PT Bumi Resources Tbk (BUMI) Earnings Call Transcript

Good afternoon, everyone. Welcome to CLSA conference call today with BUMI Resources. I'm [Vinrandi] from research, and I'll be the moderator for this call, where BUMI will share updates on its third entry and also first Q '24 performance. From BUMI, we have Pak Dilip as Director and Corporate Secretary; Pak Andrew Beckham as CFO; Pak Ashok Mitra, as Director; and also, Pak Ido as Director. So without further ado, I'll pass on the floor to BUMI to begin with the presentation, and then we will have the Q&A session later on.

Okay. Thank you, Pak [Vinrandi]. I'm Dileep Srivastava from BUMI. On my left is Mr. Ashok Mitra. He is the Chief Operating Officer of BUMI and is CEO of KPC, our largest coal unit. On my right is Mr. Andrew Beckham. He is Director and CFO of BUMI. And on the extreme right is Mr. Ido Hutabarat. He's the Marketing Director for the BUMI group. Now without much ado. We have a presentation, which consists of 46 slides. We'll try and run through them within about 25 minutes. The agenda is quite straightforward. There's an introduction. I don't think we need to spend too much of time on that. There would be a full year '23 summary. We submitted our financials and published them on the 28th of March, and we put out a company announcement which some of you may have already seen. But we will cover it generally this way for the challenging year, but we turned out a profit. And we will sharply focus on quarter 1 '24. And there is also a section which we'll cover our current proposal on a restructuring, which is subject to OJK approval. And for the interest of the community since it is a very important subject, we have our ESG credentials towards the end of the presentation. So moving on to the first slide. That's an overview. KPC is the largest export coal mine in the world. Our coal production hit 78 million tons in '23. We hope to do anywhere up to 82 million tons this year. We have adequate reserves as a subsequent slide to show. And we have potential for expansion of reserves. We have the benefit of an ideal location very close to the sea. We only do open cut mining. We have captive processing facilities. We have dedicated infrastructure. We have all the coal loading terminals, 2 deep sea ports, captive power plants and the proximity to the sea gives us an unmatched competitive advantage on cost. The next slide will show you how we segmented our business. The left is coal and energy. The middle is minerals and metals where we have an investor in BUMI Resource Minerals, such as a listed company and the various assets under them have been highlighted. And on the right are our future ambitions in the coal downstream and the non-coal project, where we will make announcements as and when the whole project details get finalized. The next slide shows you the results for at least a decade or two, and we still have some potential to explore, and we have an unexplored property in Pendopo, and you can see site yourselves. Now this is the introduction. I will now pass it on to my college Mr. Andrew Beckham, the CFO to cover full year '23 and quarter 1 '24 focus. There's a production, and there's a guidance for '24 and how we have in our nutshell, done 2023 and the guidance also for 2024. So over to Andrew.

