Indian Metals and Ferro Alloys Limited (533047) Earnings Call Transcript
November 8, 2024
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to the analyst conference call of Indian Metals and Ferro Alloys Limited arranged by Vericast Reputation. [Operator Instructions] Please note that this conference call is being recorded. I now hand the conference over to Mr. Aryan Rana from Veritas Reputation. Thank you, and over to you, sir.
Thank you, Farah. Good evening, and thank you for joining this conference call with Indian Metals and Ferro Alloys Limited to review our financial results for the second quarter of fiscal year 2025 ending September 30, 2024. IMFA, it has been a remarkable year with about 80% increase in market valuation in the past 1 year and over 700% the last 5 years. Recently got reaffirmation of our credit ratings by ICRA. Our long-term facility rating remains at AA- with a stable outlook while our short-term rating continues at A1+. This endorsement reflects IMFA's robust financial performance with sustained profitability, strong cash flows and solid debt coverage indicators projected to remain strong in the near term. The improved financial profile is largely a result of effective debt reduction since FY '22 and the company is favorably placed for growth in the ferrochrome sector. As a fully integrated manufacturer of quality ferrochrome and a dealer in the industry, IMFA benefits from a highly competitive cost structure driven by self-reliance in chrome ore and power production. We remain one of India's top ferrochrome exporters with a diverse operational portfolio, encompassing chrome ore mining, electricity production and ferroalloy smelting. Our financial results are available on our website and the stock exchanges for further reference. Please note that today's discussion may contain forward-looking statements that involve with uncertainties and other factors. These statements should be considered in light of our business risk, which could impact future performance or results. Joining us today are key members of our management team, Mr. Prem Khandelwal, Chief Financial Officer and Company Secretary; Mr. Bijayananda Mohapatra, Chief Operating Officer; Mr. Saunak Gupta, Deputy Chief Financial Officer; Mr. Binoy Agarwalla, Head Power Business Unit; Mr. Sandeep B Narade, Head Mines Business Unit; Mr. Suresh Babu, Head Ferro Alloys Business Unit; and Mr. M Venkatesh, Head Sales and Marketing, Ferro Alloys Business Unit. We will start the brief overview of our Q2 FY '25 results, after which we will open the floor for questions. With that, I will now hand over the call to Mr. Prem Khandelwal, our CFO. Over to you, sir. Thank you.
Thank you, Aryan, and good afternoon, everyone. Thank you for joining us on today's earnings call for Q2 FY '25. We are pleased to report [ results ] that exceeded our expectations for this quarter, reflecting the hard work and commitment of our team and our strategic focus on operational efficiency. Our profits came in stronger than anticipated, bolstered by solid performance across our key segments. This positive outcome reinforces our confidence in the strength and resilience of our business model even as we navigate a dynamic market environment. Looking ahead, we expect the upcoming quarters to continue this trend. We anticipate stability in demand and pricing, which should allow us to maintain a steady performance. We remain committed to driving sustainable growth supported by our investments in technology and efficiency improvements. We are grateful for the continued support of our stakeholders, and we are eager to build on this momentum. Thank you once again for your trust and partnership, and we look forward to your questions now.
[Operator Instructions] The first question is from the line of [ Sid Mehta from H&I ].
Yes. Can you hear me?
Yes.
Okay. I have a question if you can clarify my understanding of the operations going forward. If I see -- read it correctly based on the CNBC interview I saw today, it seems that in the future, in the year FY '25, '26, there will be probably -- the quantity of production will be more or less what we have going right now, but there may be an improvement in the price as well as there is currently a reduction in the cost of coking coal and that should -- both aspects together should be expected to increase our profitability going forward. So is this one correct outlook that I'm having?
No. For the next quarter, I don't think MD has indicated that...
No. I mean for the next 15, 18 months, 15 months going forward.
No, no, that would be -- I don't think we have indicated that because in our business, predicting more than 2 quarters is very difficult. So what he has mentioned in the interview that next 2 quarters looks like that we are going to maintain these kind of margins. Beyond that, it is very difficult to predict anything. So we need to see where the markets are at that point of time and demand and supply situation will determine the price.
