Ladies and gentlemen, good day and welcome to the Q1 FY 2022 JSW Steel earnings call hosted by Centrum Broking Limited. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kejriwal from Centrum Broking Limited. Thank you, and over to you, sir. Thank you, Mallika. Good evening, everyone. On behalf of Centrum Broking, we welcome you all for JSW Steel Q1 FY 2022 conference call. We are delighted to host the senior management over there. Now, I hand over the conference to Mr. Ashwin Bajaj, Head Investor Relations, to take it forward. Over to you, Ashwin. Thanks, Ashish, and thank you very much for hosting the call today. Good evening, ladies and gentlemen. This is Ashwin Bajaj, and it's my pleasure to welcome you to JSW Steel's earnings call for Q1 FY 2022. We have with us today the management team represented by Mr. Seshagiri Rao, Joint MD and Group CFO, Dr. Vinod Nowal, Deputy Managing Director, Mr. Jayant Acharya, Director of Commercial and Marketing, and Mr. Rajeev Pai, CFO. We will start with opening remarks by Mr. Rao and then open the floor to Q&A. With that, over to you, Mr. Rao. Good evening to everybody. The first quarter of this financial year was very challenging, with the second COVID wave, which started in the latter part of March 2021. It spread across India. It affected many of the people. It affected health and consumer sentiment, which led to localized lockdowns in several places in India. That had a severe impact on the overall economic activity. Responding to that, JSW Steel, even at the cost of sacrificing part of the production in the last quarter, we have supplied over 65,000 tons of liquid medical oxygen to hospitals. It is almost 100 tons a day we have peaked during that period. Whatever we could do during that time, either in terms of supporting the patients or oxygenated beds, which we have created over 1,500 and supplying concentrators, supplying masks, sanitizers, grocery kits. There are series of things which we could do as a part of our CSR activities. More and above that, some of the employees were severely impacted. We have announced a scheme to help the families of employees who lost their lives, that an employee who died due to COVID, either in the first or second waves, their families will get their 100% of the last drawn basic salary until their notional retirement. Well, that scheme was introduced by us to help the families of employees because of this unfortunate demise of some of the employees. Even in the month of July, we are still supplying some oxygen, which is around 270-300 tons a day. Even during July, the supplies are happening. On the ESG front, we have taken a lot of steps in the company, which we have listed out in our presentation. A major area is plastic waste management, where we are injecting plastic, which will replace the coke oven fines. That will reduce the carbon emission. Similarly, gas cleaning plant, which we have set up in Dolvi, it will reduce the dust emissions. There's a series of steps we have taken as per the plan we have announced the company's target to achieve in 2030. This second Covid wave, the economic activity impact, the RBI has estimated recently it could be to the extent of around INR 2 lakh crore of loss in output in this current fiscal year. This time, the wave is more in the rural areas, where the first wave was more of urban and the manufacturing, but this time it is more in the rural and agri area. That we have to see how the recovery will happen this time, even though we all hope and wish that the recovery post first COVID wave, the V-shaped recovery we will see again this time. As far as the overall steel demand globally, as you must have observed, there is a huge amount of supply of steel. In the first six months, as per the release of the production numbers, 1 billion tons of steel was produced. Which was 126 million tons more than the six months of the last year. What is also interesting is that out of 126 million tons, 67 million tons from the rest of the world excluding China. That means the supplies have picked up in line with the surge in demand for steel, mainly caused by infrastructure spend or energy transition related to CapEx that led to the steel demand. In spite of such a huge supply of steel by way of the higher production, not only from China, even from rest of the world, the steel prices in the USA in the first half year went up by 73%, and the Europe it went up by 72%. Even in China, it went up by 31%. Even on quarter-on-quarter, we were seeing increase from point to point, the price increases. That clearly establishes that globally, notwithstanding increase in supply, notwithstanding Russia putting 15% tax on exports and China withdrawing 13% VAT incentive on exports and the European Union extending this TQR or TRQ, tariff rate quota, for another three years from 1st July 2021. In spite of all these measures which have been taken by various countries, increase in production, we have seen very strong demand that is absorbing the incremental supply in the market. That is quite positive for the steel industry outlook. If you look at as far as India is concerned, we have seen a drop in the steel demand by almost 15.7% in the quarter just ended. In these circumstances, if we see as far as JSW Steel is concerned, we have produced 4.1 million tons of steel. The year-on-year has no meaning because the base was so low, all the numbers look very good. I will try to explain quarter-on-quarter. The -2% lower production in this quarter due to lack of oxygen, because this oxygen we supplied for LMO purposes. The production has suffered. The capacity utilization was 91% in the last quarter, as against 93% in the fourth quarter of last year. The consolidated sales were 3.475 million tons, which is lower by 14%. When Indian steel demand went