Thank you, Dileep. Welcome everyone. So I'll go as quick as I can. We have stated for 2023 and then quite detail for 2024-Q1. If you require more data on financial year 2023 feel free to e-mail us or I'll contact us after this meeting. The presentation should be on our website now. So you should all be able to get a copy of this at least by the time we finish this meeting. So production wise in 2023, we were at 77.8 million tons, up from 71.9 million in 2022. This is due to the improved weather and also better performance from our mining operators and our contractors. In 2024, we've started well. Q1 '24 is at 19.5 million tons, up from 16.1 million in Q1 '23. Again, this is now-- our strip rate is down, so we're actually producing a little bit more coal now with the same equipment, plus rate for KPC was below the plan. For prices, unfortunately, though, the pulp price trend in 2023 and 2024 has gone down since '22. So we've fallen from 81.3 per ton -- we are $81.3 per ton compared to $121 per ton in 2022. And then for Q1 '24, we saw continued to fall to $75.8 per ton, down from $103.7 per ton in quarter 1 2022. But this is following the trend. We can come on prices a minute. Production costs have increased in 2020 increased from $46.9 financial year 2022 to $51.3 in financial year '23, mainly due to the higher oil prices, and we are stripping at quite a high ratio in 2022. The cost has decreased from $54.6 in quarter 1, '23 to $48 in quarter 1, '24. We say it mainly due to lower rises because KPC has been managed to negotiate better discounts on its supplies and reduce the cost that way. And there's also we, as I mentioned, lower strip ratio at the moment and better productivity. So we're trying to do everything we can in efficiency at the sites at the moment. We going to the next slide. Our guidance for the year, we see production between 78 million and 82 million tons and quarter 1 is on plan, in fact, the fast plan at the moment. Prices at $71 to $81 per ton. I think if you ask anyone, it's very hard to predict where commodity prices are going in the year with the amount of geopolitical and elections that still - that we had. So we'll see as we update as we go on this. Cost wise, we're partly predicting about $50-$51, assuming that there would be some sort of oil price increase over the next 3 quarters with the geopolitical issues is not remaining around that $48 to $50 per ton level that we are in quarter 1. Next slide, please. As we see the coal price, if we actually [technical difficulty] '23, it would be a very nice trend where we are trending slightly up from 2021. But of course, as we all know, we had this massive spike with the Russia-Ukraine war and supply issues. Then this is why we come down in 2023. Hopefully, we've seen this sort of a most-- I don't see a lot of people predicting a major drop in coal places going forward. And if we go to the next slide, please. As you can see, the market is currently contained 2026 and looking at around $121 and $153 in calendar '26. So at the moment, the market is still quite bullish so pricing will start moving back up again in the future. Next slide, please. On operational highlights. On the combined-- at the bottom, you can see that in 2023, we're up 20% on overburden. We were up 30% on coal price of coal sales, but we were down on FOB prices by 33%, which, of course, hit our net profit. Q1 2024, as I stated, has started well with overburden up 4% sales coal reduction up 21%, sales up 19% and prices down though slightly 27% on Q1 2023. The main center increase has been that KPC, as you can see with price we overburden up 8% and coal mines and coal sales up 32% and 27%, respectively. Keep on going to the next slide. This shows me the rainfall and how it's been going. And as you can see, the last quarter, the last 3 months of that KPC rainfall, especially in March, has been below the long-term average. But you can see also that Arutmin has been slightly above the long-term average. Remember, Arutmin's mines are in South Cayman and KPC's mine is in East Katingan so there is quite a bit of area of difference. Next slide. So full financial year 2023, our overburdens was up as I've stated and coal mine was up as well due to the better weather and better improvement on the performance of the contract. Next slide, 2024, again, an improvement on last year, 4% up on overburden and coal mine up 21%. Next slide, please. On 2023, operational performance. Coal sales were up 13%. And this despite we actually wanted to increase sales in the quarter 4, but were unable to because we had not got the approval from the government was not coming. So we had to pull back on actual sales in 2023. Stripping ratio was also up 11%. Arutmin because of high-grade coal more high-grade coal production and KPC because of the way the mine plan was developed. Next slide, please. Coal sales in Q1 2024 have been up against 2023 Q1, as we've stated, and the strip ratio was down in 2023. Can we just be careful with the slides that keep going in and out? So on the next slide, please. The BUMI's operational performance on '23, we saw production costs up 9% compared to 2022 due to the higher stripping