Okay. All right. So in FY '25, '26, we will be setting up the expansion facilities. And after the FY '25, '26 year after that, we would start seeing -- pretty much, we would start seeing some result of the expansion, right? So the quantity of production would increase only at that time. Today, we are producing everything we can, and we are selling everything we can.
Yes, yes, that's correct.
All right. So our -- any improvement in the next year, next FY would come from -- mainly from price increases, if any, if they take place, right?
Correct.
And maybe foreign exchange improvements also?
And maybe some cost reduction. It all depends on where the market is at that point of time.
Okay. All right. Now once we pass over this scenario, if I'm understanding it correctly, we will get an expansion of roughly 40%. So if our capacity would go from, say, about [ 2-point some lakh tonnes two ], another probably 1 lakh tonnes added into that.
Yes. Yes.
And say, 2, 3 years after that, we would look to probably spend another 2 lakh tonnes, if I'm understanding correctly?
Another 1 lakh tonne.
Another one lakh tonne only. Okay, the second expansion also would be this underground mining and all that?
Yes.
That would also be only 1 lakh tonne.
Yes, that will start from here in FY '28 or '29.
That will be '28 and '29. I see. I see. Okay. Would you like to add anything to this outlook as I'm seeing?
No, I think it's pretty much you are on -- this thing. I mean, whatever -- the next year, as you said, next year, we cannot predict anything. But the next 2 quarters, yes, that we can predict, but it is more or less likely to be like this.
Okay. Okay. Now in terms of the global situation, our position today is such that we can sell everything that we are making. We are one of the lowest cost producers. If Africa, maybe if the situation improves or if the world goes slightly into recession, a little bit here and there, I don't see that it should affect us, right, very much? Because right now at $0.90, $0.95, you are already among the pretty low price at the moment, right?
Yes. You see we are at such a level as far as cost curve is concerned that if prices come down at an unsustainable level, and most of the facility would be shut down worldwide. So almost 70%, 80% capacity will shut down. But even at that level, we will be making some money.
Yes. So right now, you don't foresee any such a -- so such a bad scenario seems unlikely that people will drive the price down so low that they will...
Yes, very unlikely, very unlikely. And if it happens, then we would see the kind of jump back, we have seen earlier also.
Yes, correct, correct. Very good point. Very good point, yes. One last question. What is your view on what are the options available to us to discuss the money that will come to us?
No. The money we are -- as of now, you may be knowing that the expansion -- a lot of expansions have been lined up. Almost we have to spend almost INR 2,000 crores in the next 6, 7 years. Okay. So apart from the dividend, I don't see any further disbursement.
No, no further windfall disbursements of any kind?
No, no, no. As of now, we are not anticipating any such kind of thing. You'll be needing money for expansion, a lot of expansion....
Absolutely, absolutely. And it's correcting also. It's correcting...
Yes. Thank you.
[Operator Instructions] The next question is from the line of Dhviti from Molecule Ventures.
Yes. Congratulations on a good set of numbers, sir. So I had a question that given the new capacities will be on stream in 2 years, and we already have our mining capacity approval. So do we plan to expand through any inorganic growth like acquisition of some smelting capacity just to achieve the volume growth in FY '25 and '26?
We are open to that, Dhviti, and we are, in fact, looking for those kind of opportunity in the market also, but nothing lucrative available at the moment. So if something comes up, definitely, we'll look for that.
Okay, okay. And sir, if you could help me with the cost of production Q2 FY '25.
Q2 FY '25, just a moment, let me see. The cost of production was INR 69,600.
Okay. And EBITDA?
EBITDA was INR 176 crores, which is around 25.38%.
And sir, for the past quarter and also if you could help me with the coal cost and coke cost.
The power cost, variable cost was INR 3.85. And the coke cost was INR 16,545.