down by 15.7%, our steel volumes have fallen by 14%. The inventories were at 10.59 lakh tons. There was an increase of 428,000 tons inventories, because many of the companies, not only from steel sector, even others have attempted to increase the exports from India, considering a very good demand overseas and the domestic demand bit sluggish in the last quarter. Almost all the ports were completely congested. Almost 120,000 tons of stocks which were ready for shipment at the ports could not be done in the last quarter. Otherwise, they're almost sold stocks. If that 120,000 tons is added, our sales could have been higher in the last quarter. The exports were 1.2 million tons on a consolidated basis, which is 35% of the total sales. There is a growth of 16% quarter-on-quarter. The way the realizations have moved, the sales realizations on a blended basis have gone up by 19%. As I give the numbers quarter-on-quarter, in USA, it went up by 30%, in the Europe it went up by 40%, whereas in India it went up only by 19%. Still, the domestic prices are at a discount either compared to the international prices or compared to the landed cost of imports. The cost of production in the last quarter went up by 10%. These are all the percentages I'm giving quarter-on-quarter. The 10% increase in the cost of production is majorly on account of iron ore and coking coal. iron ore prices in India, as you know, 52% has been increased by NMDC from 1st April to 30th June. Similarly, ferro alloys, the power cost, the refractories, all these costs had a pressure on the overall cost of production, which went up by 10%. EBITDA for the standalone basis is Rs. 26,274 per ton. Quarter-on-quarter, there is an improvement of INR 6,500. It is 36.6% margin percentage. Standalone turnover went up by 6%. The EBITDA was INR 9,491 crores in absolute number, which is a growth of 18%. The net profit was INR 5,258 crores, a growth of 31%. The major highlights in this quarter is the turnaround in the overseas operations. The U.S. plate mill and Ohio together contributed $44 million of EBITDA last quarter, as against $31 million negative loss in the Q4 of last year. Italy remained in the negative with EUR 4.8 million, because we were expecting a big order for our rail mill. It got delayed. That's why we could not operate the rail mill fully. The EBITDA operation side, there was a negative EBITDA of EUR 4.8 million from Italian operations. From overseas, what is encouraging is INR 282 crores in rupee terms is a positive EBITDA contribution from overseas operations against INR 322 crores of loss in the previous quarter. Previous quarter, I mean is Q4 2021. Similarly, Indian subsidiaries have done extremely well. They contributed overall INR 1,145 crores. Either we look at coated ARCL, ACCIL, have done extremely well in the last quarter. After adjusting consolidation adjustments, the subsidiaries both overseas and India together, there is INR 782 crores. Incrementally, they contributed to the EBITDA. Over and above the Indian subsidiaries, the joint ventures under joint control, they have also done well. Bhushan Power & Steel has produced 690,000 tons of production, 480,000 tons of sales. They reported a profit of INR 745 crores. The JSW Ispat Special Products, they also did well. They made a positive EBITDA of over INR 170 crores and a net profit of INR 63.32 crores. These two joint ventures, the proportionate profit to the shareholding held by JSW Steel, INR 323 crores has been contributed by the joint ventures. All this translated in the overall consolidated EBITDA of INR 10,274 crores, which is 35.55%. It is a growth of 22% sequentially. The EBITDA per ton on a consolidated basis is INR 28,706 per ton. The profit after tax is INR 5,900 crores. Debt has marginally gone up in the last quarter. It is INR 54,989 crores. There is INR 2,374 crores increase in the debt compared to 31st March 2021. In the last quarter, majorly, we have invested in the working capital side. The inventories, as I mentioned to you, finished goods inventories have gone up by 4 lakh 28,000 tons. Over and above, we also started stocking of iron ore and the coking coal for our Dolvi operations. We also invested in inventories of raw materials. Total together, we have invested in the last quarter INR 6,200 crores incrementally in the working capital. We have spent a CapEx of INR 2,688 crores. Due to this large amount of investment in working capital, there was a marginal increase in the debt in the last quarter. Overall ratios are quite healthy. Debt equity 1.04x, debt to EBITDA 1.89x. If I look at the overall performance, including the Ohio crude steel production and also the Bhushan Power & Steel and JSW Ispat Special Products, we have a total production of 5.07 million tons and the total sales of 4.33 million tons. Two more things which I would like to share with you is the investments we are planning to make to get the captive renewable power in the SPV, Special Purpose Vehicle, being set up by JSW Energy for 958 total megawatts of power. This will help the company in two ways. One is, our strategy of reducing our dependency on the fossil fuel-based power, replacing with the renewable power that would help in that direction. Cost of power, renewable power cost relative to what we are spending today, is lower. The third is, any fossil fuel we consume, we have an obligation, RPO obligation, Renewable Purchase Obligation, of 21% in the state of Karnataka and also in Salem. Whereas, in the case of Maharashtra, it is around 10.6%. There is RPO obligations here. If we are not able to procure renewable power directly, then we have to buy the certificates in the market, so there is additional cost involved over and above the cost of power. By investing in this JSW Energy SPVs to procure this power in a