ratio and the downward trend we saw prices fall as the downward trend came down off the highs of $400 plus in 2022. Next slide, please. In 2024, we've seen the production costs fall. As I mentioned, the fuel prices have come down, mainly because of the negotiations we've had, although they, at the moment, feel quite they're on the trends down, but we believe with the geopolitical issues, I think they could rise again. Gold prices are still down based on contracted tonnage themselves; we've made in the first quarter. Next slide, please. As you can see our weighted average prices. And like I said, if you look at '21 to '24, it's quite a nice grade from $78.3 to $86 for our non-coal per say or higher-grade coal. And then Eco coal has gone from $34 in 2021 to $47 in 2024. But you had this anomaly-- where you had this big increase and big drop in '22 and '23. So overall, we're running at $75.80 at the moment. As I said, the predictions are all up and down over where the price will go in the next 2 to 3 quarters. Next slide, please. BUMI's production costs. We can see the '23 and '24 has been coming down because of better performance, better efficiency and strip ratio reductions. Fuel prices, of course, has helped and contributed going from the-- back in Q1 '23, up at $1.40, which is down to about $1.29 in Q1 2024. As I said, it's possible that it could start to trend back up. If we go to the next slide, you can see that the trend gives you the carbon oil price, which is trending slightly up. And as I said, KPC coal price that we've got here just to get a guidance has come down that because of the work done by the team to reduce the discount or get increased the discounts on the fuel prices that they come from the suppliers. So hopefully, we can maintain that, but naturally, there's a slight-- there's a lot of pressure for prices to start moving up. Next slide, please. For 2023, as we've reported, our PSAK 66, so this is Arutmin fully consolidated [indiscernible] fully consolidated, but KPC on a manner only as equity income basis. The net profit was down 10.9%. And you'll notice that income and tax and profit sharing while running at about 80% of the total profit because of the increased deferred tax adjustment that we had to book in 2023. Net equity was slightly down. This is due to we have a dividend paid related to Arutmin that went to tighter power in terms of paper. And that was the adjustment may need equity. If we go to the next slide. Now when you see Q1 '24, we've improved because of our volumes have improved. Our interest costs are down. As you can see, the income that profit share factors reduced down again because of the benefits we had with the additional tax benefit of carryforward losses. So there's been a positive adjustment. These are noncash adjustments at both 2023 and 2024, and it depends on the review, the governments are auditing BUMI on probably about 3 or 4 years in a [indiscernible]. So it will depend on how-- once the audit is complete, we can close the numbers. Next slide, please. On a consolidated basis, we get a clearer picture of how well things are going. The current-- 2024 consolidate, yes-- so for current 2024 year with revenue currently for the first quarter at $1.4 billion against $1.6 billion because of prices. Costs were down 9% and gross profit of KCP has been hit because of that. Global coal price went down, but still remaining high. I should have mentioned that in 2023, our royalty rates were running at about 32% based on how they calculated the HBA prices in 2023. That has now changed. They've improved that how they've done the calculation. So we're now running more in line with the 28% obviously that we have to pay. Please go up, companies like Bayer are paying 6% to 7% on their royalty as a max. Operating government was down 50%. But as I've said before, we've managed to improve on our income tax and other income. And now we are running at $67.6 million for the quarter. And going forward, we see that maintaining a reasonable chance of maintaining that subject to the global coal price and of course, production. But production of sales looks good and prices remain stable at the moment. From net equity point of view, we're up from $2.96 billion to $3.1 billion. Moving on to the next slide. This is just the comparison for Q1 against the PSAK reporting standards. And if we consolidate into the numbers there's not much more to say. Next slide, please. Overall, our revenues are [technical difficulty] only by 13%. Our cost-- only by 20% despite a large drop in prices because of the volume increase, our cost of revenues are down 9% as our strip ratio has improved. Yes, our gross profit is down, but we've made it back up as the tax and the benefit that we've had, and we're running now company profit overall has come down as improved since 2023. Next slide, please. At BUMI level, the equity has gone up slightly as we pointed on EBITDA, the last 12 months adjusted consolidated EBITDA has come down, of course, because of our coal prices by about 22%. Next slide, please. As you can see the detail. Note that in Q4 '23, the proportionate EBITDA was very good. But because of noncash