Sarda Energy & Minerals Limited (504614) Earnings Call Transcript
August 3, 2021
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to the Sarda Energy Minerals Limited Q1 FY '22 Earnings Conference Call. [Operator Instructions] [indiscernible] that this conference is being recorded. I now hand the conference over to Mr. Pankaj Sarda, Managing Director, Sarda Energy & Minerals Limited. Thank you, and over to you, sir.
Thank you. A very good morning to everyone. I extend a very warm welcome to all of you to the Q1 FY '22 Earnings Call of Sarda Energy & Minerals Limited. Our press release and investor presentation containing details of performance has been uploaded. Today's discussion may include forward-looking statements, which must be considered in conjunction with the risks that industry in general and our business in particular face, and actual results may vary materially. The pellet plant operated at enhanced capacity during the quarter and achieved production of 2,09,158 metric tonne. The company has achieved record quarterly production of iron ore pellet and wire rod, in spite COVID-related disruptions during the quarter. The [indiscernible] Hydro Power project successfully completed the trial operation and had commenced commercial operations. The power is being supplied to Chhattisgarh state distribution utility under long-term PPA through long-term open access. Provisional power tariff is expected to be approved in this quarter. The process of various approvals and pre commissioning activities is going on in Gare Palma IV/7 coal mine. Consent to operate for our coal was 2.96 million tonnes has been received. Environment clearance has been also received for our coal mine. Coal mine is expected to be operational in next quarter. Work on the ferro alloys expansion project at Vizag is progressing as per schedule. Work on the 25-megawatt rare hydropower project will start in the second half of the current financial year. We have also received EC for 1 million tonne of benefication plant at our Mandhar plant. I request Shri Manish Sardaji to brief about global and domestic scenario of steel and ferro alloys.
Thanks, Pankaj. The infrastructure push at global level to boost GDP has generated demand for steel and other commodities. At global level, iron ore supplies are also affected plus demand-supply mismatch has resulted into sharp rise in prices. Pollution restrictions and disincentivization of exports implemented by China have further increased demand/supply gap in steel, boosting prospects for Indian exports. India steel production and apparent consumption both were down in this quarter as compared to quarter 4 of FY '21. Production was down from 29.9 million metric tonnes to quarter 4 -- in quarter 4 '21 to 26.9 million tonnes in this quarter. The main reason for fall in production was diversion of oxygen from steel plants to hospitals. The apparent consumption was down due to lockdowns imposed across the country to contain the second wave of COVID. However, export demand and reduced imports on the back of higher global prices maintained tightness in supply resulting into improved price realization. During the quarter, India exported 4.76 million tonnes steel and imported 1.2 tonnes steel. Prices of ferro alloys remain firm during the quarter on the back of production disruptions in Ukraine and Malaysia and increased demand from the steel industry. Prices of ferro alloys continues to be at elevated level. Mr. PK Jain will now brief about the financial performance and position of the company.
Thanks, Manish. Despite of lockdowns, the company has achieved the highest ever consolidated revenue of INR 830 crores during quarter 1 FY '22 against INR 700 crores in the previous quarter and INR 345 crores in quarter 1 FY '21, registering a growth of 19% quarter-on-quarter and 141% year-on-year. The company has reported operating EBITDA of INR 268 crores during the current quarter against INR 227 crores in the previous quarter and INR 90 in quarter 1 FY'21. The company's profit after tax at consolidated level stood at INR 168 crores against INR 139 crores in the previous quarter, resulting into an earnings per share of INR 47 per share. For the quarter under review, all segments did better than the previous quarter. Debt position. At the stand-alone level, the company is net debt-free. As on 30th June, bank balance and liquid investments stood at INR 308 crores. Term debt net of the cash and current investments stood at INR 1,268 crores and net of loans given is less than INR 1,000 crores. Loan repayable within next 1 year is INR 103 crores. This way, our net borrowings has come below INR 1,000 crores. Now I request Shri Pankaj Sarda to brief about the industry outlook.
Thank you. The increased export demand has balanced domestic demand/supply of steel and ferro alloys, which should enable stable capacity utilization and improve the pricing. On global supply concerns, price of steel is expected to remain firm. However, there maybe correction in iron ore pellet prices due to restrictions on steel production in China. Ferro alloys prices have firmed up substantially from March. Effect of which is reflected in the results and near-term outlook is also positive through incremental benefit will be partly negated by increased coal and coke prices. Commission of Sikkim Hydropower Project will improve the financial performance of the company from current quarter and onwards. Projection of normal monsoon augurs well for hydropower project. This is all about the performance and outlook. Now we leave the forum open for questions from the participants. Thank you.