long-term basis, this is helping the company to procure power at a cheaper rate and also meet RPO obligations. We'll be investing total INR 445 crores. These plants will get commissioned in the next 18 months' time. The second investment that has been approved is in JSW Paints Limited. Generally, it is unrelated business. That is how the perception is. It is very strategic for JSW Steel. When we had our customer meet a few years back, at that time, one customer has asked us, "The painted coated steel which we supply, can we give warranty for more than 10 years?" We were not able to give at that time because back to back, we were not getting that type of warranties from our paint suppliers. After started getting paint from JSW Paints, not only we improved the quality of the steel which we supply after painting, because we have 1,600 shades, because we need different types of grades of steel. They set up an R&D center in Vasind, JSW Paints. They're working along with our teams to develop new grades and innovative products. Also they're giving warranties to enable us to give similar warranties to our customers. The second area where we are seeing it will benefit the JSW Steel strategically is that, as you know, two years back, our coated capacity was 0.7 million tons. Whereas if I look at today, if we commission all the plants of pre-painted at all locations, this capacity will go up to 2.5. If we add Bhushan Power and Steel, it will go up further. There is almost four times increase in the overall coated capacity. If we have to secure our paints today, in many of the paint companies in India, they are not expanding their capacity in the industrial paint segment. They are doing more in the decorative paints. If somebody has to set up the facilities for us to meet our requirements, it is very much essential that we develop that source, thereby reliability of the supply of paints, whatever we need, not only to meet these additional requirements, in case if we want to expand, there should be a commitment that they will be able to expand capacities in industrial paint space. Considering these two factors, availability of paints on a consistent basis, good quality, developing new products adjacent to us and working along with our teams. Considering these benefits, we felt it is strategically important for us. That is why we committed this INR 750 crore investment over a period of time. The first investment of INR 300 crore will happen in this quarter. This has been valuation methodology that is prevalent in the industry, that has been followed by one of the big accounting firms whom we appointed. They arrived at the valuation. Based on that valuation, this investment is happening. It will be 6.88% of the first tranche, which we are investing of the capital of JSW Paints that we would get out of this INR 300 crore investment. These are the two investments. Coming back to the projects, they're on track. We have already commissioned the CDQ unit at Dolvi or they're in advanced stage. The workers have come back to the sites. The work is going on in full swing. We will be able to commission the Dolvi expansion in this quarter. With this, I'll stop here and if any queries are there, we are here to answer. Thank you. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star then one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vineet Maloo from Birla Sun Life. Please go ahead. Yeah. Thank you for the opportunity. I just wanted to understand the raw material side. You mentioned there's a bit of a cost increase there because of coking coal and iron ore. Just want to know what would be our iron ore cost in Q1 on average, and what could it have been in Q4, the previous quarter? As far as coking coal is concerned, last quarter, the C&F cost of coking coal which has gone into production was around $128. We expect that would go up over $30, $35 in this quarter. That is what we anticipate. That also will not fully reflect the current increase over $200. That will come in the following quarter. As regards to iron ore, we have secured 42% of the total consumption in the last quarter from our captive sources of iron ore. The iron ore prices in India have gone up by 52%, as I mentioned to you, and there is a small correction which was done in the month of July. Now more supplies are coming into the market in Odisha. We expect the iron ore prices in India may not go up. The higher cost of iron ore which was there in the last quarter, that gets fully reflected in this quarter. Further increases, we are not anticipating in India. Coking coal, as I mentioned to you, this cost pressure will be there. Okay. Sir, what was the increase, let's say, for the iron ore for you, let's say in Q1 over Q4? Can you share that? The overall blended cost. I'm not asking for captive or third party or any, just the blended cost of iron ore. Can't give the exact number, but generally it is in the range of per ton, INR 5,000-INR 6,000 per ton. That is per ton of iron ore, that was the increase? That is a weighted average cost for the entire iron ore because it is costly for Dolvi. Okay. It is slightly lower in Vizag. Okay. Understood. You're saying, sir, that this is the highest cost has been factored in. There will be no further impact based on at least the prevailing prices on iron ore side. Iron ore side, the higher iron ore cost. Maybe partially will come in this quarter because the inventories which we have used in the last quarter are low-cost inventories. Now the entire high cost will get fully reflected in this quarter. No further increases, I'm saying, over and above what we got. Okay. Beyond Q2 you don't expect anything. Understood. Yes. Yeah. Thank you very much. I'm done with my questions. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of Pinakin from JP Morgan. Please go ahead. Thank you very much, sir. Can you give us a sense of the steel prices in the market at this point of time? What we had heard was that there was a small domestic price correction, but so far we have not heard of big price corrections and Chinese steel prices have started going up. Do you think there is an appetite or the market can absorb price hikes in August or September? Or will prices remain muted because exports have come off? Prices in India is reflective of the weak demand in the quarter one because of accumulation of inventory when the shops were shut or manufacturing activities came to a standstill. There is an inventory buildup in the system. I think because of that, sentimentally, the prices in the Indian market have corrected both for flats and longs. We are seeing that the situation will stabilize probably post-July, where the inventories will come down substantially since the export from the major ISPs continue to remain stably upwards. Therefore, we expect that the inventories will stabilize. Having said that, yes, the international prices in China have gone up. The futures have been going up over the last one or two weeks, which is positive. Imports versus India, I think we are at a discount level anywhere between 15%-20%, depending on which country it comes from. We'll watch the market and see the affordability and then take a decision. Understood. Thank you very much, sir. My second question is on the investments in JSW Paints and the SPVs for JSW Energy. Now, can this investment be further scaled up over the next two to three years if the requirements for the company go higher? Or these investments at this point of time are final, and we will not see further increase from here? As far as JSW Energy renewable sourcing of power is concerned, our intention is to replace the fossil fuel power gradually over a period of time. Those investments will continue to be there in future. It gives a huge amount of advantage, which I just mentioned to you. If we don't qualify as a captive unit by investing this 26% in the SPV, which is setting up this renewable power, there is a cross-subsidy applicable. Cross-subsidy varies from state to state. It is some states even as high as INR 1.30- INR 1.50. In order to avoid that, this investment is essential to avoid that cross-subsidy. Over and above that, the cost of procuring renewable power is lower. These are the benefits and meet RPO obligation. These investments will continue to happen in future based on how it progresses as regards to setting up these renewable plants. As for JSW Paints is concerned, this is the maximum what we have committed. There is no further investments in JSW Paints. Sir, your question is answered. Just to clarify one question further on that renewable. What percentage of the company's current power consumption will be met by this initial renewable investment, sir? It is approximately 300 MW. If we take 30% capacity utilization in these units, which is generally there in the case of either solar or wind power. If you take it total at 18 million ton stage, we need close to 1,800 MW total requirements. That way we are meeting maybe 15%-20% of our requirement. Understood. Thank you very much, sir. Thank you. The next question is from the line of Amit Dixit from Edelweiss. Please go ahead. Yeah. Thanks for the opportunity, sir. I have a couple of questions. The first one is on your guidance that you gave for sales volume and production at the beginning of the year. Post Q1 results and post sales volume taking a hit due to COVID-related disruption, would you like to change this guidance? No, we are not changing the guidance because there is an incremental volume that would come in from our expansion project in Dolvi. That would be fully available in the second half. Even assuming some shortfall because of the oxygen supply in the quarter one, we are confident that we'll be able to make it up in the second half. Okay. The second question is it possible to let us know the iron ore external sales volume and revenue? One more thing I wanted to add on the inventory side. The inventory also, in addition to the inventory which Mr. Rao pointed out, has got built up at the port. 120,000 odd tons, which could not be shipped because of congestions and vessel delays. We have consciously built up inventory in the pipeline because of a very low level of inventory as on 1st of April, to enable better servicing as the demand again picks up. As usual, in the end of March, we bring the inventories down. Some part of that inventory build-up is conscious in nature, and some part, which is basically limited to the port, which would go. The other thing is that new lines have started, and some of that would require raw material feed to be kept with the line. Therefore, some inventory build-ups have taken place consciously on that side. Having said that, I think during the course of the year, we expect this inventory to moderate to the levels, and therefore the guidance doesn't change. Dixit, do you have questions? Yeah. There was a second question on this iron ore external sales volume and revenue. Mr. Dixit, sir, I would request you to rejoin the queue for follow-up questions, sir. No, this was the second question. That's what I'm saying. This was the second question. We will provide you that info in the guidance. Okay. Thank you. Your question is answered, Mr. Dixit? Yeah, you can move on, please. Okay. Thank you. The next question is from the line of Saumil Mehta from BNP Paribas. Please go ahead. Yeah. Thanks. Two questions from my side. First is in terms of the export markets now. What we hear is most of the Indian players are close to exhausting their limits for the export market in the European region, which typically will shift us back to a