MOIL Limited (533286) Earnings Call Transcript

[Audio Gap] operations and growth outlook. Over the past few quarters, the company has navigated a dynamic operating environment while continuing to focus on its production journey. We look forward to discussing these developments with you in detail and addressing your questions. To take us through the company's performance and future road map, I would now like to invite the management team on stage. We are joined today by the senior leadership, who will walk you through the key aspect of the business and share their perspective. Thank you, and hope you find this session insightful. We would now like to invite Rakesh sir, Director of Finance. Rashmi ma'am, Director, Commercial; M.M. Abdulla, sir, Director, Production and Planning, on the stage. [Operator Instructions] We would now like to invite Mr. Ashwini, DGM Finance MOIL, for the presentation of the company.

Good morning, everyone. I want to extend my warm welcome to all of you for -- good morning, everyone. I want to extend my warm welcome to all of you for taking your time and gracing us on the occasion. Your presence is a testament to your interest and confidence in our company. Over the past 1 year, MOIL has made significant strides in the areas of production, sales, environmental clearance and all CapEx. We are excited to share with you not only what we have accomplished so far, but also the strategic initiatives and what we are pursuing to drive our future. In today's presentation, we'll cover our current performance, growth strategy and exciting developments on the horizon. But more than that, we aim to provide you a clear understanding of how we intend to create the sustainable growth and value to our company. So be invested. MOIL has a rich history of more than 125 years. It started in the year 1899 as the Central Prospecting Syndicate. Later, it was converted into a public company as CPMO. In 1962, Government of India took over from CPMO and...

Very good morning to all of you. I'm seeing a lot of old faces. We have been meeting investors and analysts on a continuous basis for the last 4, 5 years, so I see many of the familiar faces. But still, there are a lot of faces which are new. And this manganese industry, that is, the manganese mining is completely unknown creature. Many of the people do not know what is manganese mining. And in fact, when I joined MOIL, somebody said that you are joining Manganese Oil India Limited, okay? So that is the kind of awareness was there. Now the awareness is much better about the MOIL. And I'm sure that we are covering this presentation in a little detail so that we are giving a history so that the people who have joined for the first time and who are new, they get an idea about the company. So please bear with us, those who already know about it, yes? Thank you.