[Operator Instructions] The first question is from the line of Subham Agarwal from Aequitas India.
I would also like to congratulate the entire team on commissioning of Sikkim hydro projects. Sir, firstly, I wanted to understand how is the current utilization level at the Sikkim hydro project? Is it achieving all the parameters that we have laid out? And what would be the tentative provisional number for you -- for this?
We have achieved the COD for both the units as on 1st of July. And the parameters and everything is running perfectly okay since commissioning. And though in the commissioning, there are some small hiccups that is always there in any new project, but it is between the correct parameters that is required, and that was the first.
Right. And the provisional number per unit that we can expect to book revenue this quarter?
No, our petition for approval of the provisional tariff is under consideration that is coming up for hearing in the current month. And pending that, hopefully, we will -- before the announcement of the next quarterly results, we will have the provisional tariff approved by the regulators. In case there is delay tentatively as we already informed in the past [indiscernible] because minimum what we expect is the tariff -- generic tariff available for the renewable energy projects. That is, I think it's more than [ 6 20 ] or [ 6 30 ] that is the minimum basis for accounted profits for original tariff. But hopefully, we will get a provisional tariff approved before announcement of the next 3 years.
Got it. But in the current quarter itself, we will put the complete revenue based on full potential of this 130 megawatt, right?
Yes, definitely.
Okay. Got it. And secondly, on the steel division. So how is the current average realization across the value chain right now compared to Q1? Have you seen increasing prices?
Yes. If you see the current prices are little above the Q1 average.
Q1 average. But on the other hand, the coking coal prices have gone beyond $200. So do we expect to maintain the spread? Or what is the outlook there?
We don't use coking coal, so we have no impact of coking coal on our production.
Okay. So in that case, we would expect our spread to go up this quarter?
Hopefully.
Great. And lastly, on the ferro alloy business, so we had 1 furnace getting revamped this quarter. So is it completed? Or do we expect some more downtime in that?
No 1 furnace will remain down during the second quarter. Last quarter, for about 1 month, we had operated all the 5 furnaces. And we had deferred this down for 1 furnace for the time being to 1 furnace will remain under the downfall [indiscernible].
For this quarter also.
Yes.
Okay. And do we have any other downtime in any other unit given that sponge iron unit was not operational for 54 days?
No, that was a routine closure. It happens periodically. It was not something exceptional. This is -- ferro alloys modernization was basically over a longer period of time that was a revamping of the complete furnaces or modernization. Sponge iron kiln was shutdown after a particular period whenever you go for the that [ costable ] change that happens. So that was usual and that is already taken care into overall annual production target.
The next question is from the line of Abhishek Maheshwari from Skyridge Wealth Management.
Sir, 1 follow up on the question as per previous participant. Sir, you don't use coking coal usage, but you must be using coke, right, for your production?
Yes.
So coke prices have also increased considerably. So are you able to pass on those costs? Or if you have to take a little bit of a hit on margins?
So we use coke in our ferro alloys division. And basically, the coke consumption will have an impact if the prices have gone up a bit, but considerably the price of alloys also are moving up.
Okay. So silicon [indiscernible] expenses are over INR 90,000, INR 95,000 still? Or is it seeing a downturn?
No, it's sits around -- it's between INR 96,000 and INR 97,000 currently.
Okay. And sir, so another thing about hydropower. So our facility has commissioned now, and our tariff is yet be decided. So whatever revenue we report that will be based on the tariff decided? Or is there a provisional amount we working at?
Please, can you please repeat your question on the tariff?
Okay. So our tariffs on hydropower plant is decided yet, right?
Yes.
So by the end of the quarter, the revenue that we will book on this hydro project that will be based on the tariff that will be decided in the coming few weeks or months? Or is there a provisional tariff that has been decided between you and the authorities that you are working with currently?
As I told, hopefully, we will get the tariff -- provisional tariff approved before end of the quarter, hopefully. In case, it is not approved before end of the quarter, the chances of it is will very, very less. We will take a provisional figure based on our estimate what tariff are going to get and based on our dialogue with the regulator in this course of hearing. We will take a provisional revenue based on the provisional tariff.
[Operator Instructions] The next question is from the line of [indiscernible], a shareholder.
Yes. You just said that coal -- coking coal -- cokes are not used, but coal is used internally in the sponge iron kiln. Now what is our consumption of coal per tonne of sponge iron?
