a lot of these capex, apart from internal accrual, majority of the capex would come in through debt basically over next couple of years?

Let me tell you that. Actually, we're trying to ramp up our steel production as well as sales.

On the face of a good market, we will try to improve our profitability. We'll have focus on cost reduction as well.

Going forward in 26-27, the capex guidance is ₹15,000 crores. Suppose it happens ₹14,000 or ₹15,000 crores, we will see how to meet it from the internal accruals.

Because that is our personal target. That means, in other words, actually we'll try to improve our profitability to a level in which the cash flows will be better.

Means the profitability plus depreciation will give us a cash flow which probably will be able to take care of this year's capex to a large extent. Going forward, the same level of profitability we are trying to maintain, and beyond that, the incremental will come from the long-term loans, borrowings.

Okay. Considering the cash flows sustain at the current level with the same kind of steel prices, right?

If by any chance the steel prices go down maybe in next couple of quarters or couple of years down the line, then I think you might have to borrow higher quantum, right, at the end of the day?

That's what I'm telling, actually. We are trying to increase our profitability on an average over the years, because during the year in different quarters steel prices travel differently.

It is not only a journey of steel price, it is journey of steel price as well as coal price, and on the top of that, our own operational efficiencies. We'll be focusing more on the operational efficiency as well as on the special steel component so that we will ramp up our kind of profitability as well.

This profitability on an average over the year over various quarters in the year should remain at a higher level by which we can fund our capex through internal accruals. This is our expectation in this year, and we are working towards that.

Okay. My second question is pertaining to your guidance, what you have basically given at 22, 22.5 million tonne.

Theoretically speaking, you are at a 21.5 million tonne kind of installed capacity. Even if you take a couple of million tonnes of debottlenecking, the capacity utilization would be over 90%, 95%, which is practically unheard of in the industry.

How do you basically justify that at 21.5 or maybe 22.5 million tonne, you're going to do over 100% kind of a utilization when theoretically it's not possible?

See, actually in steelmaking and ironmaking, actually theoretical calculations do not hold good. This is what we have experienced over a period of time.

By giving better enablers and raw materials, the BF productivity, blast furnace productivity levels, they go much beyond their DPR capacities. If DPR said it is 2.3, they can easily go to 3, 3.3 productivity.

This is what is happening with us, with JSW, with Tata Steel, and everybody. There is per se no theoretical capacity for a blast furnace or steel melting shop.

It is only the enablers and the raw material and the practices which we improve by which we can easily go beyond 100%. We have already seen in the past, and more of such things will be exhibited going forward in the future.

Sir. Any threshold limit for that net debt to equity or leverage if you can give?

Net debt to equity right now is around 0.33, right now it is 0.37. As you said, in this year we are trying to improve our profitability by various actions, and debt level should not increase in this year.

This is what we are looking at. If that is so, then 0.37 will further come down in 26-27 if that happens.

That it will give a good room for huge capex going forward.

All right, that's quite helpful, sir. Thank you so much and best of luck, sir.

Thank you.

Good morning, sir, and thanks for the opportunity. Sir, my first question was on the sharp reduction in debt in this quarter, which has been achieved on account of some liquidation of inventories.

Looking at this sharp rise in steel prices and the forthcoming monsoon season, do we anticipate that there will be some inventory build-up now which will lead to again working capital rising a little bit in the coming months?

What we are looking at actually, we are personally looking at no increase in inventory during quarter one, but that is a wish list. It again depends on the market conditions and geopolitical situations.

We are looking at zero-zero in quarter one. Let's look at that.

Let's see how it works out. Quarter one after quarter one, quarter two becomes little sluggish, and again it will start picking up from quarter three onwards.

Quarter three and quarter four will have good amount of inventory reduction. Quarter two will be quite challenging as compared to quarter one.

We are making our strategies towards that to see how less increase of inventory can take place during quarter one and mostly in quarter two so that all of that can be taken care of in quarter three and quarter four, and we'll attempt at further reduction in inventory.