So in 1962, Government of India took over from CPMO and acquired 51% stake. In 1991, MOIL set up the first EMD plant in India. In 1998, MOIL set up its ferro manganese plant. In 2010, MOIL listed in NSE and BSE. In 2014, MOIL was upgraded to a public sector Schedule A CPSE. In 2025, MOIL has achieved its highest ever production and sales. MOIL is the largest producer of manganese ore in India. It contributes around 50% of the domestic production of manganese ore. MOIL is the first CPSE, which have set up the windmill in India and also the only company to produce EMD, which is used in dry cell batteries. Around 43% of its energy consumption is sourced from renewable energy. I'll tell a brief about what is manganese ore and how it is used in the industry. Manganese ore has several important uses, primarily in the steel and industrial sector. In steel production, it is used as a deoxidizing agent for removal of oxygen and sulfur impurities, improving the steel durability and strength. Manganese are also added to steel alloys to enhance hardness, tensile strength and resistance wear and tear. Manganese is used in cathodes of lithium-ion batteries, which are commonly found in EVs and portable electronics. Manganese dioxide is a key component in production of alkaline batteries. Manganese ore compounds are used in paints, ceramics and micronutrients and fertilizers. Since manganese is a critical component in steel production, the demand for steel directly affects the manganese ore prices. Higher the steel production leads to the increased demand and potentially higher prices. First of all, explaining this slide, I'll tell you something about reserves and resources. Resources are the identified mineral occurrence in reasonable prospects for extraction, and reserves are economically viable portions of those resources that can be extracted. Usually, exploration of these reserves and resources forms the basis of any mining industry. As per the last published data, MOIL holds around 20% of the India's manganese resources, through which it meets the company's 50% demand. MOIL has 10 mines, 3 opencast mines and 7 underground mines, which are operated in the state of Madhya Pradesh and Maharashtra. In the Balaghat district and in Maharashtra, we have Bhandara district and Nagpur district. Mostly, its production comes from underground mines, around 70% of its production. MOIL's authorized capital is of INR 300 crores, out of which paid-up capital is of INR 203.48 crores. Government of India holds the majority stake apart from Government of Maharashtra, which holds a 5.96% and Government of Madhya Pradesh, 5.35%. The rest of the shares is held by public at large and financial institutions. I'll brief you about manganese ore global market scenario. The global market is competitive, with significant players from countries like South Africa, Central Africa, Australia, China. India contributes only 5% of the global manganese ore production. And MOIL primarily operates and focus within India. Our company contributes to explore ways to enhance its production through various possible exploration of reserves and resources. Around 5.5 million tonnes of manganese ore is imported on an average from the data of last 5 years, and MOIL contributes around 1.4 million tonnes of manganese ore. However, our last year's production was around 1.8 million tonnes. MOIL contributes around 50% of the market share, and it holds around 18% market share. Our Board of Directors comprises of experienced leaders with diverse expertise across industries, guiding MOIL with strategic vision and strong governance to drive sustainable growth. Our independent directors bring wealth of experience, ensuring robust governance, contributing valued perspectives to MOIL's strategic decisions. Now let's discuss about our performance. In the year '24-'25, MOIL has achieved its highest ever production of 1.8 million tonnes, which is around 18.03 lakh tonnes. In the previous year also, it has achieved around 1.8 million tonnes. Similarly, in the field of sales, MOIL has achieved its highest ever sale of 1.6 million tonnes, which is roughly around 15.88 lakh tonnes. Our total income for the financial year '24-'25 was INR 1,696 crores, and it is the highest ever revenue achieved by MOIL till its inception. These are the last 5 years' physical performances. As you can see, MOIL has been continuously improving its performance through various results and exploration of reserves and resources, improving its CapEx and investing in production activities. MOIL has also 2 other segments, EMD, that is electrolytic manganese dioxide, and ferro manganese. MOIL is also striving to achieve its growth in those fields also. This is our 9 months performance. Up to 9 months of financial year '25-'26, we have achieved 1.4 million tonnes, that is 14.21 lakh tonnes as compared to previous year, 13.31 lakh tonnes. We have also achieved 10.84 lakh tonnes of sale of manganese ore against 11.40 lakh tonnes of manganese ore. This is our financial performance. As we can see that we have a stable operating margin during the last 5 years. And due to the strong performance and efficient operation and strong demand, which has supported in maintaining this stable margin. This is the financial performance of the 9-month period. For the financial year '25-'26, MOIL has achieved total revenue from operation of INR 1,056 crores against INR 1,152 crores. And total revenue, MOIL has achieved around INR 1,126 crores against INR 1,238 crores. The profit before tax is around INR 223 crores against INR 362 crores, and profit after tax is INR 175 crores against INR 266 crores. This is basically due to fall in the NSR, which is not controlled by MOIL. It is usually controlled by the demand of steel and LME and all those factors, which decides the net sales realization. Also, we have declared 2 interim dividends during the financial year. First interim dividend was of INR 1.80, and second interim dividend was of INR 3.53. This is the quarter-wise performance. MOIL believes in strong shareholder value creation. Its average return on equity is around 161% and over the last 10 years, and it demonstrates our commitment to our shareholders' value creation. We are focusing on various strategic areas for improving our performance. First is beneficiation of our low-grade products to enhance its value so that its realization can be improved. Second is agglomeration or briquetting, which is to promote our low-grade -- again, low-grade fines and low-grade materials to a stable grade so that the realization can be improved. Second is we are exploring our footprint in the overseas market so that we can unlock our export possibilities. As per National Steel Policy 2030 -- 2017, by 2030, total steel production is envisaged around 300 million tonnes. To achieve that 300 million tonnes of steel production, around 11 million tonnes of manganese ore is required. MOIL is committed to produce around 3.5 million tonnes of those manganese ore by 2030. MOIL is increasing its market share from 20% to around 32% by 2030. This is our expected growth by 2030. We are focusing on higher exploration to add reserves and resources, taking up new shaft projects for deepening into the underground mines. We are also focusing on enhancing our EC limits so that there will be no restriction in production of manganese ore. We are also increasing our production capacity by improving our infrastructure. Also, we are planning to expand our business in other states through joint ventures and MOUs. During '24-'25, we have explored around 1,07,000 meters of reserves and resources, thereby adding around 16.07 million tonnes in FY '24-'25. This is our EC expansion projections. At present, we have around 36.33 million -- 36.33 lakh tonnes of EC limit, and we are expected to increase it up to 50 lakh tonnes. That is around 5 million tonnes to achieve that 3.5 million tonnes of manganese ore production. These are our upcoming shaft sinking projects. These are the awarded cost of the 5 shaft sinking projects, out of which 3 are in Dongri Buzurg mine, which is our biggest opencast mine, and 2 are in Kandri mine and Chikla mine. One is in Bhandara district, and another is in Nagpur district. Total of around INR 664 crores of investment is put into the shaft sinking projects so that our infrastructure can be improved and production targets can be achieved in the future. And this is the proposed years of completion by which the projects are expected to be completed. In the greenfield area, we have already in an advanced stage in 2 of our projects. One is GMDC, another is Bhudkum, block of Bhudkum and Selva block of Balaghat, Madhya Pradesh. Another, we have also in exploration in the area of Balrampur in Chhattisgarh, Nilkanthpur and Balrampur in Chhattisgarh. In the year '24-'25, MOIL achieved its highest ever CapEx investment of INR 321.94 crores, roughly around INR 322 crores, and it's expected to increase year-wise. In the current year, we have envisaged around INR 325 crores of CapEx investment for capacity enhancement, modernization and mechanization of our mines. In the GMDC project, we have already in an advanced stage. We have already received the approval of DIPAM and NITI Aayog for JV formation. And Government of Gujarat has already forwarded its file for allocating that lease area in favor of GMDC so that JV can be -- JV agreement can be initiated. In the state of Madhya Pradesh, MOIL has already explored around 300 hectares -- MOIL has got around 300 hectares of land for exploration, and it has completed its exploration of 16,360 meters in Chhindwara and 55,270 meters in n Balaghat district, out of which MOIL have successfully established ore bodies in Bhudkum Block and Selva Block, which are in Chhattisgarh and Balaghat district. And MOIL has already signed a draft JV agreement with Government of Maharashtra and Madhya Pradesh Steel Mining Corporation Limited in 2024 in MP Mining Conclave in the presence of Honorable Chief Minister of Madhya Pradesh. And MOIL has also received its approval from DIPAM and NITI Aayog for formation of the JVC. And the JVC is already in the process for approval and all those things. In Nilkanthpur block, MOIL has already taken up exploration. And MOIL has already completed around 11,628 meters of core drilling, and some boreholes have also yielded positive results. But due to some local issues, currently, the drilling is suspended. Thank you.