traditional market, like maybe South Asia or Middle East, where I think Chinese competition is going to be a lot more clear. A view on the export market for the balance part of the year, will we cut down on our export quota for the year? Actually, is that basically the net profitability in those markets a bit deeper than Europe? That's my first question. Second is around basically our captive iron ore. What has been the experience of mining of our captive iron ore in terms of the logistical challenges or any mining challenges? There has been press reports about we planning to surrender a few of our mines. I'm sure there is no substance to it, how has been the overall iron ore mining experience for us? Those are my two questions. Thank you. On the first question of quotas which you mentioned, I think you may be referring to Europe. European quotas for some of the products have got exhausted, but for certain other products, they are still available. We will be accordingly calibrating our exports to that market. We are developing alternate markets around the European regions other than E.U. in particular. Some of them we were already present, where we are increasing our supplies. We are increasing our supplies into Latin America, Mexico, apart from the Middle East and Asia, which you mentioned. One is the development of markets is a continuing exercise, and I think we will do that. The other shift I think, which is structural in nature, which you have to keep in mind, is that our hot rolled, more and more of it is getting consumed into our downstream operations. Downstream operations quoted, even in this times export, our value-added component was 61%. Even in export it was 59%. Those go out in smalls and containers across the world, and we touch almost 100 countries around the world. As we increase our value-added exports, our reach for those countries, the base is already there. We will be able to increase some more volumes in those countries as well. The diversification of markets is what we are already on. Sure. In regard to captive iron ore issues which you pointed out. Last time also we shared with you majorly the quality. Quality we have to improve to enable our steel plants more efficient and less fuel consumption. That is why we committed investments in the beneficiation plants near the mines. The second is problems which are there in regard to compliances and also safety and security. As we wanted to digitize the entire operation, thereby this compliance will be digitally done. There won't be any problem. This is the second area. The third area is logistics related, either at the ports or railway racks not being available or complete roads are congested. These are the problems with regard to evacuation of iron ore produced at the mines. To address this long term, we have to set up a slurry pipeline. Pending that, we have to live with it. I think certain steps are taken with regard to other two problems. As for logistics are concerned, working continuously in this how to improve. This is how we are working on the captive iron ore side. Sure. And sir, any comments on some of the news reports about we planning to surrender two of our mines maybe because of cost issues or in terms of economic trends? These are all speculations because as we mentioned earlier, we survived in the entire year last year because we have these mines. If these mines are not there, then there was no supply of iron ore, no availability. Therefore, having a reliable supply of iron ore is essential to feed our plants consistently. These are all speculations that we are surrendering the mines. In fact, there are 10 more mines which are announced for auction in the state of Odisha. We are participating even in those mines. Okay. Thank you so much, and all the best for future calls. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Thanks for the opportunity. Sir, Sir, two questions. First for Acharya Sir. Sir, what are the lead times in U.S. and Europe? That's one. In the earlier comment, you indicated that coated or downstream is a major chunk of exports, and you also said that it goes in containers. The concern over here is container issue a problem for us which can actually hinder the way in which we would want our export trends to move going forward? Lastly, do we have visibility on export booking into next calendar year or October to December this year? Your first question was the view on U.S. and European prices, is it? Lead times. Okay. The lead times in both these markets actually have increased. If you look at the supplies also in the United States, while they have sequentially improved, the lead time still continues to be reasonably high. Similar is the case in Europe. The demand has picked up better while the supplies have improved. The demand continues to overtake the supply side. Therefore the lead times are still high. Most of the mills are all booked out till October, and some of them for the contractuals, even up to October-December quarter. Having said that, your second question was with respect to containers and the export reach. downstream products, which constitute array of products. One is cold rolled, hot rolled, pickled and oiled, galvanized, color-coated, Galvalume, et cetera. The smaller countries we reach out by containers by virtue of the fact that it is smaller quantities. While there have been congestion in the container market, we expect that to ease as the supply side on the shipping side is improving. We have also shifted some of our volumes where we are able to combine ports to break bulk, and from there supply onwards to the smaller markets. With that combination, I think we're able to reach the markets in downstream, and that's why you see a 59% component in exports. Our overall is 61. 