[Operator Instructions] The next question is from the line of Joe Shah from Seven Seas.
Thank you very much for the very good numbers. And after a long time today, shareholders of IMFA had a broad smile. Yes. Now Prem, regarding this mineral stake, we know that Supreme Court has rejected review petition filed by Union of India. All the legal doors are closed now. Ann now this -- this pending mineral stake is a big tension for us, we are also not able to utilize the compensation which we have received for [ UC. ] So now I think only option left is some parliamentary action, which is not a small job. But I remember our Vice Chairman [ during one month's in time ], he was coordinating with all the central India state for legal matter. He is a brilliant person we know and he's elected a member of parliament from Odisha and very active in parliament. So I think this matter should be taken up by him. Not just for the benefit of IMFA, but for the benefit of entire mining industry. And because it is very important that this matter is sorted out amicably in the interest of the industry, which even government of India also believe that this is very unjust ruling by Supreme Court. So now do you have any idea of what is happening in parliament for this matter?
No, I have no idea about that. But I believe this matter has been taken by all the mining companies with the government. And in fact, [ FMI ] has also given their representation that this levy should not be allowed. So beyond that, I have no idea. And our MD has also taken up the matter with the ministry. So all the companies are jointly taking the action. So let's see, hopefully, there should be some amicable solution to this. But beyond that, I won't be able to comment anything on this.
The next question is from the line of Sanjeev Goswami from Fractal Capital Investments.
Sir, I was just seeing that -- [Technical Difficulty] one. The ferrochrome production has actually increased by more than 10%. So is it that we buy chrome ore from outside also from other players like Orissa Mining Corporation? Or did we have enough inventory of chrome ore?
Sanjeev, you got cut off in between. Can you repeat your question again?
Can you hear me now?
Yes.
Sir, you're saying the production of chrome ore actually declined by almost 50%, while ferrochrome production has gone up by more than 10%. So do we really buy chrome ore from other mining companies like Orissa Mining Corporation? Or we had enough inventory of chrome core initially?
Sandeep, would you answer that?
Yes, we are having the inventory. And if you compare to the last year, it sounds to be a drop, but this year, the monsoon was quite long and there was a rainfall almost all the day. So that was the main reason. And last year, the monsoon was delayed, so we could make up the production in H1. And you can see the difference of almost 1 lakh tonnes. So there is no direct impact of this. So we are in line. And in Q1, it was 100%. In Q2, about 18% less. But yes, we have the stock. We are having the inventory of ore. So no need to buy from others.
Okay. And then we don't buy chrome ore from outside is all?
That means we don't buy.
Okay. The reason I'm asking is because if you look from FY '21 to FY '24, your ferrochrome production per chrome ore has come down from 0.5 to 0.39 FY '24. So is it because the quality of the chrome ore coming out is better? Or what exactly explains that?
No, no. Sanjeev, we didn't get your question. You are talking about ferrochrome -- chrome ore consumption in terms of ferrochrome?
Yes, yes, exactly.
No, I don't know from where you got the figure, but chrome ore in terms of ferrochrome, the chrome ore consumption a year almost 2.3, 2.3, I am seeing all the year, 2.3 to 2.4. It is not coming down.
Okay. Sir, if you look at FY '21 to FY '24, my chrome ore production increased from 521,000 to 670,000. There is an increase of almost 150,000 while the production of ferrochrome increased only by 5,000.
That is not a comparison now because then we are holding inventory.
FY '24, we have been large inventory.
Yes. But [ tangentially same ], it's around 2.4 tonnes per tonne of ferrochrome. It's not changing.
The next question is from the line of [ Saket Kapoor from Kapoor Company ].
Sir, we have spent around INR 41 crores for the first half, under the purchase of property, plant and equipment. So how much of this is to be our new furnace project? And when are we going to start spending in a major way, CapEx for the project?
Suresh?
Yes, we have started our boundary work from the last month and the boundary work will be completed by the end of this December. So are we expecting to start the furnace by 2026 July?
Okay. And we have placed the orders for the equipment?