[Operator Instructions]

This is [ Arijit ] from Kotak. If you can brief about Balaghat mine, whether we reached the high-speed shaft in Balaghat mine, whether we reached the ore body, when are we planning for commissioning, some bit of details?

The present working level is at 450 meters around, which we are mining at present. And this high-speed shaft is going up to 650 meters. And the ore body is proved up to 1,000 meters. That is the geological condition of that ore body. And the high-speed shaft got delayed because of the visa issues related to Chinese and COVID, et cetera. And we are at the final stages of completion. And we expect by next financial year, it will be operational. Anything more you want to listen?

Yes. Yes. By next financial year means, which quarter?

Actually, the winding installations are going on. The technical work, which is supposed to be done by the Chinese has already been completed, the equipping of the shaft sinking. Sinking is already completed. Equipping is also completed. And the winders' installation is going on. So I expect by -- it will take another 6 months in the next financial year to make it operational.

Sir, in November, when we last met, that time, we were guiding that in 2 months, the ore body, we will be reaching, and in 3 months, it will be operational. So in March, another 6 months, why this delay?

Ore body is already there. I'm not able to get your question. There is ore body already there up to 1,000 meters. Actually, ore body is running and ore body -- in the center of the ore body, we are sinking the shaft. There is no issue of ore body related with the sinking of the shaft.

Okay.

I think last time when we met -- hello? Are you able to hear me?

Yes, sir.

I think are you confusing with the Gumgaon project when we said that in 3 months, we'll be doing that. That was the Gumgaon project. We are running 2 projects at the moment. See, what happens when the things go bad, they go bad. Whatever you do, they do not get resolved. So we started these -- we have -- at the moment, we are having 2 running projects. One is the Balaghat project, which is the Balaghat high-speed shaft sinking projects. And second is at Gumgaon. So these are 2 different mines. At Balaghat, we are -- we have -- the shaft is up to 650 meters. And in Gumgaon, the shaft is up to 330 meters, 300 meters something. So they are 2 different projects. And in Gumgaon, we have already commissioned the winder system there. The mine winding system has already been commissioned. And what we would have told last -- in November was about the Gumgaon mine in 3 months, we'll be doing. That is right now. And this Balaghat mine is a different mine. Now as Abdulla sahab was telling, see, ore body is already there, okay? So there's no question of whether the ore is not there. The ore body is there. So we are reaching the ore body, and because in the last few things require a little bit of more detailed working. So in a 6 months' time, we will be...