adjustments, we reduced our net profit. This was as we mentioned about the tax adjustment and an intent on one of our assets because the IP is not being given. We're still waiting for that as the government transition completes. Next slide, please. Our cash balance, still healthy, but the thing to highlight is that we have $23 million tied up in [indiscernible] in advance of sales. We have-- if you see the HSA deposits, we have about $375 million, which is the revenues you received that you have to keep. You've got to keep your 30% in bank deposits, and we can't touch for 3 months. So that money is being tied up again with the government regulation. And then we have an additional 100 million of mine closure deposits. So we're pretty-- the government there definitely improving its how the banks look and the deposit look by locking up all most of our money at the moment. Some of it is very valid, and some of it we can't question. But from a cash point of view, we have to cash but working capital is high at the moment because of the restrictions. Next slide, please. Now on to the Quasi you might have seen, we published yesterday. What you have is the-- you have-- we've not been able to pay a dividend since 2012 and the main reasons being the retained earnings or the deficit, as you can see there, at $2.35 billion. The main reason for that deficit was noncash impairment of our assets back most, what, 10-15 years ago. Unfortunately, we haven't been in a position where we've been had enough profit to start reducing that significantly. But even with a $500 million profit that we had in 2022, it would take us 4 to 5 years to clear. So what we've requested and under the OJK regulation, is allowed is that we use the share premium of about $3.2 billion that we have at the moment to offset that deficit of $2.35 billion to come back to 0. It's just moving equity numbers really. That would allow us, therefore, to pay a dividend to all the shareholders so that the minority especially get a benefit from the company. We have cash, we can't pay dividend, but we can't at the moment, we respected it. When we do this calculation, there's a number of shall we call it hurdles to go through in terms of whether we have the correct numbers to justify a Quasi reorg. And we view net profit for the company, which is the net profit attributable because the retained earnings and the deficit you've seen there is based of that net profit attributable to the company. So that's how we're studying. Our auditors have confirmed that and approved that perform. And we are now in discussion-- we'll be in discussion with OJK for their approval for this so that when we come to the shareholders' meeting, June at the end of May, we can actually get the shareholders to make a decision to both on this restructure, what it does is it reset December 20-- the 31st of December 2023 numbers on the 1st of January 2024 become 0 for the earnings and then record earnings start increasing again. So we would republish Q1 with the revised numbers with the updated equity number. If we had an approval from OJK and from the shareholders. Please note that, that is vital that both those approved. But we hope that given BUMI's history, we are owned by a lot of people. There are 351 shares in circulation. So we hope that both the authorities and the shareholders will support this sort of challenge. The next slide, I think, gives you the timetable for that. With what we had the approval of the AGM on the 30th of May, the GMS that is called here, and then we'll be able to announce the summary of the GMS by June and maybe by the end or then we can look at announcing a dividend. Next slide. This is the current management. And just for info. I think it's gotten now we should be aware that the number from the selling group coming on the board. We still have CIT on the Board as a major shareholder, and we have a number of independent directors as the commissions. Next slide, this is [indiscernible] as well. We go quickly. I think we go to the end, then the basic system, we have KPC and Arutmin data. And as the fact, you'll find the ESG numbers-- the key numbers which are there. As we've said many times, we have a huge amount of data on these areas. If you need more other, please contact us and were happily supply it. And if we go on to the next slide, I think, is our safety performance, which remains very in the world-class levels and in performance. And next slide is our awards both for ESG and for human rights. And in fact, I think yesterday, we even got an award for most tax pace in what can 2023. This is, I think, due to all the royalties on the levy or the corporate tax that we are having to pay at the loan. I think 2023, we were up to 40% or 35% to 40%. I think 35% to 40% of our revenue is paid in as royalty, subsidies, levies, profit sharing taxes and all that. So we are actually working on a net revenue of 60% of what we are showing you as our share of dividends. Okay. I think that's it, yes. And these are the awards that I think you've seen before. Okay. With that, we'll open up to Q&A. If anyone has any questions regarding the numbers or anything else you've seen about BUMI.