It depends upon the grade of the coal. It depends upon maybe it points to 9 tonnes to 1.2 tonnes, depending upon the grade of the coal, we use the mix of coal also. If we are using high-grade coal, consumption remains somewhere about 0.85 tonnes to 0.98 tonnes, and if we using a mix, it may go up to 1.1 tonnes, 1.2 tonnes of coal depending upon the grade of the coal.
And the [indiscernible] of the sponge iron is about 95%?
No. The [indiscernible] plus/minus.
Again, 99%?
81% plus/minus. 81% efficacy.
Okay. 81%. Now our assets in steel are INR 892 crores and in power are INR 2,350 crores. The profit then still is unusually high compared to power, very unusually. So we still continue to go for power and -- or we have any change of mind we'll increase investment in steel?
No. In power, the major asset has recently been started, although it is added to the asset base. But profit from this segment is yet to come. So that's why you are seeing is the asset level is the enhanced level without any contribution in the profitability. And second is the hydropower seasonal business. So quarter-on-quarter, you cannot see the profitability gateway. And definitely steel is old business. With that we have kept to -- I don't know there are certain strengths in the steel sector. So then answer totally different except commodities, which is subject to cycles, hydropower is a different business. So both are not straightaway comparable. But so far as [indiscernible] if you are comparing directly on the asset base, hydro, there is no revenue from the major hydro power project in this profitability. Therefore, that cannot be compared.
True. Now this throughput, coal mines we have won. What is the quality of the coal? That is how many kilocalorie per kg? And what is the production capacity? Will be able to produce how much per year?
So production capacity of the Gare Palma IV/7 coal block is around 1.2 million tonnes. And for the Shahpur West it is 0.5 million to 0.6 million tonnes is a year because it's an underground coal mine.
And the quality is about [ 6000 ]?
What -- and the grade is around G12 to G11 grade in Gare Palma IV/7 and is around G7 in Shahpur West.
I'm not aware of G7, but how much kilocalorie does it compare to per kg, maybe 5000?
So there is a chart. I mean Coal India Limited comes out with this chart where they grade -- I don't have the figures off hand. We'll send you. Offline we'll send you...
So this is publicly available information. You can get it from the public websites from Coal India and all. So this -- I mean this is accessible to everyone. You can Google it actually.
Okay. I'll do that. Now you'll listen...
We will share it also. No problem.
You have said that pellet making you have got permission. You got the permission to increase from 6 lakh tonne to 8 lakh tonne?
Correct.
So do we have to seek permission for increasing the production?
I mean, it's environmentally governed and all. And if we don't have the permission of environment, how can we increase the capacity. Yes, for increasing any capacity of your existing plant, we need to seek the permission from MOL.
Environment.
Yes, environmentally.
[Operator Instructions] The next question is from the line of [ Rajesh Bhandari ], an individual investor.
Sir, my name is Rajesh [ Bhandari ]. Let me first congratulate the whole team for their outstanding result from which the company did [ Foreign language ] The result has been outstanding.
Thank you very much.
Thank you.
Sir, you mentioned you have furnaces for the ferro alloys 5 furnaces.
Yes.
Out of this 1 furnace always remained under shutdown for maintenance or whenever required [indiscernible] ?
No, these are basically long-time furnaces. So we have taken the modernization of all the furnaces one bye one.
One by one, okay.
Yes. So last year, also, a few of the furnaces were shut down for modernization and the revamping. And 2 furnaces -- 3 furnaces were around last year, 2 furnaces are to be covered. 1 furnace is to be -- 4 furnaces were revamped last year, 1 furnace will be revamped during the current financial year.
Okay. Normally, how much time does it take 1 quarter, 2 quarters?
Exactly 3 to 4 months, 4 months.
3 to 4 months. So overall, our production of the ferro alloys out of all the 5 furnaces will be for the year, it is going to be very comfortable because the prices of feroalloys are very high. So but has to take advantage of that. And normally, whatever you have seen in your results that whatever ferro alloys we are producing under your company and also the subsidiary, you are selling almost everything or maybe a little higher also?
Yes.
So that is going to remain for the next 3, 4 quarters?
Yes, yes.
Okay. Because certain steel consumption, et cetera, had gone down, but ferro alloys convention has not gone down. Is it?
Pardon?
Steel consumption, as you mentioned in your opening speech, that because of the certain national and international conditions, global conditions, steel consumption has gone down, but there was good export demand for these steel. So you could make up Indian steel...
That was on the domestic front. That was on the domestic front -- the domestic consumption has gone down.
Yes. But what I'm saying that you are exporting your ferro alloys production. So ferro alloys, most of it whatever you project gets consumed or rather gets sold?