62% is in the domestic value-added as a percentage of the total, and 59% is exports. We should be able to manage this. No doubt the freights have gone high. That I think everybody is aware. That's something which we will have to play out and wait for the supply side to stabilize and the price pressures to ease on the freight side. Right. Sir, the third thing, basically export booking visibility for October to December. The reason I am asking is, we have cost inflation and the Indian exports have been at lower pricing as compared to other regions. Given the cost inflation that we have, are we confident that we could probably increase the prices and cover up for cost inflation and look at stable or to better spreads going forward? Basically a relevant comment on pricing and spread would be very useful. On the order side, I think what we need to keep in mind now is that post-COVID, the government's infrastructure initiatives which had been announced in the budget are, I think coming to play. National highways has been a project which has been continuing across and is doing very well. In addition to that, we are seeing the oil and gas and water pipeline projects across various states coming up with sizable volume of tenders. We are seeing some export opportunities for larger volumes of, let's say, slurry pipelines, which are being now taken up in countries where iron ore movement is there. People are becoming much more environmentally conscious, as we discussed earlier. Also, the carbon footprint everybody wants to reduce. The slurry pipeline concept is increasing, and we see opportunities to export both plates, coils, and products to those kind of initiatives. These are longer lead time orders, which we are in the process of booking. We are also booking longer lead time orders in wind and solar, which is again a part of the renewable mission. We see that part increasing. Yes, there is some visibility of orders on the longer side. The other contractual orders, which will be automotive and the quarterly contracts, will continue in its normal course. We see the pre-engineered building segment doing quite well. Data centers, warehousing, doing quite well. These areas, again, are quarterly bound contracts, so quarterly volume indications are available. Sure. That's helpful. Can I take my second question, if I may? Yes. Yeah. This question is for Mr. Rao. Sir, just wanted to understand, you did indicate the coated steel capacity has increased nearly three-fold. Just wanted to understand, how much is the total requirement for industrial paints, putting in context the total CapEx plans what JSW Paints had highlighted, if I remember it right, it was around INR 600 crore. Just trying to understand from a mass balance perspective, how much is it that JSW Steel will require for captive consumption versus the total capacity, decorative plus industrial paints for JSW Paints has? Yeah. Decorative, we have not presented. We don't need decorative paints. We need only industrial paints. Industrial paints are concerned, if you see the total consumption of industrial paints in India, the share of JSW is sizable considering the increase in the overall capacity. The exact amount of requirement as a percentage of the total industrial paints that are consumed in India, we will come back to you on that. Sure, sir. Thank you so much. I'll join back the queue. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, good evening. First question is with respect to our subsidiaries, international businesses, which has shown a very remarkable turnaround. Just want to understand a little bit better, is the U.S. turnaround more sustainable in terms of how we have visibility over the coming quarters? With respect to our Italy business, do we expect a break-even in the coming quarter? The opening remarks you shared that because of the delay in the rail mill, the turnaround was a bit delayed. Can we expect a break-even and then profitable quarters coming ahead? The Italian side, as you're aware, we have three product lines there. The main stay is the rail mill, which basically supplies rail to the national railway network in Italy and surrounding countries. Italy recently issued a tender and in which we have won certain volumes. The contract issuance, the awarding of that has been a little delayed. That should be coming in the first contract, part should be coming in to us in this quarter, and therefore that would make the rail mill run at a much better capacity. The other thing which the Italian rail is doing is that they are now in the process of tendering or in the process of coming out with contracts for rail requirement over the next five years because they are overhauling the entire railway system and changing maybe certain sections of the rail which are older already. That is also expected soon. Once the railway contracts are finalized by the Italian rail, we expect that the Italian operations will automatically start doing much better. We have lined up the supply of semis from various sources, including India, to our wire rod operations. We have started building on the wire rod mill customers and we are seeing good traction on that. On the wire rod mill side, we are seeing the order position improving. That also will help us to basically add to the EBITDA as we go forward. Yes, I think July, September is a seasonally weak quarter at times in the West, especially Europe because of holiday. We'll see certainly an improvement in the quarter July, September. Going forward in H2, I think we are looking for a break-even and beyond. As far as U.S. is concerned, the capacity utilization was low in the quarter one. It is ramping up, therefore things should look better going forward. The local demand was okay and the prices are quite good in the U.S. With that, we find there will be improvement from