Sir, I'm talking about reaching the ore body. Did we reach the ore body in the shaft? That's what I'm...

I'm not able to get your question, actually. Actually, the ore body is actually -- it is having a strike length of some 1.5 kilometers. It is in the property. And we sink the shaft in the -- generally in the central portion of the ore body so that the roadways can be made in both the directions, both north and south directions. For that purpose, ore body is there already, up to 650 meters.

Wait a minute. What happens -- again, I'll explain you, how the shaft sinking is done. As Abdulla sahab said, first, we sink the shaft, which is nothing but a hole, okay? It's a lift, a lift going in the opposite direction. Lift goes upwards, and this lift is going downwards, okay? So you sink a hole for a lift, okay? So there's a shaft equipping is there, which is basically the lift for -- to operate the lift, you require certain -- the system there, girders, et cetera, lines, et cetera, right? Okay. So that is called the shaft sinking. So shaft sinking is over, okay? Lift -- the hole for the lift is done. The shaft, there's the lift -- to operate the lift -- lift is operating at both the places now. The lift is operating also at Balaghat and also at the Gumgaon. But when you operate the lift, there's one lift in the same lift, there is one portion is for the mine winding to take the men and material and second is for the ore, okay? So there are 2 different systems, 2 different winding systems are there, okay? Hoisting systems are there. So in Gumgaon, we have already done the mine winding system, okay? Material winding, we are in the process of doing it, okay? In Gumgaon, that is yet to be done. Balaghat, that is yet to be done, okay? We'll be doing that shortly. And from when we do a hole, for example, lift, from the lift, you go to the different flats, right? So different flats, you can call it the ore, okay? So you do a development to the ore body. So that development to the ore body is also going on, okay? So that is -- we are reaching the ore now. So when we reach that, we will start extracting the ore, okay?

Understood. In Balaghat, current production rate is 6.5 lakh tonnes, right?

6.5 lakh, no. It is around 3.5 lakh tonnes, yes. EC is for 6.5.

And after coming -- after we get the shaft done, the high-speed shaft, this 3.5 will be increased to what level?

The highest possible -- that will be around 8 lakh tonnes.

8 lakh tonnes. And the time line?

That will be the highest production capacity of that mine. It may take around 5 to 6 years to get that stage.

So after coming -- after the shaft is commissioning, I believe the EC, we are targeting this 6.5 to increase to 13, right, sir?

Yes.

So after the shaft is commissioned, what is the time line that you are looking for, for the ramp-up in year 1, 3.5 will become how much before it reach the 8.5, as you were saying?

See, we already have an internal plan for that. See, we already have an internal plan for that. But to tell that how much exactly to promise, that would be difficult to tell. But we have an internal plan for that, right? So as Abdulla sahab said, that is the 8 lakh tonnes per year that we'll be reaching. But the capacity, as you see, what happens, it is something like that success brings success, okay? Nothing succeeds like success. Once you start doing, then the things become easier and the production rate increases. In the beginning, everything is difficult until then afterwards, it becomes easy. The same -- the [ EDM ] works here also. Once we reach the ore body, it starts working, the mining become would become easier because now we'll be working with the bigger system. At the moment, generally in MOIL, our systems are basically the approach to the haulage road, et cetera, they are 2.5 meters into 2.5 meters, 3 meters something. This would be 4.5 meters into 4 meters or 5 meters something. So the ore body that the haulage road itself, the working system itself would become bigger. So there would be a bigger possibility of extracting the ore. So it will be definitely increasing.

Actually, you have already given a guidance. I just wanted to confirm that FY '27, the target was 5.5 lakhs and then FY '26, it was 4 lakhs. So certainly, FY '26, we are not reaching the 4 lakhs, I believe so, because it's not operational. But FY '27, what can we expect -- or rather FY '28 now, can we expect crossing 5 lakhs in FY '28 itself?

See, in the next year, our target is INR 25 lakhs for the whole of MOIL.

I'm talking about Balaghat.