Yes, it gets sold. We are exporting a substantial quantity this time. Also, a major portion of our [indiscernible] thermal plant has been exported.
Okay. And in India as well as export, the price is normally the same for ferro alloys?
Generally, it remains in line with -- temporarily, there may be differences. There may be time gaps, otherwise, so it automatically gets settled. If I add, in the domestic market, export goes down. If there is better realization in the export domestic, say, total shift to the export market and domestic prices automatically move up. So these get registered over a period of time.
[ Foreign Language ] probably, because the sponge iron and pellet both we have internal consumption.
Yes.
[Foreign Language], where do you use it finally?
Finally, [Foreign Language]
[Foreign Language] is much much higher than the wire sale price? Is it?
No, no. I think there is only price incremental price. If you can see that -- I got your point. The ferro alloys, you're considering 14,091. That is incremental price over the pellet. If you consider the sponge iron price, there will be 27,000 plus. [indiscernible]...
Okay. Okay. Okay. I got probably confused because I thought how come the pellet price is less than sponge iron?
No, you have to -- in that graph, you have to keep adding duties to the next...
Okay. Got it. Got it, got it, sir. Yes. [ Foreign Language ] consolidated INR 400 crores [ Foreign Language ] stel [indiscernible]. And then you have ferro alloys? Hello?
Yes.
[ Foreign Language ] products [ Foreign Language ] sponge iron, billets [ Foreign Language ] then wire rod. Then what else is under steel?
[indiscernible].
Okay. So steel production [ Foreign Language ] 400 plus [ Foreign Language ] that is for basically HB wire and this wire rod.
We are selling even pellet also. At every stage, we are selling part of the production and part of the production is going in the next downstream.
Okay. Okay. [Foreign Language]
[Foreign Language]
[Foreign Language] Do we have all the mines with us?
No, we don't have.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
So margin [Foreign Language]
Yes.
Okay. [Foreign Language].
[Foreign Language]
[Foreign Language] You have mentioned to raised about INR 1,000 crores through equity or related instruments.
Yes.
And INR 500 crores through debt.
Yes.
Will you be using all these points for your expansion or for working capital? How will you intend to use these ones, sir?
No. This is the enabling regulation. In the previous year also, we had taken this regulation. And working capital [ Foreign Language ] we have sufficient liquidity.
[ Foreign Language ]
[ Foreign Language ]
Okay. Okay. Okay. So you have not yet decided how you will be using it?
If we get some acquisition opportunity or if we freeze on the expansion, finally, we get all the clearances, if that happens, then it will be, but it has been -- as of now, it is enabling regulation.
Okay, only enabling. [ Foreign Language ] whether it is differential allotment or whether it is rights or whether it is [ Foreign Language ]?
[ Foreign Language ] There is noting like that. It is just enabling, please be clear about it.
[ Foreign Language]
Pardon?
Our -- per annum, ferro alloys production, sir?
Per quarter?
No, per annum, per annum.
Maybe about 1,40,000, 1,30,000 to 1,40,000 tonnes.
Okay. [ Foreign Language ]
I'm sorry to interrupt, Mr. Bhandari, may we request you to come back for a follow-up, please.
Last question. Last question. Only last. Sir [ Foreign Language ] that is in addition to 1,40,000 tonnes?
Yes, yes.
Okay. [ Foreign Language ]
[ Foreign Language ]
[Operator Instructions] The next question is from the line of [ Dipen Seth ] from Crystal Investment Advisers.
[ Foreign Language ] So as we exit FY '22 in another, what, 8, 9 months now, 8 months or so, [ Foreign Language]? I'm sorry if this takes up unnecessary time, but if you can just clarify.
Store capacity you're asking about?
Yes. So when we -- by the time we hit March 22, what will be our capacities in the Middle East division? If you could just do a quick recount.
Yes. Our capacity for pellet plant is 6 lakh-- 8 lakh tonnes, sorry.
Yes. [ Foreign Language ]
3,60,000 tonnes. Steal billet, we have 3,00,000 tonnes.
Okay.
Then wire rod is 1,80,000 tonnes. HB wires is 30,000 tonnes.
Okay, done. And on the hydro side, we are on the renewable energy side, we have to be invested now. There is no addition to that?
In Hydro, we have [ 105-megawatt ] projects, 125-megawatt project and another is 113-megawatt.
Correct, sir. [Foreign Language]
[Foreign Language]
Okay. [Foreign Language], and what will be the outcome of that interim result?
As I have told [Foreign Language] Third, [ Foreign Language ] during the current year. [ Foreign Language ] that is one. [Foreign Language] But what we have done is as of now as I told coal mines, ferro alloys plant and hydropower plant, these are already taken up in our project.