Right, sir. Sir, my second question is on the stainless steel setup we have.

They are still bleeding, and we don't have any plans of expansion. Do we have any plans on Salem, what do we want to do with this asset?

Far as Salem is concerned, they are bleeding, as you're correct, but we have got a plan to reduce their bleeding and improve the EBITDA levels over there. There the main concern is the operational efficiency in the CR mill.

In CR mill where the yield right now is only 84%, 83%, we are trying to increase it to 90%. We have taken couple of other actions like replacing LPG with PNG, which has given quite good benefit.

We are trying to replace costlier power with cheaper sources also, that is number three. Thereby the cost of production will go down.

Number four is we are trying to ramp up the production of the mills, because the mills have the spare capacities. CR mill and SR mill, they have got the spare capacity as compared to SMS.

We'll be feeding stainless steel slabs from imported sources to increase their production. The management guidance is to increase the production from Salem Steel Plant whereby the losses will come down and more availability of stainless steel will be there in the market.

Once that happens, then we'll have a look at further expansion over there if it is feasible.

VISL?

VISL right now it is in that list of disinvestment. We are looking at getting a comfort from the government.

After that, we'll have some plan for specialty steel.

Okay. Thank you.

Thank you.

Thank you, Michelle. Thank you, everyone.

Sir, quickly last question from me of two things. Because the kind of price increase which we have seen till April, and you mentioned that May was more or less you can say rollover from April.

By looking at the current prices, do you think that there is a possibility of some kind of demand slowdown or buyers are resisting the price hikes as well as the way government capex has been there in fourth quarter, do you think that there could be a possibility of some slowdown in that, especially in the environment on the back of this Middle East crisis? That's one.

Secondly, in terms of cost, you have mentioned about the cost increase of coking coal in first quarter, but overall cost guidance if you can help us what kind of cost increase you are witnessing in first quarter versus fourth quarter, that will be helpful. Thank you.

Yeah.

Let me give my explanations. For the first one is demand.

Generally, demand remains muted in quarter one and quarter two, as all of us have seen, because on the back of more sales in quarter four, there are events of destocking in quarter one which is taking place, and this time also it is there. Price levels almost the same level because internationally the price are going up, and dollar versus rupee also rupee is depreciating, landed cost is remaining pretty on the higher side.

Far as flat products are concerned, we have a safeguard duty in place also. That is why landed cost of imported goods is less.

That's the reason why imports are not taking place in that great number. Demand is little muted.

It remains in those ranges in quarter one and quarter two, but after that again it starts picking up. That is about on the demand front.

On the cost front, as we have told that the imported coal rates have increased. In April around say how much in say average of quarter four is somewhere around ₹19,500, and right now it is ₹21,500.

You can say around ₹2,000 increase in quarter one as compared to quarter four. When it is ₹2,000 increase, that means its impact on the cost of production will be somewhere around ₹1,400 to ₹500 if you look at coal to hot metal ratio and the blend with indigenous coal, etc., put together.

You can say that the cost impact will be around ₹1,400 to ₹500 per tonne. That will be the impact in quarter one from there, but the sales price levels are supporting this.

On the top of that, we'll have to increase our sales volumes so that inventory reduction will be there and it will give us working capital comfort.

Great, sir. Thank you so much, and I would request you for our closing remarks then.

Thank you very much. Thank you for your patient hearing as well as Q&A sessions.

The domestic market have remained fairly stable despite challenging scenario outside. As the company continues to take actions on efficiency improvement and cost reduction front, we are hopeful of delivering even better results and value addition for all our stakeholders going forward.

Also, the company remains committed towards sustainable performance, including emphasis on decarbonization, improving capacity utilization, value addition, and achieving cost competitiveness in this year and in future. I thank all our investors for their reposing faith in us, and I'm hopeful that the same still continue in future as well.

Thank you very much.