Yes. Major packages we have ordered like power plant and other electrode systems of the furnace and [ a level of ] packages we have already made LOI and ordered, some of them were ordered.
Okay. And when will we draw money? When will we be paying them for that? In which quarter we'll be drawing cash for the sale?
The payment will begin from the Q2 beginning of next year. Some of them in the Q1 and major will be come in Q2 of the 2025.
Okay. And how much have been interested with? What will be spending on this in terms of plant equipment?
Plant equipment for furnace packages, it will be around INR 181 crores and power plant is around INR 95 crores. And other, we have paid till date around INR 63 crores.
Okay. And sir, what is our cash balance?
Mr. [ Kapoor ], can we ask you to return to the question queue?
Only one question I have, ma'am. Cash balance, sir, if you could give me in terms of our investment in liquid funds and what is the cash on books?
The total cash and bank balance as on date is INR 869 crores.
Okay. And our working capital requirement is?
Working capital is INR 240 crores.
Okay. So that minus INR 600 crores net cash we are carrying as of now?
Yes, yes.
The next question is from the line of [ Sid Mehta from H&I ].
Yes. My question relates to our expansion going into ethanol production. I'm just curious, not a criticism or anything that about what is the reason that while we are making chrome ore, we decided to get into a different field altogether? And right now from my understanding, the sales on that would be around INR 300 crores, which is a fairly small amount for us as a company. So doing some different business getting into a whole different area but getting a small amount of revenue. So I'm just curious what was the reason. I'm not criticizing or anything, I'm just curious about this. And will this INR 300 crores one day become INR 3,000 crores also? Or it will remain INR 300 crores, INR 400 crores like that?
Binoy, would you answer that?
Yes. Actually, we have diverted this new project as a diversification, and we have [ land at Peru ] so utilizing that on this one. And initially, we were going for 120 KLD. Afterwards, we'll go on increasing the capacity, seeing the plant performance.
So if we go for maximum capacity in the future, given our land, roughly, what would we expect the sales, say, in today's prices to be? And theoretically, what would be the maximum sale?
Maximum sale, 120 KLD means around INR 300 crores. So as you add on another 120, you will reach to another INR 300 crores like that. [ Sales-wise ] we will expand, not [indiscernible]...
Total, how much KLD we can we put?
That would be difficult to say anything at the moment because it depends. We are just experimenting now with 120 KLD. And if it's successful and if you get extra land there, then we'll expand further...
So it can go 2,000...
But nothing concrete has been worked out.
Okay. So in the future, we can go for INR 300 crore, INR 500 crore, INR 1,000 crore, like that?
Yes, because you see the ferrochrome production in that area, logically there is disadvantage around INR 6,000 per tonne. So it doesn't make any sense in expanding ferrochrome in that area.
I see. I see.
Okay. So we have enough infrastructure available there, a lot of land available, railway siding is available and that is a full agriculture built. So maize, rice, everything available in plenty there. So that was the reason for expanding in ethanol. And we are seeing lucrative business. And if it is successful, then we expand further.
Yes. It is likely to be successful because are there any other people doing the same business, they're taking ethanol out of maize in that area and selling it?
No, that area, I think nobody else is there. So that's why we have started -- we are pioneer in there.
All right. All right. Let's hope it all works out. I'm glad that some new initiative is there. And by God's grace, let's say one day, it can go from 120 to maybe 1,200 also.
Let's hope so.
The next question is from the line of [ Kaushal Kedia ], an individual investor.
Congratulations on a good set of numbers. Sir, I want to ask you in one of the annual reports, you mentioned that you have proven capacity, reserves are 21 million tonnes. And in some earlier interview, I think someone had mentioned that it can increase also. You've not done a proper survey of the area. Is there any -- do you want to -- I want to know what is the kind of reserve that you have in the mines.
Sandeep, would you answer that?
Can you please repeat the question? The voice was not clear.
What is the mining reserves that we have, proven reserves.