Right. So on the iron ore mines we are fully integrated, we don't buy any iron ore from everyone, right?
No, we are meeting out about 40% to 50% requirement from our captive iron ore mine, rest is we are buying from the market.
All right. All right. So can this change? And can we buy -- can we get more of our own iron ore? Is there a lever here for future better integration, so to say?
Not materially.
Not materially.
The next question is the line of Niraj Mansingka from White Pine Investment Management.
This is related to a few questions that you've asked in the past on the cash flow that you're having. I think your -- the run rates of cash flows are quite high compared to the past of like a bit tough to INR 70 crores. And what have I understand is that of the debt -- major portion of the debt is the power plant, which you intend to repay using its own cash flows. So what do you plan to do with the cash that you generate over a period of next 1, 2 years?
I have told we have already taken a CapEx on the coal mines. There are 2 coal mines where we will be incurring CapEx in addition to that we already started to work on the expansion project of ferro alloys. Maybe we will -- we are also looking for iron ore mine opportunities then if we find appropriate some acquisition or maybe some greenfield expansion, depending upon the situation, what type of the schemes government so far, how do we get -- but already a few of the expansion projects have already lined up. So such opportunities...
What would be the CapEx for the iron ore -- coal mines?
Coal mines -- both mines put together somewhere about INR 400 crores to INR 500 crores of each.
Over a period of -- but the second one, it is an underground would be starting much later period, right? One would -- okay. So -- but immediate -- the question I'm trying to ask is the EBITDA run rate that you are running today of [indiscernible] and with the current pricing also not -- is quite stable, you would be running at almost INR 1,000 crores EBITDA on the company. And you hardly have any debt on the non-hydropower side. And the amount of CapEx that you require wouldn't be so much compared to the amount of cash flows that they are showing. So that's why I asked...
No. Out of EBITDA, first, I have to service my interest for all the projects, including hydropower projects recently started. Then I have to make the repayment obligations, then normal CapEx for all the projects and then expand some projects. And if still is some surplus remains, then I told we are considering iron ore mine opportunities, then definitely some greenfield expansion maybe we will increase further capacity in the ferro alloys also. We will evaluate that [indiscernible].
And sir, how much would be the CapEx for the shareholders for it would be for that?
It is INR 135 crores for the [indiscernible] project what we have taken. And for hydropower project, it is INR 250 crores approximately.
Got it. And if you have to see a project, which all areas can you do some brownfield expansions or a low-cost, high-return spending on your existing facility?
In existing facilities, as we told, we can consider further expansion even in the ferro alloys sector, some maybe debottlenecking and all those things in the steel sector.
Okay. And sir, can you share something on the hydropower plant? 113 megawatts, most of the earnings come in the Q2 and Q3 because of the monsoon season. So how much do you expect to utilize or produce during the next 2 quarters on average, considering things are normal and something unusual doesn't happen?
What is projected normal capitation will be there, whatever maximum production in the hydro power project comes in these 2 quarters. Whatever would not be earned in the first quarter, small quantities, that is left out otherwise what is projected for the annual year.
Right. And you still -- you last, I think, 1 or 2 quarters back, you had said it will -- it has a potential to INR 200 crores of EBITDA. So you could still stand with that? Or you see the numbers are higher from the earlier expectation?
No, we still stand by annual EBITDA of about INR 200 crores.
Okay. And sir, last question. On the coal block that you're starting of 1.2 million tonnes, how much would be the net contribution to you come in by using those coal internally or doing the sales externally? How much EBITDA can that generate?
It should generate EBITDA of somewhere about INR 1,000 return.
So almost INR 120 crores a year. Is that right?
Yes.
The next question is from the line of [indiscernible] Banjara from [indiscernible].
Am I audible?
Yes, you are audible.
[indiscernible]
Your voice is distorted.
Yes. So what was the CapEx that you incurred for enhancing the capacity of payment plan from 6 lakh to 8 lakh?
No CapEx. We were having full capacity earlier. The only thing we were not having permission to produce, beyond 6 lakh [indiscernible].
That's why it is just an improvement that has come now due [indiscernible]
Exactly.
Okay. And sir, can you just give a guidance on the FY '22 CapEx that you plan with in the [indiscernible] or in [indiscernible]. If you could give a breakup on what were you trying to do during FY '22?
Maybe about INR 100 crores is that coal mine project and about INR 75 crores on that [indiscernible] project.
Okay. So out of [indiscernible] total expenses on ferro alloys expansion, you're saying INR 75 crores you'll be doing this year?