Yes. Thank you, Pak Dileep and Pak Andrew Basil for the presentation. Now we will move on to the Q&A session. [Operator Instructions]. So maybe I'll kick start with the first question. So as we have seen, the coal industry has been experiencing a rollercoaster ride in the past several years and especially now with the geopolitical situation may I know how is your view on the coal industry currently? And what is the long-term direction for the company?

You're right about the rollercoaster. I think there have been a fair amount of geopolitical, economic and competitors globally, which have impacted. And I think the disturbances really happened during in the period of the pandemic, which did compact demand. And thereafter, it has been the wars. It is the Ukraine one to begin with, and now it's followed by the Middle Eastern one, and there were also some scars out of China. 2022 for a change in fortune for the coal sector where coal became short, gas became unaffordable. And there was a shortage of coal. Rains were very heavy in Indonesia. And production was impacted when demand was going up and Europe was also demanding coal. That led to a spike, as Andrew said, to prices which even crossed $400, '23, we saw contraction in the price, and we also saw some signs of shortages in India and China and Australia, of course, amended its relations with China. And then we have the green hysteria, which is imposed on top of that, which creates additional pressure. We see the impact of '23 and all the pressures of '23 flowing into '24. Now if we are looking at BUMI very specifically in 2023, our volume rose from 70 million tons to about 78 million tons or up by 13%. And if we are looking at, quarter 1 last year versus quarter 1 this year, we are seeing an increase of production by about 21%. So basically, the sign that the weather is normal, and we are able to produce normal. Now the issue basically is balancing supply demand, managing the geopolitics. And India and China are increasing production and availability. So we got to have our very good very close to the market and try and see what is the best that we can do to maintain our realizations. From a company standpoint, we are looking at cost. We are looking at optimizing costs. And as Andrew said, the challenge basically is the 35% to 40% of our revenue, along with the working cash flow pressure as we also mentioned, which is impacting our company. Now we are trying to take every step to increase efficiencies. We are meticulously working in one of our units, and we are going for cost optimization. And we are seeing what is the best that we can do under the circumstances. I mean, if we are looking at 2023, even though the volume went up as an offset, the coal price dropped by 33% and the revenue dipped by 23%. 40% of our revenue went to the government, plus on top of that is now liquidity, our costs were reduced by 31%. Despite all that and the impairment that Andrew referred to, BUMI still turned out the profit. When we are looking at quarter 1, '24, the net income is up by 10% to 12% versus quarter 1 of last year. Coal production is up by 21%. This year versus last year, the sales volume has jumped by 19% in spite of an increase in 2023. The revenue, however, because of the price is lower by 12.5% and the coal price after having fallen by 33% last year fell further by 27% this year. And the fact that the royalty and levies and subsidies that we have to incur cost us almost 35% of our revenue, probably a little more. In spite of that, we are making a profit. So 2024, we think will be far superior to what we did in 2023. Now when we are looking medium and long term, we don't see coal disappearing in Asia. In fact, we see India and China increasing coal capacity. We are also increasing to production. So we see demand sustaining for the medium to long term. We'd be very surprised if there's an impact on Asia before 2030 or 2035. Now as you know, coal is a commodity, which is subject to a lot of in potable over which we have no control. One is whether the other is infrastructure. The other are supply-demand factors, then there's a geopolitical factor. All these have the potential of driving the price up or driving the price down. And on top of that, if we superimpose government regulation, levies and policies. If they are more friendly towards the sector and the issue of royalty and levies can be levelized across the sector. I think that would be a great benefit to companies like us who are on the IUPK status because we have ambitions to grow beyond coal. We wish to have a coal downstream project for which investments are required and proper partners, and we are advancing that. Government intents are necessary. And the dialogue with the government has already begun on those issues on what is necessary. The collaborators, technical collaborators and the commercial collaborators have demands on us as to what they expect from the country and from the company and on regulation. And we are also looking at noncore projects. Now all of this requires money. So if it requires money, it has to come out of our coal company. And our coal company has to be more efficient and generate more liquidity and profit. What is holding us back really is the kind of levies and the kind of constraints that are imposed on the sector. And that also has the potential to make overseas investors a little more volume. We are hoping that with the changes that are proposed in the government and the structure and the administration. They could look more kindly as a sector, levelized some issues which are necessary and make it a playing leverage yield even within the sector. And that would be a great benefit. So all in all, we see the coal sector is robust and strong over the long term, that is turn of 15 years. And let's not forget that as far as Indonesia is concerned, their energy transition policy is up to 2060, which is taken. So essentially, whether it's possible for appeal or whether it's renewables, we have to coexist up to that period. And from our side, we think that there are some investments necessary in research and development on issues like carbon capture, utilization and storage, where nobody really has invested and people dismiss it as being too costly. It is too costly because there's no R&D that has gone into making the technology cheaper. And I think that is the order of the day. And I think the world is beginning to realize that. And as far as BUMI is concerned, it has 3 captive power plants, and I think it will be definitely examining the potential of doing this and finding this development. But this is something of the authorities to also consider, and I understand Indonesia has a regulation for the oil and gas sector. Perhaps a saying sunshine can also shine on the coal sector. It is really the power plants that have to invest in it. But we as coal producers, unfortunately, do get impacted, although we are not the redistributors. It is our users, and that is where the attention is required. And I think governments by and large, are being pragmatic on how they want to approach the energy transition. And I think Asia is far more pragmatic in that regard. And I think the China and India policy really is to balance renewables and fossils fuels, where you increase fossil fuel capacity, you also increased renewable capacity. So if one fail the other is available. And we have seen examples in Europe and in the U.S. where these have failed where they've relied completely on one source. So we think that definitely up to 2060, that is scope for coal and over 2030-2040, you have seen our reserve statement. I think we are there. And as Andrew said in his marketing report, where he gave the forecast on price. I think in 2024, the coal prices are in contango, they are looking more in the region of $150 and if it is in that area, we think that those are prices at which the coal business is sustainable. Our effort would be to maximize revenue and margins and liquidity out of our coal assets. We may not invest in capacity, but we do have 1 or 2 coal-producing mine, the coal mines, which can produce coal. So those have a potential to also contribute. And we are looking at projects that we can place on these sites. A fair amount depends upon how government policy goes and how much time here they can look upon the sector. And I think fossils fuels are here to stay in Asia, at least for the next 20, 30 years. So we definitely in-house believe on that. But we recognize reality, and we are looking at noncoal and coal downstream projects and looking at ways on how to make our existing business more profitable. So all in all, I would say we consider prospects to be robust.