Number as of now, I'm not having with me right now. But yes, we're having enough reserves for our lease period from both the mines.
So we are comfortable for the next 20, 25 years?
Yes, yes.
So it's upwards of 521 million tonnes then?
Yes, roughly.
Okay. Sir, and can you just repeat what was the EBITDA cost per tonne?
EBITDA cost per tonne is around just INR 77,500.
Okay. Sir, I mean is this -- the new furnace that we are setting up, where will we take the power from?
Binoy?
Yes. Actually, we are setting up the power plant in the Kalinganagar and whatever our thermal capacities now. It is now catered in the year. So for future, we are getting tie-up with the renewable energy is a hybrid, solar plus wind. So with that grid power, we will go for the furnace on that.
So no -- so this CapEx that we are doing, it includes setting up of how many megawatts of power plant?
No, no, no. We're setting up a small power plant, utilizing the furnace gas. It will be around 9 megawatts. That is the beneficial to -- that's using the heat from the fuel gas. That's our real thermal power plant.
Okay. Understood. So this balance will be dependent on the grid only?
Not in grid. We are getting tie up with the captive hybrid power plant [ in the world ].
What does that mean, captive hybrid power plant?
That means somebody setting up solar plus wind energy, we are taking the other stakeholders [indiscernible].
So we will be investing in that as equity shareholder?
Yes, yes.
Okay. So a third-party setting it up, and we will be investing in that?
Yes.
Okay. And what is how much of that investment? INR 95 crores?
INR 100 crores, INR 120 crores.
INR 120 crores.
So that is included in this CapEx. You have included in this CapEx. Or that is a separate investment now?
No, no, that isn't a separate CapEx. It is not included in the financial year.
Okay. And sir, to set up 1 lakh tonne of furnace, what is the cost, is it INR 500 crores or INR 1,000 crores, I am confused because I'm listening to the last...
No, it's around INR 650 crores, Kaushal. Furnace is INR 650 crores; and for mining, it is around INR 1,000 crores.
Sir, this mining needs to go to 1.1 million tonnes?
Yes. 1.2 million tonnes.
The next question is from the line of Joe Shah from Seven Seas.
Regarding power investment maintenance of about INR 85 crores in Kalinganagar, there is further producing power from the grid, right?
No, that is -- sorry.
Yes, please go ahead.
The Kalinganagar power plant is around 9 megawatts. That power generation will be done from the furnace of gas.
Yes, I see. I see. So we'll be producing 9 megawatts of power from this furnace gas.
Yes.
Now one more thing. Prem, this Sukinda underground mining, which we are going to start, when we are starting with the project, underground mining? I mean it is a very challenging project underground mining. And what is the time line and how much investment would be needed?
Sandeep?
Yes. The time line is next 5 to 6 years to start the improved production and investment will be about INR 1,000 crores.
Okay. And when will be starting this underground project?
Yes. We have already started some work.
[Operator Instructions] The next question is from the line of [ Akhilesh P ], who is an individual investor.
Am I audible?
Yes, Akhilesh.
Congratulations, sir, and your whole team for a great set of numbers. Good execution as usual. Sir, I have 2 questions. One is on the Supreme Court verdict, which came a few months back that state government can also levy royalty. Have you heard any discussions with your state government in Odisha? Is there any idea you're getting about how it will proceed going ahead?
No, the act has been struck down in Orissa High Court and the state government has gone to Supreme Court against that. So that is pending since so many years now. So unless the act is reenacted, nothing is payable as of now.
So we have no contingent liability on...
No, no, no. There is no demand, there is no contingent liability. So that's how we are not showing anything in our books. And even Tata Steel also, which had quantified earlier, this quarter, they have also withdrawn that note because there is no demand, there is no act as on date.
So as on date, royalty is still decided by the center?
Yes. IBM. Not center, IBM. Royalty [ rate 80%, 15%, ] and the IBM declares the price on which we pay royalty.
And that is status quo, nothing has changed since this...
Yes, yes.