Yes. Yes. Maybe, yes. The project is under [indiscernible].
[Operator Instructions] The next question is from the line of Prasad [indiscernible], an individual investor.
So congratulations for a good set of numbers. I have [indiscernible]. I would like to know what kind of risk associated with SHP to not perform up to the mark?
Your voice is not very clear.
Yes, I would like to know what kind of risk associated with the SHP to not perform up to the mark? Hydro power plant, new Hydro power plant, 113-megawatt power plant.
See, any material risk associated with the hydro power plant, except rainfall that -- one, because there is a matter of nature. Otherwise, we don't foresee any risk associated with the utilization of the asset.
All right. So the next question is how sustainable is this ferro alloys price? Currently, you said that it rose to INR 96,000 to [indiscernible] per tonne. So how much sustainability?
Manish?
The ferro alloys prices primarily right now look to be sustainable for the next 3 to 4 months because there are still some plants which are not fully operational internationally because of COVID. And the demand also is very high, and China has curbed on the production of ferro alloys, and there is an export duty also on ferro alloys specifically on ferrochrome. And most likely, people are fearing that there will be export duties either on all alloys from China. So for the moment, it looks like the ferro alloys prices are going to remain strong.
So for next quarter, it will be increasing through the September, October, we can expect the same kind of price, right?
Exactly.
Next question is from the line of Chakravardan [indiscernible], an individual investor.
My question has been answered.
Next question is from the line of [ Yash Chaudhry ], an individual investor.
Yes. So I wanted to know like we are having an EBITDA of INR 250 crores or on an annualized basis, INR 1,000 crores of EBITDA. Our net debt stands at somewhere around INR 1,300 crores out of which, almost INR 950 crores is for hydro project, which we will be repaying it from the hydro project proceeds only? So there's a fundraise of INR 1,500 crores. So can you just throw a light on your fund raise?
As I told -- as of now, it is only an enabling regulation, there is no concrete plan for raising of funds. In case we get any acquisition opportunity, maybe iron ore mines, may be some project under NCLT or maybe some other projects or maybe finally, we find a good state policies on the incentives for a new green project. Otherwise, as of now, there is no concrete plan for raising of the funds.
So this is a provisional approval which we have taken in our Board meeting. And if required, then only we'll be raising the funds, right?
Yes. Even last year also -- we have taken last 2, 3 year, we have taken enabling regulation so that tomorrow if we get any acquisition opportunity, there is [indiscernible].
[Operator Instructions]. The next question is from the line of Subham Agarwal from Aequitas India.
I just had one clarificatory question. So basis, the INR 1,000 saving per tonne in coal and the expected commissioning in Q3, can we expect further addition to EBITDA by INR 30 crores in Q4?
Should be.
The next question is from the line of Shekar Mundra, an individual investor.
So just wanted to know what is the tariff expected for the Sikkim Hydropower Project?
It should be somewhere about INR 6.50 to INR 7 somewhere in between. Very difficult to predict at this moment. But what we expect is minimum age of now for the generic deficit INR 6.21 or something for the renewable energy project. So we should definitely get over this price -- over and above this price.
And what is the cost of debt for the INR 952 crores for the Sikkim Hydropower Project?
It's somewhere about the 11%, but it will be refinanced, and it will get reduced once this operational figures come in. The debt cost will drastically reduce.
And what is the debt repayment schedule? Like how many years we expect to repay the debt?
15 years.
Okay, 15 years. All right. And when is your figure expected to come in, the tariff figure? And from when can we expect [indiscernible] to flow in from this project? When is the tariff figure expected to be finalized?
As we already told, the provisional tariff should be cleared during the current quarter, hopefully. It is under hearing with the regulators.
And the revenues will start flowing in from the current quarter itself?
Yes.
The next question is from the line of Mohit Jain, a private investor.
Congrats for the great results. Just wanted to know what is the amount you're expecting on top line and bottom line after this hydro project [indiscernible], which is commissioned, [indiscernible] approximately [indiscernible] per unit?
Top line should be somewhere about INR 225 crores to INR 240 crores per annum.
And profit?
EBITDA. As I told, EBITDA should be somewhere about INR 175 crores to INR 200 crores. I don't know.
So we can expect this [indiscernible] comparison approximately?
Pardon?
Can we expect a better quarter next time, coming quarter?
Yes. This will come in the current quarter also. It is already operational. We'll get the benefit of the operations in this quarter.
What was the per tonne ferro alloys rate this quarter?
This quarter, average of somewhere about INR 84,000.