Yes, Balaghat, then in 25 lakhs or 4 lakhs is the production from Balaghat.

This is Manav from Yes Securities. Sir, first question I wanted to ask. Basically, if we look over the last few quarters, there's a disconnect between the production and the sales volumes. We have done a production of roughly 1.4 million and only [ INR 1 million ] in sales. So could you just help me in understanding why the production is not translating into the sales? What are the factors behind the same?

See, there is no disconnect, as you said. Production and sales are completely aligned as far as MOIL is concerned. First, let me just explain to you, the market space. Market is divided into 3 zones, basically. One is Vizag, one is Durgapur or Eastern zone, we'd say that. And the main zone is Central zone. Not the main zone, they are -- if you see the volumes, they are almost equally divided, 3 million, 3 million, 3 million. And we are sitting in the center. So in fact, we are not even able to reach Vizag and Durgapur because there is enough demand in Central region. As I said, it's about 2.8 million tonnes. And as you are aware, our production is about say, 1.8 million. Out of that 1.8 million, about 1.3 million is prime grade basically, and balance, about 5 lakh tonnes is lower grades. So you must be aware that the average grade required to make ferro alloys is about 33 to 37, depending on what you are making, whether it's silicon manganese or ferro manganese. So -- and when I say our prime grades, what I mean is close to average grade. So for that, we are not even able to take care of the requirement of the Central region, which is very close to us and which is not accessible for the imported ore. So if these people want to use the imported ore, they have to shell out at least INR 1,500 per tonne extra in logistic cost. So we are very, very competitive in the Central region, and there is space to grow by another 1.5 million tonnes within the Central region for MOIL. So what I see is that even next 3, 4 years' production, we won't need to go to Vizag or Calcutta, that zone. We are very comfortable in taking care of the Central region requirement. So what you are pointing out at is the gap between that 1.8 and probably 1.6. The gap is not more than 2 lakh tonnes. Over a period of time, it depends on the stage of development of a mine. There are certain times when proportion of lower grades goes up. So in past few months, only in past few months, production of lower grades has -- component has slightly gone up. And we have been very quick to find markets for those lower grades and sell additional -- I think this year, the growth is about 50% in case of the lowest grade, which is mainly used for blending. So these lower grades are basically used for blending with high grades. As you're aware, a lot of high grade is being imported. So for using those high grades, customers need low grades to blend. So in the country, you must be aware, there are very many small, small mines, about 8 to 10 small mines which are scattered all over India. So even in Vizag and Eastern region also, there will be some local mines, which are obviously not producing any average grade. They are producing only low grades, even below 20%. So initially, obviously, the imported ore for the users will try to use the locally available ore because of the logistic cost. So they prefer to buy from the local miners. But once that material is consumed, then, of course, MOIL is also able to capture those markets. So if you see in last 3 years, I have the data for the last 3 years, and the growth every year has been almost 50% in sale of low grades. So we have market for that. But largely, these materials should be used for beneficiation because as it is, it is difficult to consume these materials. And -- but for beneficiation, when we want somebody to put up a plant for beneficiation, obviously, the party would ask us to commit larger resources on a continuous basis. If we are able to supply, let's say, about 3 lakh tonnes per annum for next, let's say, 3 years, 4 years, then a party would be very much willing to set up a plant closer to our mines and use our material. So they want a commitment for resource. That, we didn't have because our component of low grade was not that much. We were not in a position to commit any big volumes of low grades, which probably now in -- going forward because we are such, planning to ramp up our production and mechanization is increasing. So with mechanization, obviously, a lot of contamination takes place, at least to some extent. So we are now probably thinking of committing this bulk volume to somebody who's interested to set up a plant closer to our mines, we are moving in that direction. So that, you can say waste to wealth. So we are moving in that direction. And we are confident of having an MOU shortly, whereby even these low-grade materials can be sold in the market. But let me tell you, the value of these grades is much less. So it is nothing to worry about. Even if we are supposed holding some 5 lakh tonnes of low grade, it's -- there's nothing to worry about because that is -- once we are able to commit that kind of resource on a regular basis, there is every likelihood that some partner will be there for beneficiation. So that is the gap you're talking about. But as I said, that once we reach newer ore bodies, production of ferro grade also jumps substantially. So production of ferro grade is also increasing. And so is the component of low grade in between has gone up. But going forward, ferro grade will continue to increase, and for which there is enough market to expand.