And unlike Tata Steel, we didn't even have any contingent liability or demand in the past. So...
I doubt even Tata Steel had any demand. I don't know how they have shown it because the [ ag ] was shut down. So obviously, there is no demand.
It had worried a lot of investors.
So now they have modified their note. For this quarter result, they have now modified the note.
Okay. And sir, second question is can you refresh us on this ethanol project what is our total CapEx, when is the payback period, our expected EBITDA once it ramps up? Can you refresh us on this?
Bijayananda?
So on the ethanol project, our CapEx is approximately INR 140 crores. And we expect to get this around in 6 years' time, the payback period?
And what can be the projected EBITDA at full utilization?
The full utilization, we expect it should be somewhere around 14%, 15% EBITDA will be there in that.
The next question is from the line of [ Pawan Kaware ] from N.M.B. Securities.
Congratulations for your good numbers. Sir, my question is on CapEx in quarter 4 of FY '24, you have given a CapEx number of INR 1,500 crores. Is there any improvement in that number?
Improvement, you meant reduction?
Increase, obviously, you said INR 2,000 crores in today.
No, no, INR 2,000 crores is because there are several CapEx items are there, like we have furnace capacity, then mining, then ethanol, then RE power. All put together, it is around INR 2,000 crores.
Okay. So you can give me a breakup of this INR 2,000 crores?
Estimated around INR 650 crores for furnace, INR 1,000 crores for mining, INR 140 crores as Mr. Saunak said, INR 140 crores for ethanol and roughly INR 120 crores for RE power.
Okay. So what is the expected CapEx for this year different next 2 years?
Saunak, do you have that number?
Yes. So this year, we expect to be around -- if I go by the order release, it will be around INR 600 crores [ EBITDA, ] CapEx. Next 2 years, we are in the finalization stage. So we will be actually framing it out.
Okay. So out of the INR 600 crores for this year, what was the executed CapEx still now in half year?
So as of now, what Suresh mentioned, especially the Kalinganagar project. So there, we have around -- if I say executed is around INR 60 crores and a portion which the ethanol has started. So there we have some. And the rest of them would be the routine CapEx, which we have spent around [ INR 50 crores ]. That's the thing as of now. So what we mentioned is, basically, we mentioned this on the basis of order released. So the overall order released is in that tune annually INR 600 crores. But as of now, we have released in the tune of about INR 300 crores, INR 350 crores.
Okay. So out of this INR 600 crores, is it included maintenance CapEx?
Yes, yes, routine CapEx is included.
What is your routine CapEx, sir?
It is around INR 70 crores to INR 80 crores.
INR 70 crores to INR 80 crores yearly?
Yes.
The next question is from the line of [ Mohit Madiwale from Envision Capital ].
Sir, I just wanted to understand that, has there been any reclassification of costs in the cost of material consumed line item?
Yes, this -- from this quarter onwards, we are showing power and fuel separately. So if you see our results, there is a line item of power and fuel expense of INR 101 crore.
So this was earlier being...
Yes, but the auditors have advised that, no, this is not part of raw material. This is a separate line item. So we have segregated this and that's why the 2 items are appearing now.
Okay, sir. Fair enough. And I just wanted to confirm a few things in terms of the capacities that we have and all of that. So on our ferrochrome production capacity, we are currently at 284,000 tonnes, right?
Yes.
And what would be the utilization for this quarter?
I didn't get you. Utilization for this quarter means we are running at full capacity now.
All right. Okay.
So on average, we are producing around [ 65,000 ] tonnes every quarter.
Right, right, right. Got it. Got it. Okay. And I also wanted to check on the ethanol plant. Just in terms of when the revenues are expected. Just a little bit on that as well.
Yes. We are expecting it to be operational by the end of December '25. So first quarter of FY '26, I mean first -- last quarter of FY '26, we should be seeing that.
Sorry, last quarter of FY '26?
FY December '25, we're expecting it to be operational. So January to March quarter '26, we should be seeing the revenue out of that.