And currently, it is going around INR 96,000 to INR 97,000?
INR 96,000, INR 97,000.
Okay. Okay. So that will also come in this quarter itself?
Yes.
The next question is from the line of as [ Yash Chaudhry ], and individual investor. As there's no response, we take the next question from the line of Shanti Patel from Investment Advisor.
My first question is anything into [indiscernible] in the industry. What would be the [indiscernible] as on 31st March '22.
Very difficult to comment on the forward EPS because we are in the commodity business and the markets are volatile. So generally, we don't give any outlook on the specific earnings per share.
Yes. But now suppose we're just [indiscernible], which you are talking about will come [indiscernible] that is '21, '22?
Your voice is not very clear.
[indiscernible] some of these are going to be completed in the current year. [indiscernible] impact for that -- those [indiscernible] on the revenue also? [indiscernible] approximately, is the present commission continue?
You're voice is getting cracked, not very clear.
Yes. My question is very simple. We have got [indiscernible] in the current year, that is '21, '22, the impact of the [indiscernible] revenue also. Do you see that the present conditions not really changing in the future, what the impact from PAT, profit after tax? Approximately I'm talking about. I'm not telling you give us a piece of [indiscernible]
[indiscernible] No further expansion during the current year. Whatever was to start that has already started hydro power projects. [indiscernible] hydro power there is no expansion, which will have a bearing on the current year results.
So [indiscernible] the permission has been granted from increasing 6 lakh to 8 lakh, correct? [indiscernible] from 6 lakh to 8 lakh?
Yes. [indiscernible] that is already reflected in the first quarter result also.
So these are already reflected? Okay. I think revenue will be not be -- it will be more or less stagnant if the present condition is prevalent for the next 3 years. Is it okay?
Yes. Revenue addition on the hydropower project side. There will benefit of cost saving in the coal mine. Otherwise, all the projects are already on.
The next question is from the line of Mohit Jain, a private investor.
I just wanted to ask one thing, again. This capacity expansion of ferro alloys, was it totally reflected in the previous quarter? Or again, on the few -- 1 or 2 months only reflected?
Pardon? Didn't get your question.
The capacity expansion, which you said from 16 million to 18 million tonnes, is it totally reflected in the -- all the 3 months or only 1 or 2 months is included?
No. Pellet plant from 6 lakh to 8 lakh tonnes, it is reflected in the whole quarter.
Okay. So this will continue again [indiscernible]?
[indiscernible] produce [indiscernible] that is 1/4 of the whole year capacity.
The next question is from the line of Niraj Mangsingka from White Pine Investment Management.
I think, just had one question on the utilization of the Sikkim Hydropower plant. If you see in the past, whatever hydropower plant here, you had 45% to 50% utilization. So what utilization do you foresee for the next 2 years average? I know there are [indiscernible] of nature, but just on average, what expectation would it be on utilization?
It is about 50%.
So if you -- then your numbers of whatever your guidance of talking about INR 225 crores, And if the [indiscernible] utilization is still coming at 40% utilization approximately. So do you expect this to be revised or is -- the rates are fixed INR 6?
No. This also depends upon the transmission, lossage and all those things going to be [indiscernible] transmission cost will be there. That is reduced.
Got it. And what would be the approximate transmission charges that you [indiscernible]?
Transmission charges somewhere should be in the range of INR 1, plus/minus.
[Operator Instructions]. The next question is from the line of [indiscernible], a shareholder.
This is a follow-up question. Our production is less than our requirement. At what price we are procuring the iron ore? Hello?
Yes.
At what price we are procuring the iron ore?
Somewhere about -- it varies because it's a mix of -- mix float, we are procuring from Odisha also, we are procuring from NMDC also. So it is just be INR 1,000. It is -- might be somewhere about INR 9,000 of mix.
But [indiscernible]
[indiscernible] not readily available, but we are procuring from a mix basket.
NMDC's highes is INR 1,500 of this ore?
No, no. It won't work as a base price. Base price -- there are additions, there are multiple additions, royalty. Then there are other [indiscernible] and then freight.
And that goes to INR 10,000?
Yes, somewhere about between INR 9,000 and INR 10,000.
And you have given sales figure, say, you are selling ore pallet 158,000 tonnes and sponge iron 19,000 tonnes in your presentation you have given. What is the price at least you are selling pellets?
Pellet, our average realization for the quarter was 13,153.
And for the sponge iron?
Given the graph -- in the graph in the presentation, which we will give you this information.
Of the price, also?
Slide 11. You will get to the information.
It is about the products, perhaps not the price.