Okay. Just one follow-up on the same. Would you be able to quantify what your high-grade and low-grade inventory levels would be as of the last quarter?

In high grade, we don't have any inventory because whatever is produced is already covered by orders. So it gets produced, gets tested and gets dispatched. That is the cycle. So monthly, we produce about 80,000 tonnes of high grades. And in fact, 30% is also high grade. That's also considered average grade. That is another 1.5 lakh tonnes. So about 1.5 lakh tonnes annually. So another 10,000. 90,000, 95,000 is high grade, and balance is about less than, let's say, 30% is -- we generate fines also. That is not low grade or high grade, that is fines as such in any grade. So that has a ready market for itself. That's about 3.5 lakh per annum, 3 lakh to 4 lakh tonnes per annum. So this low grade, what I was talking about is another 5 lakh annually.

Okay. So basically, just if I had to understand, the production and the sales will start normalizing only once we get a partner where we are able to allot those volumes too?

No, I'm not saying that. What I was saying that -- that was we get a partner only if we are able to commit a large resource, low-grade resource to them. So we think that we are now in a position, probably. We are still evaluating. We have interested parties but we are still evaluating whether we are in a position to commit. Because you must be aware that China and Indonesia are importing a lot of low-grade material. In fact, government had appointed MOIL as the state trading enterprise for all exports of manganese ore from the country. So that we were, in fact, in February 2024, this order came out. And from June last year, we started exporting. So low-grade ore, whatever is available near the ports, most of the miners are interested to export because, as I said, demand locally is only for blending, which is not much. So we have already exported 3 shipments. So once that material moves out of the country, that makes room for our material to get consumed as such for blending. So as I said, our sales are also increasing in 20% and 25% low grades. Sales are increasing every year by 50%, okay? So this year, the sales are likely to be around 5 lakh tonnes, which was, earlier, say 3 lakhs. Before that, it was only 1.5 lakhs. So every year, the sales are also jumping. And export markets have also opened up. After exporting as STE, we are now very comfortable to export our own ore also. We have recently booked, in fact, 1 parcel of 60,000 tonnes of low grade of our own ore for exports. So it depends. Whatever, wherever we find value, we will adopt that commercial practice. We can sell in domestic market if we get a good price. We can export because there's a regular demand for these materials. And for India, 2 lakh, 3 lakh tonnes, maybe a big quantity, but for export market, it's a very small quantity, 3, 4 shipments annually or even in 6 months is not a very big quantity for exports. So we will decide what to do. We haven't taken a call yet. But -- and we are also -- as it was shown in the presentation also, this year, the -- one of the major focus areas is our own beneficiation. So we are mulling with that idea also. We may set up beneficiation units within our mines so that we don't have to sell because we want to add value. We have -- actually, the government allows us to sell above 10%. But currently, we are selling only about 20%. So we have stocks of 10% to 20% also. So we are mulling over. We'll decide whether to have beneficiation units within our plant. But let me tell you, we want to convert this waste to wealth. And this year, the focus will be on beneficiation. So we'll decide whether we'll beneficiate ourselves or we will commit to a third party if we have that kind of resource.

Okay. Ma'am, the second question is, over the last few years, we have been guiding that import substitution is a very good opportunity for MOIL. And you just now mentioned that you're basically catering to the central market where the imports usually don't come about. So how should one read at that story for MOIL?

See, import substitution, if we don't supply in central region, right, where we have a strong presence because our NSR is highest there. If we don't supply to that region, then these people will also have to use imported material, isn't it? So import substitution takes place when you increase your overall volume. It doesn't matter whether you sell it in central or eastern. If I can sell my material in central region, I would like to get the highest value for that, right? So import substitution happens when you increase your production of sellable grades, and we are continuously doing that.

Okay. Sure. Ma'am, just one last question. Just wanted to have some clarity on the volume visibility over the next couple of years. You just mentioned that 25 lakh tonnes is what we are targeting for FY '27. Your presentation states a similar number for this particular year, that is roughly 23.6 lakhs for FY '26, which I believe is going to be a big, big challenge considering the first 9 months was only 1.4. So are there any internal targets that we have to reach that 35 lakh production by 2030? And if you could just provide some color on the same?