here on in the quarter one. Understood. Sir, my second question is would like your thought on the inorganic opportunities. There are a couple of us being talked about, NINL, RINL, NMDC. Just want to know your thoughts, which are the probable assets to get divested and how does these fit our portfolio strategically? As on date, if we look at the government actions, two plants are ready for auction. One is NINL, second is Nagarnar plant of NMDC. Whereas RINL we have not seen any roadshows or any progress from the government. If you look at these two, both are sizable. Sizable in the sense NINL has iron ore mine. The Nagarnar plant is 3 million ton plant, is expected to be commissioned by end of this calendar year or early next year. Considering that both are interesting, therefore we are evaluating both the options. We will take a call once the data room full data is available, then we will take a call. Understood. Thanks and all the best, sir. Thank you. The next question is from the line of Indrajit from CLSA. Please go ahead. Hi, sir. Congratulations on good set of numbers. Thank you for the opportunity. I have two questions. First, in this quarter, how much have auto realizations increased on a quarter-over-quarter basis when the revisions had happened in the month of April? My second question is for Mr. Acharya. Ex of China, globally, where are we seeing some of the capacity expansions coming or some of the mothballed capacities getting restarted? Which regions are we seeing that, or if we are seeing it at all? On the first question on the automotive contracts. For the April-June quarter, we have been able to get the increase for auto products, long products, and cold rolled and galvanized products. It ranges for flat products between INR 7,500 to about INR 9,500 per tonne. In long products, it is in the range of about INR 6,000 per tonne. That is for the quarter gone by April, June. As you know, automotive operates with a lag, whatever increases have happened during April, June would become due basically from July to September. Therefore that discussion with the automotive companies are in the process. As far as capacities are concerned, I think I would say different regions will probably behave differently. Some of the older capacities which have been mothballed now are being looked at with the lens of what is required to achieve environmental compliance. With that level of compliance requirements and investments, some of the capacities may not like to come back because the cost of compliance and the cost of operation becomes high. With the current level of coking coal and the current level of iron ore, I think in many areas it is not making sense, especially outside U.S. and Europe, to restart some of the mothballed capacities. In Europe and U.S., I think some of the capacities may restart and some have just started. While the capacities have come up, they are still behind from a supply perspective because it's what their earlier rates were. We expect that to catch up probably by the end of this year, and they would stabilize to a level of where they were earlier with respect to the volumes. I don't see that going up too much because some of the capacities would also go for some shutdowns because of certain compliance requirement to be met. Thanks a lot. I am done with my questions. Operator, we can take the next question, please. Hello. Sir, as we wait, if I can ask one more question. On the power aspect, the energy aspect, have we done some kind of IRR calculation in terms of what kind of IRR it may generate through the course of the investment? Yeah. That has been done. It is above our threshold as regards to the investment in the renewable power. One is return. Second is the entire world is moving towards decarbonization. It is one of the essential elements that we should do this. That is why we are moving towards going for renewables, but it is above our threshold. Okay. Thank you so much. Thanks. Thank you. Ladies and gentlemen, please hold on. We are just checking. Seems to be some technical difficulty. Okay. Sorry about that, ladies and gentlemen. There seems to be some technical problem at the operator's end. I have got a question by messaging. We can't unmute your lines, but I have a question by message from Abhijit Mitra of ICICI Securities. The question is, last year's HRC sales were 9 million tonnes. How much was export and after Dolvi ramps up, how much HRC sales are we looking at? Yes. That's correct. Thank you. As far as hot rolled coil sales are concerned, our current supplies of hot rolled have been diverted to the downstream. We were expecting the Dolvi operations to start a little earlier. You are aware that the COVID impact has taken the project out into July-September quarter. It should start soon. Post Dolvi startup, actually our sales have currently, for the hot rolled coils have gone down into the market because of lesser availability. Post Dolvi startup, it should gradually stabilize to normal levels and improve thereafter, during the course of the year. I will not be able to give you an exact number as to how much of the hot rolled coil sales exactly will come about. That we can share, Sesha or Ashwin can share that later. Thanks. The next question is from Ashish Kejriwal of Centrum. He's asking about this issue of iron ore and duplication of royalty. Is there any resolution around that? Yes. Royalty on royalty is an issue which is being agitated by the industry, both mining and also steel industry. What we understood is the government has appointed a committee to examine this point and make the recommendations to take a call. The committee has been constantly in touch with the industry, and they're taking presentations from the industry. We are in that process. Hopefully, in the next two