Okay. Thank you. That's very insightful. We have several queues from the participants we can go to one by one. First up from Nitin Arora.

Just quickly on the subject of dividend. I guess, assuming that the quasi restructuring actually succeeds. Could you talk a little bit about how the management sort of intends to free up cash in order to make a dividend payment just considering the large deposits and the large working capital requirements, which are fairly onerous and placed upon the firm? We'll still be receiving cash from our coal companies especially KPC over this year. Despite the restrictions, it just won't be as much as we would like, but there is still sufficient cash to give a reasonable dividend for 2024. I know someone say the dividend payout for 2023. Just to be clear, the dividend will be-- we're at 0 retained earnings as of 2023 December. So the dividend would be for 2024. But we could do an interim dividend if that was a possibility. But there will be sufficient cash to be able to pay out this year, some sort of dividend at least. Next, we have Ian here. Can you unmute your line to ask your question? Okay. Maybe we are waiting for Ian. We can go to the question from the question box. I think you have answered the question for the dividend pay off for 2023. So the other question is, will BUMI be able to increase take in KPC going forward and to what level? Look, we have type of power and CIC as shareholders in that company. We're very happy with them there. If they want to sell, we'll happily discuss with them the option, but we can't do anything quite comfortable to say that. That's tough to their own companies and their own policies only one of them is largest coal mines in the world. It's not the largest truck and shovel fleet in the world. But it is up to the-- at the moment, there's no plan or no discussion that onwards on a sell or any as buying the shares.

Okay. Thank you, Pak Andrew. Maybe we can go to the question from Ian now.

I think that's quite one of our submission is on CAC. So I don't know if that's a mistake or not.

Okay. I'll ask a question probably from the audience. Regarding the future coal price, I mean, this probably should be answered by Pak Ido regarding the future price.

The industry retail global coal price is actually market decreasing. It's important for the next 3 months. But the consumption in the Japan a little bit decreased. China, the biggest importer from Indonesia currently producing coal-- current market China is coal market. Europe also decreased in the coal consumption. In other markets, Asia, like India, current consumption also flat, Philippines also flat, Indonesia consumption actually increasing, but Indonesia as we know more is on the [indiscernible] increasing their consumption. As a whole, the consumption increased compared with 2023. So we expect the price will be moving -- the decision will be moving around $130 to $150 depends on the current situation in Japan and [indiscernible] also. The impact of the war of Russia and Ukraine still the part of why the price is not up because Russia is keep producing and selling at a low growth price. For example, right now, we are selling CRM China and Taiwan, and other market at around $110, while [indiscernible] is over $130. So that is the reason why the market has been marked definitely increased. That is currently situation of the whole market. And any questions?