This year target, we had revised to 23.5 lakhs, not 25, okay? And we have come -- and we'll not be able to reach 23.5 lakhs this year. It will be lesser than that. It would be somewhere between 19 to 20, that would be our production this year. But definitely, next year's target is 25 lakhs, and we are working on that. As we have discussed very in detail about our 2 projects, okay? So these 2 projects, basically, we were expecting to start early, but these projects have not started as per the schedule. So there's a little delay. And that's why this 23.5 lakhs could not be achieved, okay? So definitely -- but these projects would be commissioned in this year and the next year, and 25 lakhs would be achieved.

In addition to that, we are going for mechanizations also. Actually, basically, underground manganese mining generally comprises of more manual efforts. We are converting these manual mining into semi-mechanized and from semi-mechanized to mechanized state also. We are deploying some LHDs, SDL machines in underground. And we are also thinking of changing our method of mining from conventional cut and fill to long-hole stoping method also that experiments are also going on. So with these changes, we hope that we will achieve our targets in the coming years.

Sure. So the production and sales guidance will go hand in hand is going to be a fair assumption over the course of the next...

Yes, definitely, definitely.

This is Chirag from Neo Asset Management. So I wanted to understand, what is your mining cost per tonne currently? And what will be the road map for the, let's say, next 3, 4 years, it is ex royalty?

This figure, actually earlier, we never used to talk about, but now it has become one of our parameters in our MOU. You understand MOU parameters. Basically, we signed a memorandum of understanding with the administrative ministry and it becomes our performance parameter for the whole company. So the cost of production is one of that parameter. And last year, that is '24-'25, our cost of production was around -- that is for manganese ore was at the -- because our cost of production at the factory gate was around INR 5,500 per tonne. And this year will be around INR 5,300 something, so there will be a reduction in the cost of production. And this cost of production is one of the most competitive. In fact, if you compare with any company around the world, this is the Q1 kind of the cost of production. It is very competitive and it's in one of the best, I would say.

So this is ex royalty, right?

Yes, yes.

And once you reach 35 lakh tonnes, this will remain at INR 5,500 or it will be lesser than that?

It will be going down because the reasons being, at the moment, some 5 years back, MOIL's total employee number was around 6,000, 6,000 something. Today, our number is around 5,200. So the number of people are going -- the retiring is going up, okay? And number of people are going down, basically, the working people. And this will continue happening. And the way we are operating our mines is that we would be doing more of outsourcing, okay? Yes, we'll be doing more of outsourcing. So the permanent employee would be going lesser and lesser. It would be outsourced model. And we are -- as Abdulla sahab said, we'll be doing more and more of mechanization. Earlier, as we were doing semi-mechanized mines, that is manual mines, more hands were required. As we move to mechanization, lesser hands would be required. So the mining itself would become more productive. You would be requiring to do the same amount of mining, you require lesser people. And with mechanization, you would be doing more mining, okay, with lesser hands. And then we are also -- Abdulla sahab said, we are changing the -- our method of mining. At the moment, our method of mining is conventional cut and fill method, which is very laborious that is very labor-oriented and inefficient, okay? And now we want to go for a long-hole open stoping, which is very, very productive. It is 5x to 6x or 10x more productive So over a period of time, our production will increase with a lesser manpower. So the cost of production will go down because at the moment, the biggest portion of our cost of production is our manpower, which is almost around 48% something.

And the current production, I mean, in the mines, do you have -- you do it completely on your own? Or is it through MDOs? And if it's through MDOs, then what is your share in that? And once you reach, let's say, 27 lakh tonnes and 35 lakh tonnes, then how much will be done through MDOs?

At the moment, we are not using any MDOs, okay, because these are all very traditional mines, okay? We have not started till now, any new mines. The old mines are continuing, okay? So MDOs are usually coming into picture when you have to restart the mine, okay, from the beginning. So we don't have any of those mines. All our mines are old mines, and we are continuing with that. So we don't have MDOs at the moment. But we do mining in both ways. We have our internal people also. We have outsourced also. So Abdulla Sab can...

Actually, the core activity is being done by the company people for more expertise for doing the mining. And the ancillary operations like loading of rock and doing some supporting works, these things are being done contractually.

And once you reach, let's say, 35 lakh tonnes, how much will be used captively for making ferro alloys and how much will be sold outside? And what is your cost of manufacturing the ferro alloys?

See, our ferro alloy business is a very small business. We have a capacity of 12,000 tonnes per year. So that's a very small amount. So it's not going to have any impact when we reach 3.5 lakhs. So it's not of something which we need to discuss here, and it's not something impactful thing.