months, they will take a view on this and then government will take a call. Thank you. We have a question, asking on CapEx and OpEx from Saurin Shah. Raw material acceptances are INR 955 million as on 30th June 2021. The capital acceptances were INR 565 million. Thank you. The next question is from Bhavin Chheda. Iron ore mining premium and royalties are paid on the IBM index. What is the lag effect here, please? Generally it is two months. That is what we have been seeing. It gets adjusted, whatever premiums we are paying, if it is extra that will get adjusted. If it is a shortfall, we have to make the payment as and when announcement is done. Right. The next question from him is, mining run rate at Odisha and Karnataka is higher, but captive usage was only 42%, which means merchant sales of iron ore was much higher in Q1. Any color around that, please? No. These mines are also supplying to Bhushan Power and Steel and Monnet Ispat. They want to qualify as the captive. That's why overall, whatever we are supplying other than companies under joint management, joint control and also captive, if we exclude that, what is sold in the market is not very high quantity. Thank you. The next question is from Sumangal of Kotak Securities. PLI and specialty steels, how does this benefit us and the sector? The PLI scheme, which has just been announced yesterday is very welcome. I think it is going to encourage investment in India, will create opportunities for expansion and self-reliance within India as envisioned by Prime Minister under the Atmanirbhar Bharat scheme. It is also a very good step to substitute imports, produce these specialty steel within the country and leverage our base for exports of specialty products from India. As far as JSW is concerned, we have already initiated certain measures to look at some investments in some of the specialty products, which is in the process. I think we'll be able to give you more color as we go along. Just to add what Jayant has mentioned. They said 25 million tons is the incremental capacity that is expected as an outcome from the PLI scheme involving INR 40,000 crore investment. What is very encouraging is, it is melted and poured is the requirement for this 25 million tons incremental capacity. PLI scheme will enable more investments in the downstream. That will create demand for upstream to the extent of 25 million because of this one condition of melted and poured. That is very encouraging in the PLI scheme. Thank you. We'll take the last question from Pallav Agarwal of Antique. Any guidance on net debt and whether working capital levels have stabilized or will increase further from here? We are not envisaging further investment in the working capital. As regards net debt, we can only talk about the overall ratio of 2.75/1. We have enough headroom from the current level, which is there today. We will be managing our entire growth plans within this ratio of 2.75. Thank you, sir. Any closing remarks from you? We have commissioned, as I mentioned to you, the pellet plant at Vijayanagar, the CRM plant at Vijayanagar, coke oven plant at Dolvi and the pellet plant at Dolvi and the CDQ plant at Dolvi. I'm very happy to say that they're all stabilized. The workers came back in Dolvi and the hot strip mill is almost ready now. We're also planning to send some slabs from Vijayanagar to Dolvi and roll those slabs into coils. Over and above that, one unit in melt shop, their work is in full swing. It will get completed before end of this quarter. We are very confident that we'll be able to commission this 5 million ton. The trigger here for JSW is the volume growth that would come in from Dolvi expansion. The downstream capacities more or less got commissioned, excepting the CRCA 0.5 million ton and the Tinplate Line 2. More or less balance all completed. Downstream is a good contributor for value addition and increasing our value-added products proportion in the overall product mix. The backward integration through iron ore mines. I think these are the three very important things that would contribute in future the performance of JSW. We have given the guidance about ESG. What is the target for the year 2030. We have been very actively evaluating to raise the sustainability linked bond based on these commitments, which we have to achieve by 2030. This is one thing which we are evaluating to fund our capital expenditure program for increasing by another 5 million ton at Vijayanagar, plus other requirements of the company. With that, we expect the demand scenario in India is concerned, we are seeing a good demand from solar appliances and also the packaging industry, plus signs of revival in the auto sector and also residential construction site. We are seeing some uptick. We are optimistic that the demand will pick up in the months to come, if not in this quarter, because of the general subdued demand due to seasonal factors. The demand will pick up. Why we are very confident is that even after second wave impact, where economic activity came down, the total steel consumption in the last quarter was 24.7 million tons, as against 12 million tons in the quarter one of last year. The impact was moderate compared to last year. Similarly, the way it picked up in the last financial year, the second quarter, it was around 24 million ton last year. It went up as high as 30 million ton. Even assuming that the same amount of demand will come back into India, we will be close to 110 million ton total demand for the year, total consumption for the year in this financial year. We are quite optimistic as regards the revival in steel demand in the Indian markets. Thank you. Thanks, Mr. Rao. Thanks everyone for joining us and bearing with the technical glitch. Have a great evening and a good weekend. Thank you. Bye.