The price, we have given a Slide 11. Slide #11. You will find them.
[Operator Instructions] The next question is from the line of Ayush, an individual investor.
Sorry, I joined late. I'm not sure if this question has been answered. So I just wanted to understand, our upcoming figures [indiscernible] expansion, so how will the power requirement for the same be met? Will it be met [indiscernible]? Or are we -- will we buy power from outside?
[indiscernible] in between, we have got disconnected. We couldn't hear your question. Can you repeat?
I'll answer that question. So our expansion which is happening on the ferro alloys side is [indiscernible] And we will be using the power effectively only as we have our own capital generation of 80-megawatt in [indiscernible].
Okay. So 100% will be met with captive [indiscernible].
Yes. Yes. Yes. We don't have to buy any power from the [indiscernible].
Okay. And secondly, so as we all know, [indiscernible] decarbonization team that is staying [indiscernible] China, which is expected to increase demand for higher paid pellets and iron ore. So just wanted to understand the pellets that we need, are those on the high grade side or on the lower grade side?
The power that we make is a higher grade side, but because it has -- our mines have a little higher costs. On the cost side, it is higher, so which is an impurity. So -- and we have seen that the domestic prices are very good at the moment. So we mostly intend to -- right now, we are selling in domestic.
And the iron ore, the captive iron ore that we mine, so what grade is that?
That vary from 53 to 60 grade.
Okay. 53 to 60 grade.
Right. We have a beneficial the mines itself, where we are increasing the grade there, and then we are transporting it.
Okay. So currently, basically, our pallets -- iron ore pellets are not in the higher grade, right?
No, no. Our pellet is 62.5 grade, which is normally acceptable very, very decently in the market. It's just that we -- our cost is a little high because of [indiscernible] iron ores, which has got a higher cost.
Correct.
The next question from the line of Rajesh Bhandari, an individual investor.
Yes, sir, this is my follow-up question on ferro-alloys. For ferro alloys, the main consumption is power, which for Visak as well as for your other [indiscernible]? And the expansion, you have 100% captive power.
Yes. Yes.
Now coming to the raw material, mainly basically, raw material is chrome ore and manganese ore, sir?
No, there is no chrome ore required by us in our plants. We normally, use only [indiscernible] ore as they are manganese alloy producers.
You are not producing chrome alloy?
We can't produce ferrochrome [indiscernible] at the moment.
Okay. So this ferro alloys for manganese ore, what is the approximate normal cost per tonne? Like for iron ore you say INR 9,000.
We are importing manganese ore in the range of somewhere around INR 10,000, to INR 14,000 depending upon the different grades of -- grade that we are [indiscernible].
And then the power.
These are the 2 basic things, otherwise everything else is value addition.
Ladies and gentlemen, we take the last question from the line of [indiscernible] Banja from Axis Capital.
Sir, I just have a follow-up question on the pellet plant. So sir, what should be the cost right now if you were to set up a new pellet plant [indiscernible] now? Is there a -- some rule kind of thing on that?
It depends. If you are putting beneficiation along with it or not. Roughly without beneficiation, it will come out to be around INR 175 crores to INR 200 crores.
For 8 lakh or 6 lakh?
For a 6 lakh plant.
Okay. So most of the companies that we see, they have 6 lakh per annum plant. So is that a standard kind of capacity that's there in the industry, that's the reason for that?
So yes, this is a standard. If you are going with the pellet plant from China, this is the standard from where the pellet plant price starts.
So you said INR 75 crores to INR 100 crores, right?
INR 175 crores to INR 200 crores.
INR 175 crores to INR 200 crores. And how would that vary if you were to set up a beneficiation plant?
INR 150 crores will be required per my understanding. Another INR 52 crores to INR 55 crores is required.
And that will also have the same capacity, right?
There are multiple variables. It's very difficult to give specifics on the project [indiscernible] side, there are variables which determine the project cost.
Okay, understood. And then just one last question. So your pallet capacity was 2 lakh tonnes, right? And you have increased it to 3 lakh [indiscernible] for that you incurred any substantial CapEx?
It has already been incurred, I think, year before.
Okay. So you would know the cost for that?
[indiscernible] Might be somewhere about INR 35 crores, INR 40 crores. INR 40 crores.
Ladies and gentlemen, that was the last question. And the conference over Mr. Pankaj, our Joint Managing Director for closed comments.
Thanks to all the investors for participation in the call. We hope we have clarified all the questions to their satisfaction. If any information remain unanswered, we can always contact our [indiscernible] given the presentation, and you are most welcome any time. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Sarda Energy & Minerals Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.
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