I do have one other question it's regarding the [indiscernible] because our coal is a thermal coal, do we have any data on the new-- the build coal- power plant in China, India under our target countries. And is there any additional new coal power plant being proposed and to be built in the future. So that probably can give us some indication that the future demand, so thermal coal will increase. I'm not sure you have such data. I mean this is something outside of-- I mean, the marketing analysis.

Currently, we don't have any detailed data. But we understand from some countries there is new build power plant of the coal fired power plant and at the same time, as you see China also build a new renewable energy power plant. Currently, we don't have that detailed data, but we can find it out. But we believe in all countries, there is a new power plant coal power plant. In Philippine, we understand also new power plant in Island. In Japan, also, we just revealed new one, 2 times 1,000 gigawatt in Kobe area. In China there is, in India also. But yes, to be more exact on the analysis, we need to have more data that we have to [indiscernible].

Just to inform you India, NTPC which is the biggest power producer, they have setting up 3,000-megawatt power plant. And some of the power plants, which had closed down during COVID times or they couldn't pay the debt it is reported that both Adani and [indiscernible] is buying those mines. Those 4 or 5 coal power plants. So in addition to what Pak Ido said, Philippines, China, India, there are power plants which had closed down during COVID time or those owners who could not pay the debt to the bank and are now being opened up and is going to start generating power and that will definitely help in increasing the power consumption in India, which will have an effect on coal dispatch to that country. This is all I can say about India at this moment.

I think there have been newspaper reports, which has talked about China building coal plants in Africa. And at the same time, they're also building about 200 to 250 gigawatts of coal-fired power in China, and that's been approved, and construction is in progress. That's what the report was saying. As far as India is concerned, there are also reports that India is scrambling to add coal fire power capacity to avoid outages. And as Ashok said, they are even reviving old what you call obsolete plants, they cannot risk any outage. So the policy both in China and India appears to have a balance between renewables and coal to have adequate capacity in both these sources of feedstock so that the risk of an outage is reduced, should there be any importable kind of situation. That seems to be the boss. But you might also have some information on this because this concerns China. And definitely, we can research a lot more in India. There's a lot of activity. I mean renewables is being talked on one hand. But at the same time, coal-fired is very much there, and they're building super capacities. In fact, even Coal in India is increasing production. And I think this year, they have gone up by 15% or 20%. They are crossing 1 billion tons.

Yes, I noticed some news from China in the newspaper that they are building up quite a few large coal-fired power plant recently. So I don't have the exact number, but I can really do the research and feedback to you.

It will be interesting to get that information. Definitely from our side we try and secure that. Any other questions?

Okay. I think next, we can take a question from Bharat. You can go ahead, Bharat.

Thank you so much sir, for a fairly detailed presentation and the insights. This is part of Bharat Parekh. I had the overall power utilities and new energy research for CLSA in India. And we do concur with a view that India is going to go on the energy transition unlike the energy disruption which is caused all over the world, and that's where we'll have a balanced growth. And just to update you that India has just launched last quarter, 80 gigawatts of fresh thermal power expansion over the next decade, which is what is the balance transition which we are aiming for versus the 500-gigawatt renewables, which will add as well. Thank you so much for the feedback. But really, I must congratulate you on a 32% growth, sir, which you have been able to achieve at KPC in the first quarter. But when I see your guidance of 53 million to 55 million tons for KPC, it seems to me a bit more conservative. If you can give us some insights that why would production grow only 2% to 3% as per your guidance compared to a very solid growth, which you have had in the first quarter. Is it only the weather and you expect some sort of softening in the growth or it is just a conservative number, which probably is set to be beaten?

Let me answer that, Mr. Bharat. And see what happened last year, first quarter, the heavy rains, there were land slide in KPC, which led to reduction in production at KPC. So compared to the last year's quarter, January to March '23 this year. It is not seen anything of that sort. And as a result, we could increase our production, and that was much higher compared to last year. So for the next 9 months is the weather subject to the weather being good at this moment, this month also we have seen better weather. We should be able to increase our production beyond last year what we have achieved. So that much I can let you know now...