[Operator Instructions] The next question is from the line of Joe Shah from Seven Seas.
So Prem, this is a rather futuristic statement or suggestion. Now there is a lot of interest and discussion about the ethanol. Now there is a very interesting product, which is called sustainable aviation fuel, SAF, which is produced using ethanol as a feedstock to process like alcohol to [ get 80J ]. Now India is taking expertise from U.S., Europe, about the SAF blend and SAF blend is mandated -- getting mandated for aviation? So we should consider this SAF production in future once we are established in ethanol. So ethanol is used mainly for the vehicles on the road. Now this is for the aviation fuel and India is supposed to become the global hub of this SAF because of our location. So this is number one. Number two is, Binoy, this is an interesting point of CBAM is a Carbon Border Adjustment Mechanism tax. It is coming into effect in Europe in 2026 because now everyone is becoming aware of carbon tax, carbon emission and they want to control it. So Europe is going to maybe tax on this all the carbon emission and that will make a freight very expensive. So freight of chrome ore from South Africa to China will become more expensive. And China, U.S., Japan, Korea, they're also going to -- they're also considering this kind of carbon tax. So that will put us in benefit in a way because we are already, we are -- as far as power generation is concerned, we are using renewable energy and our underground mining is also producing less of pollution. So these are our benefits. So maybe time will come when [ Far East ] importers would kind import of this from us, more beneficial than doing all the processing and getting from other places. This is another -- CBAM is a very interesting point, which we should keep in mind.
[Operator Instructions] The next question is from the line of [ Pawan Kaware ] from N.M.B. Securities.
Sir, my question was on our CapEx plan. On our mining and chrome capacity expansions. So what is the expected time when we can see the full capacity expansion in mining and in chrome production both?
Mining will be in stages. Sandeep, could you give the date?
So we are expanding the Sukinda mine for the production capacity of -- in the first phase, 6 lakh tonne per annum. Right now, we are producing 3 lakh tonne. So from that, we'll move to 6 lakh tonnes. So that will come in FY '31. Pawan, have you got it?
Yes, yes. This is about the mining. And what about this 1.2 lakh tonnes in expansions?
That is the mining Sandeep is talking about, Pawan, 1.2 million tonnes. Ultimately, we reach 1.2 million tonnes...
That will be 1.2 million tonnes. From both the mines together, it will be 1.2 million tonnes.
And this should be expected in FY '31?
Yes.
Okay. And what about the ferrochrome capacity increasing by 1 lakh tonne.
That will come in second quarter of FY '26.
Okay. So it will be counted in financial year '27.
Yes. Yes.
Okay. So our current capacity of mining is 6.51 lakh?
6.51 lakhs.
Yes, 6.51 lakhs. So will it be possible to produce this much tonnes from ferrochrome because for this [ 3.84 lakh ], we will be requiring nearly 8,800 -- 8.8 lakhs.
Just a minute. This is are our production. Our capacity is now 9 lakhs already. Mining underground is 6 lakhs and Sukinda is [ 3 lakhs ]. So as on date, our capacity is 9 lakhs.
Okay. Capacity is 9 lakh.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Abhishek Savant for closing comments.
Thank you, Farah. Our Q2 performance has been solid, driven by consistent growth, higher revenue and improved margin, thanks to our fully integrated model and debt-free balance sheet. While the global stainless steel demand is under pressure due to economic slowdown, China's recent economic indicators show promise with their October PMI marking the first growth in 6 months, along with stability in the real estate prices. This is encouraging for the ferrochrome market, especially as many global regions face uncertainties. Rising power costs in South Africa may also drive China to seek alternative ferrochrome sources, potentially benefiting our industry. As we move forward, we are focused on our expansion plan, which are progressing constantly. Thank you all for joining, and we look forward to a continued positive momentum. On behalf of the Board of Directors and management, we thank you all for participation in this call today. Have a good day ahead.
Thank you very much, everyone. On behalf of Indian Metals and Ferro Alloys Limited and Veritas Reputation, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.
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